43



                              UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549


                                FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

(Mark One)

    x     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
               For the Fiscal Year Ended December 31, 1998
                                    Or
    o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

                      Commission file number 1-11735


                           99 CENTS ONLY STORES

          (Exact name of registrant as specified in its charter)

          California                     95-2411605
 (State or other Jurisdiction         (I.R.S. Employer
      of Incorporation or            Identification No.)
         Organization)
  4000 Union Pacific Avenue,                90023
 City of Commerce, California            (zip code)
     (Address of Principal
      Executive Offices)
                                              
    Registrant's telephone number, including area code: (323) 980-8145
       Securities registered pursuant to Section 12(b) of the Act:
            Common Stock, no par value  New York Stock Exchange
     Securities registered pursuant to Section 12(g) of the Act: None
                                     
      Indicate  by  check mark whether the registrant: (1)  has  filed  all
reports  required  to  be  filed by Section 13 or  15(d)  of  the  Security
Exchange  Act  of 1934 during the preceding 12 months (or for such  shorter
period  that the registrant was required to file such reports) and (2)  has
been subject to such filing requirements for the last 90 days. Yes x  No o

      Indicate by check mark if disclosure of delinquent filers pursuant to
Item  405  of  Regulation  S-K is not contained herein,  and  will  not  be
contained,  to the best of Registrant's knowledge, in definitive  proxy  or
information statements incorporated by reference in Part III of  this  Form
10-K or any amendment to this Form 10-K.  x
      The aggregate market value of Common Stock held by non-affiliates  of
the Registrant on March 25, 1999 was $547,638,368 based on a $40.50 average
of  the  high and low sales prices for the Common Stock on such  date.  For
purposes  of  this computation, all executive officers and  directors  have
been deemed to be affiliates. Such determination should not be deemed to be
an  admission  that  such executive officers and directors  are,  in  fact,
affiliates of the Registrant.

      Indicate  the  number of shares outstanding of each of  the  issuer's
classes of stock as of the latest practicable date.

     Common Stock, No Par Value, 24,804,203 Shares as of March 25, 1999

      Portions  of  Part  III  of  this report have  been  incorporated  by
reference   from  the  Company's  Proxy  Statement  for  the  1999   Annual
Shareholders meeting.




                           99 CENTS ONLY STORES
                            Table of Contents



                                                                      Pag
                                                                       e
Part I
Item 1.  Business                                                         3
Item 2.  Properties                                                      16
Item 3.  Legal Proceedings                                               18
Item 4.  Submission of Matters to a Vote of Security Holders             18
 Part
  II
Item 5.  Market for Registrant's Common Stock and Related Stockholder    18
        Matters
Item 6.  Selected Financial Data                                         19
Item 7.  Management's Discussion and Analysis of Financial Condition     21
        and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk      37
Item 8.  Financial Statements and Supplementary Data                     38
Item 9.  Changes in and Disagreements with Accountants on Accounting       
        and Financial Disclosure                                        56
 Part
  III
Item 10. Directors and Executive Officers of the Registrant              56
Item 11. Executive Compensation                                          56
Item 12. Security Ownership of Certain Beneficial Owners and             56
        Management
Item 13. Certain Relationships and Related Transactions                  56
 Part
  IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form     56
        8-K





                                  PART I

Item 1. Business

      99 Cents Only Stores (the Company, including 99 Cents Only Stores and
Universal International, Inc. and its retail stores, Only Deals and Odd's-N-
End's)  is  a  leading  deep-discount  retailer  of  primarily  name-brand,
consumable  general  merchandise.  The  Company's  stores  offer   a   wide
assortment of regularly available consumer goods as well as a broad variety
of  first-quality,  close-out merchandise.  In  1998,  a  majority  of  the
Company's  product  offerings  were comprised  of  recognizable  name-brand
merchandise and were regularly available for reorder. The Company  provides
customers  significant  value  on their everyday  household  needs  and  an
exciting shopping experience in customer-service-oriented stores which  are
attractively  merchandised, brightly lit and well-maintained.  The  Company
believes  that  its name-brand focus, along with a product mix  emphasizing
value-priced  food  and  beverage  and  other  everyday  household   items,
increases  the  frequency  of consumer visits  and  impulse  purchases  and
reduces  the  Company's exposure to seasonality and  economic  cycles.  The
Company  believes  its format appeals to value-conscious customers  in  all
socio-economic groups and results in a high volume of sales. The  Company's
66  existing 99 Cents Only Stores at March 25, 1999 are located in Southern
California  and have an average size of approximately 15,000  square  feet.
The  Company's  99  Cents  Only  Stores generated  average  net  sales  per
estimated saleable square foot of $335, which the Company believes is among
the  highest  in the deep-discount convenience store industry, and  average
net sales per store of $4.1 million in 1998.

      The Company opened its first 99 Cents Only Store in 1982 and believes
that  it  operates the nation's oldest existing single price point  general
merchandise  chain.  The  Company competes in the  deep-discount  industry,
which  is  one of the fastest growing retail sectors in the United  States.
The  Company significantly increased its rate of store expansion  following
its initial public offering in May 1996, expanding its 99 Cents Only Stores
from  36 stores and 332,100 estimated saleable square feet at December  31,
1995   to  64  stores  and  822,900  estimated  saleable  square  feet   at
December  31, 1998, representing a compound annual growth rate ("CAGR")  of
21.1%  and  35.3%, respectively. The Company believes that  its  attractive
store-level   economics  facilitates  its  expansion.   Historically,   the
Company's 99 Cents Only Stores have been profitable within their first year
of  operation. In the first quarter of 1999, the Company opened two  stores
and  plans to open an additional 11 net new stores during the remainder  of
the  year. The Company intends to continue its planned store expansion over
the  next several years at a targeted growth rate of approximately 20%  per
year.  The  Company estimates that the Southern California market  has  the
potential for over 199, 99 Cents Only Stores.

      In  September 1998 the Company completed its acquisition of Universal
International,  Inc. and Odd's-N-End's, Inc. As a result of  the  Company's
acquisition,  the  Company  owns 94% of the  outstanding  common  stock  of
Universal. As of March 25, 1999 Universal operates 69 Only Deals and Odd's-
N-End's deep discount stores located in Minnesota and the surrounding upper
Midwest,  upstate  New  York and Texas. Like the Company's  99  Cents  Only
Stores,  the  majority of Universal's product offerings  are  comprised  of
recognizable name-brand consumable general merchandise, regularly available
for reorder. The Universal retail price points include items priced over 99
cents,  however  its  retail product mix and merchandising  techniques  are
similar to that of the Company's 99 Cents Only Stores. As of March 25, 1999
the 69 Universal stores had 631,600 saleable square feet.

      The  Company  also  sells merchandise through its  Bargain  Wholesale
division  at  prices  generally below normal  wholesale  levels  to  local,
regional,  and  national  discount,  drug  and  grocery  store  chains  and
independent  retailers,  distributors  and  exporters.  Bargain   Wholesale
complements  the  Company's retail operations by allowing  the  Company  to
purchase  in larger volumes at more favorable pricing, to be exposed  to  a
broader  selection of opportunistic buys and to generate  additional  sales
with   relatively  small  incremental  increases  in  operating   expenses,
contributing  to  strong  overall operating margins  for  the  Company.  In
addition  to  Universal,  Bargain Wholesale enables  the  Company  to  sell
merchandise  at  prices other than 99 Cents, providing the Company  greater
flexibility in inventory management. Bargain Wholesale represented 16.5% of
the Company's net sales in 1998.

Industry

      The  Company  participates  primarily  in  the  deep-discount  retail
industry,  with  its 99 Cents Only Stores and Universal's  Only  Deals  and
Odd's-N-End's  stores.  Deep discount retail is  distinguished  from  other
retail  formats  by  the purchase of close-out and other  special-situation
merchandise at prices substantially below original wholesale cost, and  the
subsequent  sale of this merchandise at prices significantly below  regular
retail. This results in a continually changing selection of specific brands
of  products.  The  deep-discount retail industry is  one  of  the  fastest
growing retail sectors in the United States.

      The  sale  of close-out or special-situation merchandise develops  in
response to the need of manufacturers, wholesalers and others to distribute
merchandise  outside their normal channels. Close-out or  special-situation
merchandise  becomes  available  for a  variety  of  reasons,  including  a
manufacturer's  over-production, discontinuance due to a change  in  style,
color,  size,  formulation or packaging, the inability to move  merchandise
effectively   through  regular  channels,  reduction  of  excess   seasonal
inventory,  discontinuation of test-marketed items and the financial  needs
of the manufacturer.

      Many  deep-discount  retailers also  sell  merchandise  that  can  be
purchased  from  a manufacturer or wholesaler on a regular basis.  Although
this  merchandise can usually be purchased at less than original  wholesale
and  sold below normal retail, the discount, if any, is generally less than
with   close-out   merchandise.  Deep-discount  retailers  sell   regularly
available  merchandise to ensure a degree of consistency in  their  product
offerings and to establish themselves as a reliable source of basic goods.

