99 Cents Only Stores(R) Announces Preliminary Financial Results for Its Third Quarter Ended December 31, 2006 and Delay of Its Third Quarter Form 10-Q.

CITY OF COMMERCE, Calif. -- 99C/ Only Stores[R] (NYSE:NDN) (the "Company") has announced preliminary financial results for its third quarter ended December 31, 2006. The Company also announced the delay of its third quarter Form 10-Q and the continued delay of its 2006 Form 10-K and Form 10-Qs for the first and second quarters of fiscal 2007.

For the quarter ended December 31, 2006, net sales increased $23.3 million, or 8.3%, to $302.1 million compared to $278.8 million for the three months ended December 31, 2005. Same-store-sales for the quarter ended December 31, 2006 increased 1.9% versus the same quarter last year. Net income for the quarter ended December 31, 2005 was $0.10 per share. Based on preliminary results, the Company expects to report net income of approximately $0.12 per share for the quarter ended December 31, 2006. The increase in net income compared to the quarter ended December 31, 2005 is primarily due to higher overall gross profit driven by lower product cost, lower expense associated with excess and obsolete inventory, and improvement in the overall rate of shrink and scrap which has decreased in the October to December 2006 period compared to the same period in the prior year. The increase in gross profit was partially offset by higher costs associated with operating 16 new stores, higher labor costs incurred in the 2006 period primarily to support implementation of inventory control initiatives, increased expenses in the 2006 period for expensing stock option compensation as now required under the new accounting standard of SFAS 123R and increased transportation costs. These preliminary results may change due to final adjustments from an ongoing subsequent events analysis described below.

As previously disclosed, the Company anticipates net income for the quarters ended March 31, 2006 and June 30, 2006 to be approximately $0.01 per share for each quarter and the Company expects to report approximately breakeven results for the quarter ended September 30, 2006. Because financial statements have not yet been filed for these periods, these preliminary results may change due to final adjustments from an ongoing subsequent events analysis described below.

Eric Schiffer, CEO of the Company, said, "For the quarter ended December 31, 2006, we continued our trend of positive same-store-sales and improved gross margin. We successfully focused our operation on the holiday season and are pleased with our holiday sales."

"We regret that we have had to continue to delay our SEC filings. We look forward to discussing the results of our operations, including progress and plans during a conference call which will be held as soon as we complete these filings."

Until the Company completes certain procedures with its auditors, the Company is unable to file its Form 10-K for the fiscal year ended March 31, 2006 and its Form 10-Qs for the quarters ended June 30, 2006, September 30, 2006 and December 31, 2006 (the "SEC Reports"). Due to procedures ongoing in the review by one of its predecessor external auditors regarding the appropriate accounting treatment for the stock option errors, the Company must update its disclosures and accounts for each of the periods covered by these SEC Reports for subsequent events accounted for in the month of January 2007 including the review of its inventory reserve estimates in light of physical inventories, the filing of its federal tax return for the year ended March 31, 2006 and other data currently available. The Company currently expects to file its delayed SEC Reports by early March 2007, but this timing is subject to the completion of the procedures outlined above.

The Company also notes that during the fourth quarter of fiscal 2006, the Company determined that it had over-accrued certain accounting and auditing fees for the third quarter ended December 31, 2005 and corrected the over-accrual by increasing operating income and net income which resulted in the adjusted basic and diluted earnings per common share increasing by $0.01 per share from $0.09 to $0.10. The Company has determined that the effect of this correction is not material for the previously reported interim financial statements for the quarter ended December 31, 2005 and it does not intend to file an amended Form 10-Q. The correction will be reported in the Company's Form 10-K for the fiscal year ended March 31, 2006.

As previously disclosed, the Company's management conducted a voluntary, self-initiated review of the measurement dates for the Company's stock option grants and found that certain measurement date errors occurred during the period 1999-2004. The Company also determined that several historical option grants to consultants during 1996-1998 were incorrectly accounted for as employee option grants. These errors result in adjustments that would have increased non-cash compensation expense in these periods. The Company continues to believe that these adjustments are not material to its financial statements in any of the periods to which the adjustments were related, and, therefore, does not believe that it is necessary to amend or revise its historical financial statements. The cumulative after-tax net income impact of the unrecorded expense adjustments from the periods 1996-2004 is approximately $2.1 million as compared to net income reported during the same periods of $323 million and to retained earnings as of year end 2004 of $276 million.

99C/ Only Stores[R], the nation's oldest existing one-price retailer, operates 248 retail stores in California, Texas, Arizona and Nevada, and also operates a wholesale division called Bargain Wholesale. The Company's next 99C/ Only Store is scheduled to open on March 8, 2007 in Dallas, Texas. 99C/ Only Stores[R] emphasizes name-brand consumables, priced at an excellent value, in attractively merchandised stores, where nothing is ever over 99C/.

We have included statements in this release that constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act and Section 27A of the Securities Act. The words "expect," "estimate," "anticipate," "predict," "believe" and similar expressions and variations thereof are intended to identify forward-looking statements. Such statements appear in this release and include statements regarding the intent, belief or current expectations of the Company, its directors or officers with respect to, among other things, trends affecting the financial condition or results of operations of the Company, the anticipated results for the quarters ended March 31, 2006, June 30, 2006, September 30, 2006, and December 31, 2006, expected improvements in operations and the impact on the Company's financial statements of certain errors in option measurement dates and accounting for consultant option grants. The shareholders of the Company and other readers are cautioned not to put undue reliance on such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected in this release for the reasons, among others, discussed in the reports and other documents the Company files from time to time with the Securities and Exchange Commission, including the risk factors contained in the Section -- "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Note to Editors: 99C/ Only Stores[R] news releases and information available on the World Wide Web at http://www.99only.com. Contact Rob Kautz, EVP & CFO, 323-881-1293.