Business Strategy

      The Company's goal is to continue to provide significant value to its
customers on a wide variety of consumable merchandise in an exciting  store
environment.  The  Company's strategies to achieve this  goal  include  the
following:


  Focus  on  "Name-Brand" Consumables.  The Company strives to  exceed  its
customers'  expectations of the range and quality of name-brand  consumable
merchandise  that can be purchased for 99 Cents. During 1998,  the  Company
purchased   merchandise   from   more   than   999   suppliers,   including
Colgate-Palmolive  Company, Cheseborough Ponds, The  Dial  Corp.,  Eveready
Battery  Company  Inc., General Electric Company, Gerber Products  Company,
The Gillette Company, Hershey Foods Corp., Johnson & Johnson, Kraft General
Foods,  Inc.,  Lever Brothers Company, Mattel Inc., The  Mead  Corporation,
Nabisco  Inc., Nestle, The Pillsbury Company, The Procter & Gamble Company,
Revlon Inc. and SmithKline Beecham Corporation.

  Broad Selection of Regularly Available Merchandise.  The Company's retail
stores  offer  consumer  items  in each of  the  following  staple  product
categories: food and beverages, health and beauty aids, household  products
(cleaning  supplies,  paper  goods, etc.), housewares  (glassware,  kitchen
items,  etc.), hardware, stationary and party goods, seasonal  goods,  baby
products and toys, giftware, pet products and clothing. The Company added a
deli and frozen food section in its 99 Cents Only Stores in the second  and
third  quarters of 1997. The Company ensures that its merchandise  offering
is  complete by supplementing its name-brand merchandise with private-label
items.  By  consistently  offering  a wide  selection  of  basic  household
consumable  items, the Company encourages customers to shop the stores  for
their  everyday  household needs, leading to a high frequency  of  customer
visits.

 Attractively Merchandised and Well-Maintained Stores.  The Company strives
to   provide   its   customers   an   exciting   shopping   experience   in
customer-service-oriented  stores  which  are  attractively   merchandised,
brightly lit and well-maintained. The Company's stores are merchandised and
laid  out in a "supermarket" format with items in the same category grouped
together. In addition, the shelves are restocked as needed during the  day.
By   offering  merchandise  in  an  attractive,  convenient  and   familiar
environment,  the Company believes its stores appeal to a wide  demographic
of customers.

 Strong Long-Term Supplier Relationships.  The Company believes that it has
developed  a  reputation as a leading purchaser of name-brand,  reorderable
and  close-out merchandise at discount prices through its ability  to  make
immediate buying decisions, experienced buying staff, willingness  to  take
on  large  volume purchases and take possession of merchandise immediately,
ability  to  pay  cash or accept abbreviated credit terms,  reputation  for
prompt  payment,  commitment  to  honor  all  issued  purchase  orders  and
willingness  to purchase goods close to a target season or out  of  season.
The  Company's relationship with its suppliers is further enhanced  by  its
ability  to  minimize  channel  conflict for the  manufacturer  by  quickly
selling  name-brand  merchandise without, if  requested  by  the  supplier,
advertising or wholesaling the item. Additionally, the Company believes its
well-maintained,  attractively merchandised stores have  contributed  to  a
reputation among suppliers for protecting their brand image.

 Complementary Bargain Wholesale Operations.  Bargain Wholesale complements
the  Company's  retail operations by allowing the Company  to  purchase  in
larger  volumes  at  more  favorable pricing to be  exposed  to  a  broader
selection  of  opportunistic  buys and to generate  additional  sales  with
relatively  small incremental increases in operating expenses, contributing
to  strong  overall operating margins for the Company.  Net  sales  in  the
Company's  wholesale  division grew from $30.3 million  in  1995  to  $53.3
million in 1998, primarily due to an increased focus on large domestic  and
international  accounts  and  expansion into new  geographic  markets.  The
Company  opened showrooms in New York City in February 1997 and Chicago  in
February 1998 to support its Bargain Wholesale operation.


  Adherence to Disciplined Cost Controls and Savvy Purchasing.  The Company
is  able  to provide its customers with significant value while maintaining
strong operating margins through an adherence to a disciplined cost control
program.  The  Company  purchases merchandise at  substantially  discounted
prices  as  a  result of its buyers' knowledge, experience and  negotiating
ability  and  its established reputation among its suppliers.  The  Company
applies  this  same  approach to its relationships with other  vendors  and
strives to maintain a lean operating environment focused on increasing  net
income.


  Focus  on Larger Stores in Convenient Locations.  The Company's 99  Cents
Only   stores   are   conveniently  located  in   freestanding   buildings,
neighborhood  shopping  centers  (anchored  by  99  Cents  Only  Stores  or
co-anchored  with  a supermarket and/or a drug store) or  downtown  central
business  districts  where consumers are more likely to  do  their  regular
household shopping. The Company's 64 existing 99 Cents Only Stores  average
approximately 15,000 gross square feet. Since January 1, 1995, the  Company
has  opened  35 new stores that average over 20,000 gross square  feet  and
currently  targets  new  store locations between 15,000  and  25,000  gross
square  feet.  Universal's  Only  Deals and Odd's-N-Ends  Stores  currently
average 10,700 gross square feet. The Company's larger 99 Cents Only Stores
allow  it  to  more effectively display a wider assortment of  merchandise,
carry deeper stock positions and provide customers with a more inviting and
convenient  environment that encourages customers to shop  longer  and  buy
more.  The  Company's  decision  to target larger  stores  reflects  higher
average  annual net sales per store and operating income typically achieved
by these stores.

 Experienced Management Team and Depth of Employee Option Grants.  99 Cents
Only  Stores' management team has many years of retail experience  and  has
demonstrated  its  skills  through  a  proven  track  record  of  financial
performance.  The  Company's  management strongly  believes  that  employee
ownership  of the Company's stock helps build employee pride in the  stores
that  significantly  contributes to the success  of  the  Company  and  its
operations.  Accordingly, all members of management of the  Company  (other
than David Gold, the Company's Chief Executive Officer, Howard Gold, Senior
Vice  President Distribution, Jeff Gold, Senior Vice President Real  Estate
and  Information  Systems, Eric Schiffer, Senior Vice President  Operations
and  Finance and Karen Schiffer Senior Buyer) and all employees  (part-time
or  full-time) with tenure of more than six months with the Company receive
an  annual  grant of stock options. As of December 31, 1998, the  Company's
employees  (other  than  executive officers) held options  to  purchase  an
aggregate of 2,015,675 shares, or over 8.2% of the fully-diluted shares  of
Common Stock outstanding.

Growth Strategy

      Management believes that future growth will primarily result from new
store openings facilitated by the following:

  Southern  California has Significant Potential for Growth.  By continuing
to  focus  99  Cents  Only Store openings in Southern  California  for  the
immediate  future,  the  Company can leverage its brand  awareness  in  the
region  and  take  advantage  of its existing  warehouse  and  distribution
facility,   regional  advertising  and  other  management   and   operating
efficiencies.  The  Company's growth strategy in Southern  California  will
focus  on  opening locations in existing markets as well as expanding  into
markets  adjacent to those currently served. The Company opened it's  first
two  99 Cents Only Store in San Diego County in the fourth quarter of 1998.
The  Company has plans to open at least 13 net new 99 Cents Only Stores  in
1999  (a net increase of 20%), all in the Southern California area.  As  of
March  25,  1999, the Company had opened two new stores, and secured  sites
for  five  additional store locations. The Company intends to continue  its
planned  store expansion over the next several years at a targeted rate  of
approximately  20%  per  year.  The Company  estimates  that  the  Southern
California market has the potential for over 199, 99 Cents Only Stores.




  Portable  Format Facilitates Geographic Expansion.  The Company  believes
that  its  concept of consistently offering a broad selection of name-brand
consumables, at value pricing, in a convenient store format is portable  to
most  other  densely  populated areas of the country.  With  the  Company's
retail  presence  established in the upper Midwest, upstate  New  York  and
Texas and with distribution facilities in Minneapolis serving these stores,
the  Company  expects to explore the potential for geographic expansion  as
opportunities  present themselves in the next several  years.  The  Company
intends  to focus on developing clusters of stores that can take  advantage
of its local warehouse and distribution facilities.

 Acquisitions.  The Company considers acquisition opportunities as they are
presented  to the Company and may make acquisitions of a chain, or  chains,
of  clustered  retail  sites  in  densely populated  regions.  The  Company
believes that its acquisition of Universal in September 1998 satisfied this
objective.


Recent Developments

      In November 1997 the Company acquired common stock of Universal equal
to  48% of the outstanding common stock. On September 16, 1998, the Company
acquired an additional 4.3 million shares or approximately 46% and now owns
94%  of the outstanding Common Stock of Universal. Pursuant to the exchange
offer,  the  Company exchanged one share of its common stock for  every  16
outstanding  shares of Universal plus the associated common share  purchase
rights.  The offer closed on September 16, 1998. In addition the  Company's
merger  with Odd's-N-End's Inc. ("Odd's-N-End's") was complete on September
30,  1998.  Together,  these  two companies operate  42  retail  stores  in
Minnesota  and the surrounding upper Midwest region, nine retail stores  in
Texas  and  22  retail stores in upper New York State. The  Company  issued
shareholders of Universal 336,986 shares of the Company's Common Stock  and
paid $843,243 to holders of Odd's-N-End's common stock.

      Prior  to  September  16, 1998 the Company's  ownership  interest  in
Universal  was  accounted for using the equity method. The  impact  of  the
inclusion of Universal in the Company's financial statements for  the  nine
months  ended  September  30, 1998 was a charge  of  $1.4  million.  As  of
December  31, 1998, the Company has consolidated the results of  operations
of  Universal  with those of the Company for the period from September  17,
1998  to December 31, 1998. The Company recorded approximately $8.6 million
in goodwill on its balance sheet, which will be amortized over 30 years and
will   result   in  increased  amortization  expense  in  future   periods.
Universal's  business is seasonal. Historically, all of its  earnings  have
been generated in the fourth quarter, and it has incurred losses during the
first  three  quarters  of  the  calendar year.  In  conjunction  with  the
acquisition  of Universal the Company retired Universal's revolving  credit
line  which  totaled approximately $12.5 million. The Company continues  to
support  Universal  by  providing trade credit  and  other  advances.  Such
amounts  are provided from the Company's ongoing cash flows from operations
and its existing working capital.

      The Company's investment in Universal was motivated by an opportunity
to  apply  the  Company's core competencies to two under-performing  retail
chains  which  the  Company  believes have  significant  upside  potential.
Universal's  strengths include its many attractive store locations,  strong
trade  name identity and inventory of first-quality, close-out merchandise.
In  addition, Universal has built a strong management team led by its Chief
Executive Officer, Richard Ennen, who was hired in September 1996  as  Vice
President   of   Merchandising  and  assumed  his   current   position   in
February  1998, and a solid corporate infrastructure and operating systems.
The  Company believes Universal's historical performance has been  impaired
by  a lack of capital, which has limited its access to merchandise and  its
ability  to purchase merchandise at attractive prices, a failure  to  focus
attention  on store merchandising and layout to create an attractive  store
environment  and a failure to identify and take advantage  of  cost  saving
opportunities.



      Since the Company acquired Universal it has gained greater access  to
name-brand, close-out and regularly available goods, implemented more savvy
purchasing  procedures,  and  developed  and  begun  to  implement  a   new
merchandising  program  that  places greater emphasis  on  consumables  and
focuses  on  attractive, convenient store layouts. Further,  Universal  has
determined to close unprofitable stores and has completed the consolidation
of  its three warehouse and distribution facilities into a single facility.
In  addition,  Universal  has identified several areas  for  cost  savings,
including  freight  and  advertising. During 1998, Universal  introduced  a
revised  merchandising program in all of its stores to accommodate  the  99
Cents  Only  Stores  philosophy.  The  Company  believes  that  its  strong
reputation among suppliers and the depth of its operating experience in the
deep-discount  industry has contributed to these changes. The  Company  and
Universal  continue  to  review Universal's operations  to  identify  other
opportunities for cost savings and improvements to operations. In addition,
the Company and Universal are reviewing less profitable stores to determine
stores  that  should be relocated or closed. Since December  31,  1998  the
company  has closed six stores. As of March 25, 1999 Universal  now  has  a
total of 69 Only Deals and Odd's-N-End's stores.


      Universal's  Only  Deals and Odd's-N-End's stores  will  provide  the
Company a retail channel for merchandise at prices other than the Company's
single  price point and will enable the Company to increase the  volume  of
merchandise sold by it. The Company believes that this greater distribution
capability  will  provide  the  Company an opportunity  to  strengthen  its
relationship  with  its  suppliers,  increase  the  Company's  exposure  to
opportunistic  buying opportunities, allow the Company to capture  a  wider
range  of  merchandise and enable the Company to take greater advantage  of
volume  discounts. Further, the acquisitions allow the Company to diversify
its  geographic  presence and provide the Company  valuable  experience  in
other  merchandising formats. This geographic presence  could  serve  as  a
basis  for launching the Company's 99 Cents Only Stores retail format  into
these regions in future periods. The Company believes further opportunities
exist  for  improving store level economics. In addition, it is anticipated
that  the acquisition will ultimately provide the combined businesses  with
opportunities  to  realize  the efficiencies  and  synergies  available  by
operating  on  a  cooperative basis which include  economies  of  scale  in
purchasing,   insurance,  marketing,  advertising,  human   resources   and
administration.


Retail Operations

      The  Company's  retail stores offer customers a  wide  assortment  of
regularly  available  consumer  goods,  as  well  as  a  broad  variety  of
first-quality,  close-out merchandise, generally at a significant  discount
from  normal  retail. All merchandise sold in the Company's 99  Cents  Only
Stores  retail stores sells for 99 cents per item or two or more items  for
99  cents. The Company strives to exceed its customers' expectations of the
range  and quality of name-brand consumables that can be purchased  for  99
cents.   Universal's  Only  Deals  and  Odd's-N-End's  stores  also   sells
merchandise at deep discounts within a similar range.

      The  following table sets forth relevant information with respect  to
the  growth  of  the  Company's  existing 99 Cents  Only  Store  operations
(amounts in thousands, except sales per square foot):












                              Year Ended December 31,
                        1994    1995   1996    1997    1998
                          
                                                              
99 Cents Only Stores                                          
net retail sales        $110,7 $121,9  $143,1  $186,0 $238,86
                            24     98      63      24       7
Universal retail sales        -      -       -       - $31,107
(a)
99 Cents Only Stores                                          
annual net sales                                             
growth rate               8.7%  10.2%   17.3%   29.9%   28.4%
99 Cents Only Stores                                          
store count at                                               
beginning of year           31     34      36      43      53
New stores                    4      4       8      10      13
Stores closed              1(b)   2(c)    1(c)       -    2(c)
Universal stores (a)          -      -       -       -      75
Total store count at                                          
year end                    34     36      43      53     139
Average 99 Cents Only                                         
Stores net sales per                                         
store open the full                                          
year(d)                 $3,267 $3,467  $3,667  $3,750  $4,147
Estimated saleable                                            
square footage at                                            
year end for 99 Cents   293,00 332,10  455,20  631,50 822,900
Only Stores                  0      0       0       0
Average net sales per                                         
estimated saleable                                           
square foot(d)            $396   $397    $389    $354    $335
Change in comparable 99                                       
Cents Only Stores net                                        
sales(e)                (1.4)% (0.2)%    2.8%    1.5%    4.3%
Estimated saleable                                            
square footage at                                            
year end for                 -      -       -       - 694,400
Universal's stores


(a)  Represents  sales from the date of acquisition September 17,  1998  to
     December 31, 1998. As of March 25, 1999 Universal had closed 6  stores
     and  now has a total of 69 stores. The Company has closed those stores
     that were performing below expectations or were in outlying areas  and
     the leases were expiring.

(b)  Store closed September 1994 due to fire.

(c)  Stores closed due to relocation to a larger nearby site.

(d)  For stores open for the entire fiscal year for 99 Cents Only Stores.

(e)  99  Cents  Only  Stores for the years 1994-1996 change  in  comparable
     stores net sales compares net sales for stores open for the entire two
     years  compared. Commencing in 1997, change in comparable  stores  net
     sales compares net sales for all stores open at least 15 months.
  Merchandising.   All of the Company's stores offer  a  broad  variety  of
first-quality, name-brand and other close-out merchandise as well as a wide
assortment of regularly available consumer goods. The Company also  carries
a line of private label consumer products made exclusively for the Company.
The  Company believes that the success of its 99 Cents Only Stores  concept
arises from the value inherent in selling primarily name-brand consumables,
most of which retails elsewhere from $1.19 to $9.99, for only 99 cents  per
item or group of items. The Company believes that this concept also applies
to  the Universal Only Deals and Odd's-N-End's stores. Each store typically
carries  over  five  thousand different stock keeping units  ("SKUs").  The
merchandise  sold  in the Company's stores primarily  consists  of  a  wide
variety  of  basic consumer items including beverages and food, health  and
beauty  aids and household products (cleaning supplies, paper goods, etc.).
The   stores  also  carry  housewares  (glassware,  kitchen  items,  etc.),
hardware,  stationary and party goods, seasonal, baby  products  and  toys,
giftware,  pet products and clothing. In the second and third  quarters  of
1997, the Company added a deli and frozen foods section to each store. None
of the Universal stores carry deli or frozen products.

      While each of the Company's stores regularly carry a variety of basic
household  consumer items, the stores differ from typical  discount  retail
stores   in  that  they  do  not  continuously  stock  complete  lines   of
merchandise.  Although  a  majority of the  merchandise  purchased  by  the
Company is available for reorder, the mix of specific brands of merchandise
frequently changes, depending upon the availability of close-out and  other
special-situation  merchandise at suitable  prices.  Since  commencing  its
close-out  purchasing  strategy in 1976, the Company  has  not  experienced
difficulty  in  obtaining  name-brand close-outs  as  well  as  reorderable
merchandise  at  attractive prices. Management believes  that  continuously
changing specific name-brands found in its stores from one week to the next
encourages  impulse  and  larger  volume purchases,  results  in  customers
shopping  more frequently and helps to create a sense of urgency, awareness
and  excitement. Unlike many discount retailers, the Company rarely imposes
limitations  on the quantity of specific items that may be purchased  by  a
single consumer.

      The  Company targets value-conscious consumers from a wide  range  of
socio-economic   backgrounds  with  diverse  demographic   characteristics.
Purchases  are by cash, credit or debit card. The Company's stores  do  not
accept  checks  or manufacturers' coupons. The Company's  stores  are  open
every  day  with  opening  hours designated to meet  the  needs  of  family
consumers.  The Company advertises that its stores are open "9:00  a.m.  to
9:00 p.m., 9 days a week."

 Store Size, Layout and Locations.  The Company's 66 existing 99 Cents Only
Stores  are  located in Southern California and average over  15,000  gross
square  feet. Since January 1, 1995, the Company has opened 35  new  stores
(including  two  relocations in 1995, one in 1996 and  two  in  1998)  that
average  over  19,000  gross square feet and currently  targets  new  store
locations between 15,000 and 25,000 gross square feet. The Company's larger
99  Cents  Only  Stores  allow  it  to more  effectively  display  a  wider
assortment  of  merchandise,  carry  deeper  stock  positions  and  provide
customers  with a more inviting and convenient environment that  encourages
customers  to  shop longer and buy more. The Company's decision  to  target
larger  stores  reflects  higher average annual  store  revenues  typically
achieved  by  these stores. Universal's stores average 10,700 gross  square
feet and 9,100 saleable square feet. All of Universal's stores are leased.

       The  Company's  stores  are  conveniently  located  in  freestanding
buildings, neighborhood shopping centers (anchored by 99 Cents Only Stores,
a  supermarket and/or a drug store) or downtown central business  districts
where consumers are more likely to do their regular household shopping. The
stores  are  located  primarily in more densely populated,  demographically
diverse  neighborhoods. The Company's 66 existing 99 Cents Only Stores  are
located  in five counties: 52 in Los Angeles County, nine in Orange County,
two  in San Bernardino County, one in Riverside County and two in San Diego
County. Universal's 69 stores at March 25, 1999 consist of 22 Odd's-N-End's
stores located in upstate New York, 39 stores in the upper mid west  and  8
stores in Texas.


      The  Company's  stores are attractively merchandised,  brightly  lit,
well-maintained,  "destination"  locations.  The  layout  of  each  of  the
Company's stores is customized to the actual size and configuration of  the
individual  location. The interior of each store is, however,  designed  to
reflect   a   uniform   format,  like  a  typical  supermarket,   featuring
attractively displayed products in windows, consistent merchandise  display
techniques, bright lighting, lower shelving height that allows unobstructed
visibility  throughout the store, distinctive color  scheme,  interior  and
exterior  signage  and customized check-out counters, floors,  price  tags,
shopping  carts and shopping bags. The Company emphasizes a  strong  visual
presentation in all key traffic areas of the store. Merchandising  displays
are  maintained throughout the day, change frequently and often incorporate
seasonal themes. The Company believes that due to the continuously changing
brand-names, the lower shelving height and the absence of aisle description
signs, the typical customer tends to shop the whole store.

     The Company leases 61 of its 66 99 Cents Only Stores retail locations.
The  Company typically seeks leases with an initial five to ten  year  term
with  one  or more five-year options. See "Item 2 Properties." The  Company
identifies  potential  sites  through a  network  of  contacts  within  the
brokerage  and  real estate communities, information provided  by  vendors,
customers  and  employees and through the efforts  of  the  Company's  real
estate  department. All of Universal's Only Deals and Odd's-N-End's  stores
are  leased  with  remaining lease terms extending one to six  years.  Most
leases have renewal options ranging from three to ten years.

      As part of its strategy to expand retail operations, the Company has,
at times, opened new stores in close proximity to existing stores where the
Company determined that the trade area could support a larger facility.  In
some  of these situations, the Company retained its existing store so  long
as  it  continued  to contribute store-level operating income.  While  this
strategy  was  designed  to  increase revenues  and  store-level  operating
income, it has had a negative effect on comparable stores net sales as some
customers  migrated  from  the existing store to the  close-by  larger  new
store.  Except for four relocations to larger, nearby sites and  one  store
closure as a result of a fire, the Company has never closed one of  its  99
Cents Only Stores.

 Store Management.  Substantially all merchandise decisions with respect to
pricing and advertising are made at the Company's headquarters. The Company
employs  ten  district  managers responsible  for  store  operations.  Each
district manager is responsible for up to seven stores. Reporting  to  each
district  manager  is  one merchandising supervisor responsible  for  store
merchandising  in  that district. The store managers  also  report  to  the
district  manager. These district managers are supervised by the  Company's
Vice President of Retail Operations. District managers visit each store  in
their district at least twice a week and focus on the implementation of the
Company's  policies,  operations  and  merchandising  philosophy.  District
managers also help train store management and assist store management  with
scheduling.  The  Vice  President of Retail Operations  also  supervises  a
cashiers  training school located at the Company's corporate offices.  Each
merchandising supervisor and his crew (usually six to ten experienced stock
people)  visit each of the stores at least once a week and help  the  store
managers  to  maintain and improve the appearance of the sales floor,  move
merchandise  sections,  organize the stockroom and train  store  personnel.
Typically the Company's stores are staffed with a manager and two or  three
assistant  managers.  Store managers are responsible  for  assessing  their
respective store's stocking needs and ordering accordingly.











 Advertising.  Advertising expenditures were $1.5 million, $2.0 million and
$3.1  million for 1996, 1997 and 1998, respectively, or 0.8%, 0.9% and 1.1%
of net sales, respectively. The Company manages its advertising without the
assistance of an outside agency. The Company allocates the majority of  its
advertising  budget  to  newspaper  and radio  advertising.  The  Company's
advertising  strategy  emphasizes the offering  of  nationally  recognized,
name-brand  merchandise at significant savings. The Company  minimizes  its
advertising  expenditures by an efficient implementation of its advertising
program   combined  with  word-of-mouth  publicity,  locations  with   good
visibility  and  efficient  signage. Because of the  Company's  distinctive
grand  opening  promotional  campaign, which  includes  the  sale  of  nine
televisions  for 99 cents each and nine microwave ovens for 99 Cents  each,
grand  openings  often attract long lines of customers  and  receive  media
coverage.  The  Company  believes that one of  its  biggest  challenges  is
attracting affluent customers to shop its stores. The Company also  uses  a
direct  mail campaign for new customers who are homeowners in more  upscale
neighborhoods.  The  Company believes the direct  mail  campaign  has  been
successful in attracting new customers.

Bargain Wholesale

      In  1998,  Bargain Wholesale sold merchandise to over 999  customers,
including  other  wholesalers, small local retailers,  large  regional  and
national retailers and exporters. During 1998, no single customer accounted
for  more  than  3%  of  Bargain Wholesale's net  sales.  In  1998  Bargain
Wholesale  shipped  $12.0  million  of  merchandise  to  Universal.   These
shipments  were  billed  at cost and were shipped during  the  period  from
January  through  September  16, 1998, prior  to  the  acquisition  of  the
majority  interest  in  Universal.  The Company  advertises  its  wholesale
operations primarily through direct mail. The Company plans to continue  to
expand  its  wholesale operations by continuing its focus on the  needs  of
large  domestic  and international accounts, expansion into new  geographic
markets, increasing its marketing and promotional programs, increasing  the
number of trade shows at which it exhibits, focusing on its recently opened
showrooms  in  Chicago  and New York City, enhancing customer  service  and
aggressively  contacting  its customers on a more  frequent  basis  through
telephone, facsimile and mail.

      The Company's wholesale product line is substantially similar to  its
retail  product  line,  although the Company  has  seen  strong  growth  in
reorderable  and private label merchandise within its wholesale operations.
Bargain  Wholesale has recently begun a program to provide merchandise  for
the "dollar" promotional aisles of certain supermarkets and drugstores. The
Company offers 15-day payment terms to its Bargain Wholesale customers  who
meet  the  Company's  credit standards. Customers located  abroad,  certain
smaller  customers or others who do not meet the Company's credit standards
must pay cash upon pickup or before shipment of merchandise.

      Bargain  Wholesale  complements the Company's  retail  operations  by
allowing  the  Company  to  purchase in larger volumes  at  more  favorable
pricing, to be exposed to a broader selection of opportunistic buys and  to
generate  additional net sales with relatively small incremental  increases
in  operating  expenses  contributing to strong  overall  margins  for  the
Company. Bargain Wholesale also allows the Company to purchase goods  which
it  would not otherwise purchase for distribution through its 99 Cents Only
Stores  and  provides the Company with a channel by which it may distribute
merchandise at prices other than 99 Cents.

     Bargain Wholesale conducts its wholesale operations through its 15,000
square  foot  product  showroom  located at  the  Company's  warehouse  and
distribution facility. The Company's showrooms in New York and Chicago also
continue to support Bargain Wholesale's operations.





Purchasing

      The Company's purchasing department staff consists of fourteen buyers
managed by the Company's Vice President of Purchasing. The Company's  Chief
Executive Officer also participates in the Company's purchasing activities.
The  Company's  buyers  purchase for 99 Cents Only  Stores,  Universal  and
Bargain  Wholesale. The Company believes a primary factor  contributing  to
its  success is its ability to identify and take advantage of opportunities
to  purchase merchandise with high customer interest at lower than  regular
wholesale  prices.  The Company purchases most of its merchandise  directly
from  the manufacturer. The Company's other sources of merchandise  include
wholesalers,  manufacturers' representatives, importers, barter  companies,
auctions,  professional finders and other retailers. The  Company  develops
new  sources  of merchandise primarily by attending industry  trade  shows,
advertising, marketing brochures and referrals.

       The  Company  has  no  continuing  contracts  for  the  purchase  of
merchandise and must continuously seek out buying opportunities  from  both
its  existing  suppliers and new sources. No single supplier accounted  for
more  than  2% of the Company's total purchases in 1998. During  1998,  the
Company  purchased  merchandise  from more than  999  suppliers,  including
Colgate-Palmolive  Company, Cheseborough Ponds, The  Dial  Corp.,  Eveready
Battery  Company  Inc., General Electric Company, Gerber Products  Company,
The Gillette Company, Hershey Foods Corp., Johnson & Johnson, Kraft General
Foods  Inc.,  Lever  Brothers Company, Mattel Inc., The  Mead  Corporation,
Nabisco  Inc., Nestle, The Pillsbury Company, The Procter & Gamble Company,
Revlon  Inc.  and  SmithKline Beecham Corporation. Many of these  companies
have been supplying products for the Company in excess of four years.

      A  significant portion of the merchandise purchased by the Company in
1998  was  close-out  or  special-situation merchandise.  The  Company  has
developed  strong  relationships with many manufacturers  and  distributors
that  recognize  that  their special-situation  merchandise  can  be  moved
quickly  through the Company's retail and wholesale distribution  channels.
The sale of close-out or special-situation merchanidse develops in response
to  the  need  of  manufacturers,  wholesalers  and  others  to  distribute
merchandise  outside  their normal channels. The  Company's  buyers  search
continuously  for  close-out opportunities. The  Company's  experience  and
expertise  in  buying  merchandise has enabled it to develop  relationships
with  many  manufacturers that often offer some or all of  their  close-out
merchandise  to  the Company prior to attempting to sell it  through  other
channels.  The  key  elements to these supplier relationships  include  the
Company's  (i)  ability to make immediate buy decisions,  (ii)  experienced
buying staff, (iii) willingness to take on large volume purchases and  take
possession of merchandise immediately, (iv) ability to pay cash  or  accept
abbreviated   credit   terms,   (v)   reputation   for   prompt    payment,
(vi)  commitment to honor all issued purchase orders and (vii)  willingness
to  purchase goods close to a target season or out of season. The Company's
relationship  with  its suppliers is further enhanced  by  its  ability  to
minimize   channel  conflict  for  the  manufacturer  by  quickly   selling
name-brand  merchandise without, if requested by the supplier,  advertising
or  wholesaling the item. The Company believes this reputation  along  with
its well-maintained, attractively merchandised stores have contributed to a
reputation among suppliers for protecting their brand image.

      In  1998,  reorderable merchandise accounted for a  majority  of  the
Company's   purchases.  The  Company's  strong  relationships   with   many
manufacturers and distributors, along with its ability to purchase in large
volumes,  also enable the Company to purchase reorderable name-brand  goods
at  discounted  wholesale  prices. The Company  focuses  its  purchases  of
reorderable  merchandise  on a limited number of  SKUs,  which  allows  the
Company to make purchases in large volumes.



      The  Company  is continuously developing new private  label  consumer
products  to  broaden  the assortment of merchandise that  is  consistently
available.  The  Company  also  has  an  in-house  import  operation  which
primarily  purchases reorderable merchandise. The Company imports  products
mainly  from  Southeast Asia. Merchandise directly imported by the  Company
accounted for approximately 7% of total merchandise purchased in 1998.  The
Company  primarily imports merchandise in product categories which are  not
brand  sensitive  to  consumers such as kitchen  items,  housewares,  toys,
seasonal products, petcare and hardware.

Warehousing and Distribution

      The  Company maintains an 880,000 square foot, single level warehouse
and distribution facility located on approximately 23 acres in the City  of
Commerce, California. The Company's headquarters are also located  in  this
facility.  The  site  is located near downtown Los Angeles  and  has  close
access to the Southern California freeway and rail systems and the ports of
Los  Angeles and Long Beach. The warehouse has 129 dock doors available for
receiving  or  shipping, over 25 dock levers and,  new  racking  with  over
10,000  pallet positions. Most of the Company's merchandise is  shipped  by
truck  directly  from manufacturers and other suppliers  to  the  Company's
warehouse  and distribution facility. As part of its distribution  network,
the Company owns a fleet of 24 tractors and 44 trailers which are primarily
used  to deliver merchandise to its stores. Full truck deliveries are  made
from  its distribution center to each store typically three times  a  week.
Product  is delivered to a store the day after the store places a scheduled
order.  Most  of  the merchandise is requested by the store in  conjunction
with  the Company's buyers (i.e., ordered by the store manager) as  opposed
to  being determined by the distribution center (i.e., sent by order of the
Company's  distribution  personnel).  The  Company  attempts  to  optimally
utilize  its fleet by a combination of filling outbound trucks to  capacity
and  instituting  a backhaul program whereby products are  picked  up  from
suppliers  in  conjunction with deliveries to stores in  the  same  general
area.  Backhauls accounted for approximately half of all merchandise picked
up  by the Company's trucks. The Company also uses its own vehicles to pick
up  certain  shipments  at local ports and rail  yards.  The  size  of  the
Company's  distribution  center allows storage of bulk  one-time  close-out
purchases and seasonal or holiday items without incurring additional costs.
The  Company believes that its current warehouse and distribution  facility
will be able to support distribution to approximately 150 additional stores
in  Southern  California. The Company also maintains a 210,000 square  foot
distribution facility in New Hope, Minnesota, which serves as  a  principal
distribution facility for Universal. This lease expires in July 2000. There
can  be  no  assurance that the Company's existing warehouse  will  provide
adequate storage space for the Company's long-term storage needs.

Information Systems

     The Company's business is currently supported by a standard accounting
and  financial  reporting system utilizing a PC-based  local  area  network
(LAN)   and  a  separate  partially  customized  inventory  control  system
processed by a Hewlett-Packard RISC-based computer. The Company's inventory
management  system  is  designed to track all  inventory  received  at  the
Company's distribution center and shipped to each retail stores location or
Bargain  Wholesale  customer.  The Company's systems  allow  management  to
monitor  inventory and assist store operations. In light of  the  Company's
continuously  changing merchandise, single price point and  other  factors,
the Company has determined not to install a point of sale system in its  99
Cents Only Stores. The retail order processing system has been designed  to
expedite the processing of retail store orders for both store and warehouse
personnel.  Buyers  use  inventory and historical shipment  information  to
assist  in reordering and inventory planning functions. The Company employs
an  accounts  payable  and  general ledger  software  package  that  shares
information  with the inventory management, order processing  and  accounts
receivable  system.  This system is currently being updated  to  a  network
windows  version  and will integrate Universal's operations  as  well.  The
Company  has  implemented various reporting tools  to  support  the  timely
generation   of  financial  and  managerial  reports  from  the   Company's
information systems. The Company has installed personal computers  in  each
99  Cents  Only  Store  location for use with a  popular  suite  of  retail
applications purchased in late 1997. The Company internally refers to  this
store-level  personal  computer implementation as its "C.E.N.T.S."  system.
The  first  phase of C.E.N.T.S., which includes electronic mail, electronic
forms and time and attendance module has been fully implemented as of  June
1998. The second phase of C.E.N.T.S., which includes sales forecasting  and
labor  scheduling modules have been implemented and is being rolled out  to
the  stores  beginning in the second quarter of 1999. Future  modules  will
include  daily sales reporting and sales/payroll analysis, and may  include
certain store-level human resources functions. The Company also embarked on
it's  implementation of store ordering system to allow for a more efficient
order processing using handheld units and processed through it's C.E.N.T.S.
system. Universal uses NCR scanning equipment in its stores to track sales,
SKU  level  inventory  and markdowns. This POS system  provides  real  time
information to manage day to day operations at Universal.

      The  Company's  accounting  and management  information  systems  are
overseen by a director of information systems who manages a staff  of  four
employees.   The  Company  believes  that  its  accounting  and  management
information system and inventory control system adequately provide for  its
current  needs. The Company intends to continue to update and  enhance  its
systems in order to improve capabilities and provide for planned growth. If
the  Company should experience faster than anticipated growth, the  Company
may  be  required  to  install a new management  information  or  inventory
control system or undergo a significant modification of its current systems
to  accommodate a larger business. The Company has completed an  assessment
and  has  determined that it will be required to modify or replace portions
of  its  software so that its computer systems will function properly  with
respect to dates in the year 2000 and thereafter. The project cost  is  not
anticipated to have a material effect on the results of operations  and  is
scheduled to be completed no later than mid-1999.

Competition

     The Company faces competition in both the acquisition of inventory and
sale  of merchandise from other wholesalers, discount stores, single  price
point  merchandisers, mass merchandisers, food markets, drug  chains,  club
stores  and  other  retailers. Industry competitors also  include  a  large
number of privately held companies and individuals. In some instances these
competitors are also customers of the Company's Bargain Wholesale division.
There  is  increasing  competition with other  wholesalers  and  retailers,
including  other  deep-discount retailers,  for  the  purchase  of  quality
close-out   and   other  special-situation  merchandise.  Some   of   these
competitors have substantially greater financial resources and buying power
than  the  Company. The Company's ability to compete will  depend  on  many
factors  including  the  success  of  its  purchase  and  resale  of   such
merchandise  at  lower prices than the competition. The  Company  may  face
intense  competition in the future from new entrants in  the  deep-discount
retail  industry, among others, that could have an adverse  effect  on  the
Company's business and results of operations.

Employees

      At  December 31, 1998, the Company had 4,433 employees. 99 Cents Only
Stores  had  2,583  employees (2,190 in its retail operation,  296  in  its
warehouse and distribution facility, 83 in its corporate offices and 14  in
its   wholesale  division),  of  which  approximately  270  are   part-time
employees.  None  of  the  Company's employees is  party  to  a  collective
bargaining agreement. The Company considers relations with its employees to
be  good.  The Company offers certain benefits, including health  insurance
and  401(k)  benefits to its full time employees. All members of management
of  the  Company  (other  than David Gold, the  Company's  Chief  Executive
Officer, Howard Gold, Senior Vice President Distribution, Jeff Gold, Senior
Vice  President Real Estate and Information Systems, Eric Schiffer,  Senior
Vice President Operations and Finance and Karen Schiffer Senior Buyer)  and
all  employees, part-time or full-time, with tenure of more than six months
with  the Company receive an annual grant of stock options. Also, Universal
has  1850  employees  124 in warehouse and administration   and  1,726  are
employed in the retail operations.
Trademarks and Service Marks

      "99 Cents Only Stores", "99 Cents", Only Deals and Odd's-N-End's  are
registered service marks of the Company and are listed on the United States
Patent  and  Trademark Office Principal Register. Bargain  Wholesale  is  a
service  mark  used by the Company. Management believes that the  Company's
trademarks, service marks and trade names are an important but not critical
element of the Company's merchandising strategy.

Environmental Matters

      Under  various  federal,  state  and  local  environmental  laws  and
regulations,  a current or previous owner or occupant of real property  may
become  liable  for  the  costs  of removal  or  remediation  of  hazardous
substances  at such real property. Such laws and regulations  often  impose
liability without regard to fault. As of March 25, 1999 the Company  leases
130  of  its 135 existing stores, as well as its warehouse and distribution
facilities (where its executive offices are located). The Company currently
intends  to  exercise an option to purchase the warehouse and  distribution
facility  in Commerce, California, in December 2000, the end of  the  lease
term.  In connection with such properties, the Company could be held liable
for the costs of remedial actions with respect to hazardous substances.  In
addition, the Company operates one underground diesel storage tank and  one
above-ground  propane  tank  at its warehouse  and  distribution  facility.
Although  the Company has not been notified of, and is not otherwise  aware
of,  any specific current environmental liability, claim or non-compliance,
there  can be no assurance that the Company will not be required  to  incur
redemption  or  other  costs in the future in connection  with  its  leased
properties or its storage tanks or otherwise. In the ordinary course of its
business,  the  Company from time to time handles or disposes  of  ordinary
household products that are classified as hazardous materials under various
federal,  state and local environmental laws and regulations.  The  Company
has adopted policies regarding the handling and disposal of these products,
and  has implemented a training program for employees on hazardous material
handling  and  disposal.  There  can be no assurance,  however,  that  such
policies  or  training  will  be successful in  assisting  the  Company  in
avoiding violations of environmental laws and regulations relating  to  the
handling and disposal of such products in the future.

Item 2. Properties

      As  of  March  25,  1999, the Company leased 130  of  its  135  store
locations.  The Company currently leases 13 store locations and  a  parking
lot associated with one of these stores from the Gold Family.

      Management  believes  that  the Company's stable  operating  history,
excellent  credit  history  and  ability to generate  substantial  customer
traffic give the Company significant leverage when negotiating lease terms.
Most  of  the Company's leases provide for fixed rents, subject to periodic
adjustments. Certain of the Company's store leases contain provisions  that
grant the Company a right of first refusal to acquire the subject site.

      The  following  table  sets forth, as of the  date  of  this  filing,
information  relating  to  the expiration dates of  the  Company's  current
retail stores leases assuming the exercise of all options to extend:

Expiri  Expirin Expirin   Expiring
  ng       g       g        2005
 1999   2000-20 2002-20  and Beyond
          01       04
                                    
10(a)         43       48         29
                                    
(a)  Includes six stores leased on a month to month basis.

      The  Company  has  purchased five locations, one opened  in  each  of
November 1996, February 1997, November 1997, September 1998 and March 1999.
The Company may also purchase other locations in the future.

      The  Company  leases its warehouse and distribution  facilities.  The
Company's  executive  offices are also located in the  Commerce  California
facility.  In December 1993, the Company entered into a seven  year  triple
net  lease agreement with a purchase option, which is accounted for on  the
Company's financial statements as a capitalized lease obligation. The lease
included  the  Company's initial payment of $2.75 million  and  eighty-four
monthly  payments of $70,000. As part of the lease agreement,  the  Company
received  $500,000 in 1993 and $1.0 million in 1994 to apply to  renovation
costs.  The facility's fire prevention and lighting systems were completely
upgraded.  A state-of-the-art sprinkler system, hundreds of new smoke-vents
(skylights)  and  energy  efficient lighting  with  motion  detectors  were
installed.  The Company has the option to purchase the property  for  $10.5
million  at  the  end  of the lease and the Company  currently  intends  to
exercise the option. If the Company does not exercise the purchase  option,
the  Company  will be subject to a $7.6 million penalty. The  Company  also
maintains  a  210,000  square  foot  distribution  facility  in  New  Hope,
Minnesota, which serves as a principal distribution facility for Universal.
This lease requires minimum monthly payments of $48,000 and expires in July
2000.

Item 3. Legal Proceedings

      The  Company is periodically subject to legal actions which arise  in
the  ordinary course of its business. The Company does not believe that any
pending  action  is  material  to its results of  operations  or  financial
condition.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

                                 PART II


Item  5.  Market  for  Registrant's Common Equity and  Related  Stockholder
Matters

      The  Common Stock is traded on the New York Stock Exchange under  the
symbol  "NDN."  The  following table sets forth, for the  calendar  periods
indicated, the high and low closing prices per share of the Common Stock as
reported  by the New York Stock Exchange. The Common Stock was not publicly
traded prior to the Company's initial public offering on May 23, 1996.  All
stock  prices have been restated to reflect two five-for-four stock  splits
effected  in  the form of stock dividends which were paid on  November  28,
1997 and November 12, 1998.

                                                        Price
                                                        Range
                                                        High   Low
                                                                    
1997:                                                               
   First Quarter                                          $12.8 $10.2
                                                            7     4
   Second Quarter                                         19.28 12.40
   Third Quarter                                          22.07 17.28
   Fourth Quarter                                         24.45 20.48
1998:                                                               
   First Quarter                                          $31.6 $21.6
                                                            0     0
   Second Quarter                                         34.66 27.15
   Third Quarter                                          37.45 28.10
   Fourth Quarter                                         49.13 29.40
1999:                                                               
   First Quarter through March 25, 1999                   49.13 39.75

      The closing price as reported on March 25, 1999 on the New York Stock
Exchange  is set forth on the cover page of this Form 10K. As of March  25,
1999,  the  Company  had approximately 4,441 holders of  the  Common  Stock
including 457 shareholders of record.

     The Company has not paid any cash dividends with respect to the Common
Stock.  The Company presently intends to retain future earnings to  finance
its development and expansion and therefore does not anticipate the payment
of  any  cash  dividends  in  the foreseeable  future.  Payment  of  future
dividends,   if  any,  will  depend  upon  future  earnings   and   capital
requirements of the Company and other factors, which the Board of Directors
considers appropriate.

Item 6. Selected Financial Data

      The  following table sets forth selected financial and operating data
of  the Company for the periods indicated. The following selected statement
of  operations  data for each of the three years ended December  31,  1996,
1997, and 1998, and the balance sheet data as of December 31, 1997 and 1998
are  derived  from the financial statements and the notes thereto  included
elsewhere  herein  audited  by  Arthur  Andersen  LLP,  independent  public
accountants,  as set forth in their report also included elsewhere  herein.
The selected statements of operations data for the years ended December 31,
1994 and 1995, and the balance sheet data as of December 31, 1994, 1995 and
1996  are derived from financial statements audited by Arthur Andersen  LLP
not   included  herein.  The  following  information  should  be  read   in
conjunction  with  "Management's  Discussion  and  Analysis  of   Financial
Condition  and Results of Operations" and the Financial Statements  of  the
Company and notes thereto included elsewhere in this report.

                               Year
                              Ended
                             December
                               31,
                               1994     1995     1996     1997      1998
                             (Amounts
                                in
                             thousand
                                s,
                              except
                               per
                              share
                               and
                             operatin
                             g data)
                                                                           
Statement of Operations Data:                                              
Net sales:                                                                 
   99 Cents Only Stores        $110,724 $121,998 $143,163  $186,024 $238,867
  Universal                           -        -        -         -   31,107
   Other retail sales(a)          2,097      492        -         -        -
   Bargain Wholesale             18,916   30,337   40,480    44,831   53,299
                                                                           
                                                                          
        Total                      131,737  152,827  183,643   230,855  323,273
Cost of sales                   88,045  102,160  120,922   146,797  199,618
                                                                           
Gross profit                    43,692   50,667   62,721    84,058  123,666
Selling, general and                                                       
administrative expenses:
   Operating expenses            31,319   32,169   37,683    49,850   73,941
   Depreciation and               1,342    1,640    2,009     2,989    5,053
amortization
                                                                           
                                                                          
        Total operating expenses    32,661   33,809   39,692    52,839   78,994
                                                                           
                                                                          
Operating income                11,031   16,858   23,029    31,219   44,661
Special litigation provision   (2,900)        -        -         -        -
reversal(b)
Interest (income) expense,         764      755    (126)     (855)  (1,403)
net
Equity loss and minority             -        -        -         -    1,429
interest
                                                                           
                                                                          
Income before provision for                                                
income taxes                   13,167   16,103   23,155    32,074   44,635
Provision for income                                                       
taxes(c):
   Pro forma                      5,163    6,509    9,453         -        -
                                                                           
                                                       
   Historical                        62      156    2,418    13,124   17,942
                                                                           
                                                                          
Net income(c):                                                             
   Pro forma                     $8,004   $9,594  $13,702         -        -
                                                                           
                                                       
                                                       
   Historical                   $13,105  $15,947  $20,737   $18,950  $26,693
                                                                           
                                                                          
                                                                          
                                                                          
Earnings per common
  share(c)(h):
   Pro forma_Basic                $0.51    $0.62    $0.68         -        -
   Pro forma_Diluted               0.51     0.62     0.62         -        -
   Historical_Basic                0.85     1.02     1.03     $0.82    $1.11
   Historical_Diluted              0.85     1.02     0.94      0.81     1.09
Weighted average number of                                                 
common shares outstanding:
   Pro forma_Basic               15,514   15,514   20,129         -        -
   Pro forma_Diluted (d)         15,514   15,514   21,999         -        -
   Historical_Basic              15,514   15,514   20,129    23,178   24,022

                      (Continued from previous page)



Company Operating Data:                                                    
Sales Growth                                                               
   99 Cents Only Stores            8.7%    10.2%    17.3%     29.9%    28.4%
   Universal                          -        -        -         -        -
   Bargain Wholesale                4.9     60.4     33.4      10.8     18.9
   Total Company sales              7.1     16.0     20.2      25.7     40.0
Gross margin                      33.2     33.2     34.2      36.4     38.3
Operating margin                   8.4     11.0     12.6      13.5     13.8
Net income margin:                                                         
   Pro forma                        6.1      6.3      7.5         _        _
   Historical                       9.9     10.4     11.3       8.2      8.3
Retail Operating Data(e):                                                  
99 Cents Only Stores at end                                                
of period                          34       36       43        53       64
Universal stores end of              -        -        -         -       75
period
Change in comparable stores     (1.4)%   (0.2)%     2.8%      1.5%     4.3%
net sales 99 Cents Only
Stores
Change in comparable stores                                                
net sales Universal (f)             -        -        -         -    10.4%
Average net sales per store                                                
open the full year 99 Cents                                               
Only Stores                    $3,267   $3,467   $3,667    $3,750   $4,147
Average net sales per                                              
estimated saleable square                                         
foot 99 Cents Only Stores        $396     $397     $389      $354     $335
(g)
Estimated saleable square                                                  
footage at year end 99                                                    
Cents Only Stores             293,000  332,100  455,200   631,500  822,900
Estimated saleable square                                                  
footage at year end for                                                   
Universal's stores                  -        -        -         -  694,400

                              As of
                             December
                               31,
                               1994     1995     1996     1997      1998
                                                                           
Balance Sheet Data:                                                        
   Working capital              $24,713  $28,690  $58,822   $60,791 $110,510
   Total assets                  51,419   57,598   98,997   119,443  198,123
   Long-term debt                     _        _        _         _        _
   Capital lease obligation,                                                
including current portion      10,548    9,977    9,366     8,709    8,260
   Total shareholders' equity    30,811   35,558   76,505    96,308  164,366
                                                                           


(a)  The  Company operated other stores during the periods presented  under
     different  trade  names pending conversion to  99  Cents  Only  Stores
     format or their eventual closing. Only one such store was operated  by
     the Company in 1995 and that store was closed in May 1995.

(b)  In  1993, the Company provided a reserve of $3.1 million for estimated
     litigation  and  interest costs. As a result of a settlement  of  this
     litigation  in  1995,  $200,000 was charged to  the  reserve  and  the
     remaining $2.9 million was included in income in 1994.

(c)  Prior  to May 1, 1996 the Company was treated as an S corporation  for
     federal  and state income tax purposes. The presentation for 1993-1996
     reflects a pro forma provision for income taxes as if the Company  had
     always  been  a  C corporation, at an assumed effective  tax  rate  of
     41.0%, plus the effect of deferred taxes and tax credits.

(d)  Diluted  weighted  average common equivalent shares  in  1996  include
     1,362,000  shares  to fund certain notes issued and dividends  payable
     declared  to  then  existing  shareholders,  in  connection  with  the
     termination of the Company's status as an S corporation.

(e)  Includes retail operating data solely for the Company's 99 Cents  Only
     Stores.

(f)  For  the  years  1993-1996,  change in  comparable  stores  net  sales
     compares  net  sales for stores open the entire two periods  compared.
     Commencing in 1997, change in comparable stores net sales compares net
     sales for all stores open at least 15 months.

(g)  Computed based upon estimated total saleable square footage of  stores
     open for the entire period.

(h)  All  earnings  per  share amounts have been restated  to  reflect  the
     adoption of SFAS No. 128, "Earnings per Share," effective December 15,
     1997.  For  further discussion of the change in accounting,  refer  to
     Note 4 of the Notes to the Financial Statements.

Item  7.  Management's Discussion and Analysis of Financial  Condition  and
Results of Operations

      The  following discussion and analysis should be read  in  connection
with "Item 6_Selected Financial Data," and "Item 8_Financial Statements."

General

      The  Company has been engaged since 1976 in the purchase and sale  of
name-brand,  close-out and regularly available general  merchandise.  Since
that  time,  the  Company has sold its merchandise  on  a  wholesale  basis
through  its  Bargain Wholesale division. On August 13, 1982,  the  Company
opened  its first 99 Cents Only Stores location and as of March  25,  1999,
operates a chain of 66 deep-discount 99 Cents Only Stores and 69 Universal,
Only  Deals and Odd's-N-End's stores. The Company's growth during the  last
three  years has come primarily from new store openings and growth  in  its
Bargain  Wholesale  division. The Company opened eight,  ten  and  thirteen
stores  in  1996,  1997  and  1998, respectively  (seven,  ten  and  eleven
respectively,  net of relocated stores). The Company opened two  stores  in
the  first three months of 1999, one in Los Angeles, California and one  in
Van  Nuys, California and plans to open an additional 11 net stores  during
the  remainder of the year. Of the additional stores planned for 1999,  the
Company  has secured sites for six additional store locations and has  five
additional locations in escrow to acquire the leasehold interest.

      Bargain  Wholesale's growth over the three years ended  December  31,
1998 was primarily attributable to an increased focus on large domestic and
international  accounts  and  expansion into new  geographic  markets.  The
Company   generally  realizes  a  lower  gross  profit  margin  on  Bargain
Wholesale's net sales compared retail net sales. However, Bargain Wholesale
complements  the  Company's retail operations by allowing  the  Company  to
purchase  in  larger  volumes at more favorable  pricing  and  to  generate
additional  net  sales  with  relatively  small  incremental  increases  in
operating expenses.


      Comparable  stores net sales improved in 1996, 1997  and  1998  after
declining  during 1994 and 1995. The Company believes that this  trend  has
resulted in part from its expansion strategies. In the past, as part of its
strategy  to  expand  retail operations, the Company has  at  times  opened
larger  new stores in close proximity to existing stores where the  Company
determined that the trade area could support a larger facility. In some  of
these  situations, the Company retained its existing store so  long  as  it
continued  to contribute store-level operating income. While this  strategy
was  designed to increase revenues and store-level operating income, it has
had  a  negative  impact on comparable store net sales  as  some  customers
migrated  from  the  existing store to the larger new  store.  The  Company
believes  that  this strategy has impacted its historical comparable  sales
growth.

      During  the  three  years  in the period  from  January  1,  1996  to
December  31,  1998, average net sales per estimated saleable  square  foot
(computed on 99 Cents Only Stores open for a full year) declined from  $397
per  square foot to $335 per square foot. This trend reflects the Company's
determination  to  target  larger  locations  for  new  store  development.
Existing  stores  average  approximately 15,000 gross  square  feet.  Since
January  1,  1995,  the  Company has opened 35 new  stores  (including  two
relocations in 1995, one in 1996 and two in 1998) that average over  19,000
gross  square  feet.  The  Company currently targets  new  store  locations
between  15,000  and  25,000  gross feet.  Although  it  is  the  Company's
experience  that larger stores generally have lower average net  sales  per
square  foot  than smaller stores, larger stores generally  achieve  higher
average annual store revenues and operating income.

     99 Cents Only Stores has increased its net sales, operating income and
net  income  in each of the last five years. In 1998 it had  net  sales  of
$323.3  million, operating income of $44.7 million and net income of  $26.7
million,  representing  a  40.0%,  43.1%  and  40.9%  increase  over  1997,
respectively. From 1994 through 1998, the Company had a CAGR in net  sales,
operating income and net income of 25.5%, 42.0% and 35.5%, respectively.

Recent Developments

      In November 1997 the Company acquired common stock of Universal equal
to  48% of the outstanding common stock. On September 16, 1998, the Company
acquired,  pursuant to an exchange offer, an additional 4.3 million  shares
or  approximately 46% and now owns 94% of the outstanding Common  Stock  of
Universal. Pursuant to the exchange offer, the Company exchanged one  share
of  its common stock for every 16 outstanding shares of Universal plus  the
associated common share purchase rights. The offer closed on September  16,
1998. In addition the Company acquired Odd's-N-End's by merger on September
30,  1998.  Together,  these  two companies operate  42  retail  stores  in
Minnesota  and the surrounding upper Midwest region, nine retail stores  in
Texas  and  22  retail stores in upper New York State. The  Company  issued
shareholders of Universal 336,986 shares of the Company's Common Stock  and
paid approximately $843,243 to holders of Odd's-N-End's common stock.

      Prior  to  September  16, 1998 the Company's  ownership  interest  in
Universal  was  accounted for using the equity method. The  impact  of  the
inclusion of Universal in the Company's financial statements for  the  nine
months  ended  September  30, 1998 was a charge  of  $1.4  million.  As  of
December  31,  1998, the Company consolidated the results of operations  of
Universal with those of the Company for the period from September 17,  1998
to  December 31, 1998. The Company recorded approximately $8.6  million  in
goodwill  on its balance sheet, which will be amortized over 30  years  and
will   result   in  increased  amortization  expense  in  future   periods.
Universal's  business is seasonal. Historically, all of its  earnings  have
been generated in the fourth quarter, and it has incurred losses during the
first  three  quarters  of  the  calendar year.  In  conjunction  with  the
acquisition  of Universal the Company retired Universal's revolving  credit
line  which  totaled approximately $12.5 million. The Company continues  to
support  Universal  by  providing trade credit  and  other  advances.  Such
amounts  are provided from the Company's ongoing cash flows from operations
and its existing working capital.

      The  Company  has  made in this Form 10-K forward-looking  statements
within  the  meaning  of Section 27A of the Securities Act  concerning  the
Company's  operations,  expansion  plans, economic  performance,  financial
condition, store openings, purchasing abilities, sales per square foot  and
comparable   store   net  sales  trends  and  capital  requirements.   Such
forward-looking statements may be identified by the use of  words  such  as
"believe",   "anticipate,"  "intend"  and  "expect".  Such  forward-looking
statements are subject to various risks and uncertainties, certain of which
are  beyond  the Company's control. Actual results could differ  materially
from  those currently anticipated due to a number of factors. Some of those
factors  include (i) the Company's ability to open new stores on  a  timely
basis  and operate them profitably, (ii) the Company's ability to integrate
Universal  and Odd's-N-End's and to operate their stores at multiple  price
points  and in different geographic locations, (iii) the orderly  operation
of  the  Company's  receiving  and distribution  process,  (iv)  inflation,
consumer   confidence  and  other  general  economic   factors,   (v)   the
availability of adequate inventory and capital resources, (vi) the risk  of
a  disruption  in  sales volume in the fourth quarter  and  other  seasonal
factors   as   discussed  in  "_Seasonality  and  Quarterly  Fluctuations,"
(vii)  dependence on key personnel and control for the Company by  existing
shareholders  and (viii) increased competition from new entrants  into  the
deep-discount  retail  industry.  The  Company  does  not  ordinarily  make
projections of its future operating results and undertakes no obligation to
publicly  update  or revise any forward-looking statements,  whether  as  a
result of new information, future events or otherwise.

Results of Operations

      The  following  table sets forth, for the periods indicated,  certain
selected income statement data, including such data as a percentage of  net
sales:

                                    Years
                                    Ended
                                   Decemb
                                   er 31,
                                    1996       1997         1998
                                   (Amoun
                                    ts in
                                   thousa
                                    nds)
                                                                           
Net sales:                                                                 
                                                                           
   99 Cents Only Stores               $143,1  78.0 $186,0  80.6  $238,8 73.9
                                        63     %     24     %      67    %
  Universal                                -     -      -     -  31,107  9.6
   Bargain Wholesale                  40,480  22.0 44,831  19.4  53,299 16.5
                                                                           
     Total                              183,64  100. 230,85  100.  323,27 100.
                                         3     0      5     0       3    0
Cost of sales                        120,92  66.8 146,79  63.6  199,61 61.7
                                         2            7             8
                                                                           
   Gross profit                       62,721  34.2 84,058  36.4  123,66 38.3
                                                                    6
Selling, general and administrative                                        
expenses:
   Operating expenses                 37,683  20.5 49,850  21.6  73,941 22.9
   Depreciation and amortization       2,009   1.1  2,989   1.3   5,053  1.6
                                                                           
     Total                              39,692  21.6 52,839  22.9  78,994 24.5
                                                                           
Operating income                     23,029  12.6 31,219  13.5  44,661 13.8
Interest (income) expense, net        (126)     -  (855)  (0.4  (1,403 (0.4
                                                            )       )    )
Equity loss and minority interest         -     -      -     -   1,429  0.4
                                                                           
Income before provision for income   23,155  12.6 32,074  13.9  44,635 13.8
taxes
Provision for income taxes(a):                                             
   Pro forma                           9,453   5.1      -     -       -    -
                                                                           
   Historical                          2,418   1.3 13,124   5.7  17,942  5.5
                                                                           
Net income(a):                                                             
  Pro forma                           $13,70  7.5%      -     -       -    -
                                         2
                                                                           
  Historical                        $20,73  11.3 $18,95  8.2%  $26,69 8.3%
                                         7     %      0             3
                                                                           
                                                                          




(a)  Reflects  a pro forma provision for federal income taxes in  1995  and
     1996.  Effective May 1, 1996 the Company changed in  form  from  an  S
     corporation to a C corporation, a change that affected its  operations
     and  financial  condition by an increase in the level of  federal  and
     state income taxes. As an S corporation, the Company's income, whether
     or  not  distributed, was taxed at the shareholder level  for  federal
     income  tax  purposes.  For  California  franchise  tax  purposes,   S
     corporations  were taxed at 1.5% of taxable income in 1995  and  1996.
     Currently, the top federal tax rate for C corporations is 35% and  the
     corporate tax rate in California is 8.84%. The pro forma provision for
     income  taxes in the accompanying selected income statement  data  for
     the  Company  shows  results as if the Company had  always  been  a  C
     corporation   and  had  adopted  Statement  of  Financial  Accountings
     Standards  No. 109 "Accounting for Income Taxes" prior to  January  1,
     1991.  The change in form has affected the earnings and cash  flow  of
     the Company.


Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

 Net Sales.  Total net sales increased $92.4 million, or 40.0%, from $230.9
million  in 1997 to $323.3 million in 1998. 99 Cents Only Stores net  sales
increased  approximately $52.8 million, or 28.4%, from  $186.0  million  in
1997  to  $238.9 million in 1998. Universal accounted for $31.1 million  of
the  $92.4  million  increase in net sales from  the  date  of  acquisition
(September  16,  1998  to December 31, 1998). Bargain Wholesale  net  sales
increased approximately $8.5 million, or 18.9%, from $44.8 million in  1997
to  $53.3  million in 1998. There were no other retail operations in  1998.
The  increase in 99 Cents Only Stores net sales was attributed to  the  net
effect  of 11 stores opened in 1998 and the full effect of 10 stores opened
in  1997. Comparable stores net sales increased 4.3%, or $7.1 million, from
1997  to  1998.  The increase in Bargain Wholesale net sales was  primarily
attributed  to  an  increased  focus on large  international  and  domestic
accounts  and  expansion  into  new geographic  markets.  Offsetting  these
positive  developments was the adverse effect of the slow-down in shipments
to export brokers.

  Gross profit.  Gross profit, which consists of total net sales, less cost
of  sales,  increased  approximately $40.0 million, or  47.1%,  from  $84.1
million  in  1997 to $123.7 million in 1998. The increase in  gross  profit
dollars  was  primarily due to higher net sales. As  a  percentage  of  net
sales, gross profit improved from 36.4% in 1997 to 38.3% in 1998 reflecting
the  effect  of  a  5 to 1 ratio in 1998 of retail sales, versus  wholesale
sales.  The  ratio  in  1997  was  4 to 1,  retail  versus  wholesale.  The
consolidation of Universal retail, during the fourth quarter of  1998  also
contributed to this increase.

  Selling, general and administrative.  Selling, general and administrative
expenses  ("SG&A"), which include operating expenses and  depreciation  and
amortization, increased $26.2 million, or 49.5%, from $52.8 million in 1997
to  $79.0 million in 1998. The consolidation of Universal during the fourth
quarter  accounted  for 46% of the dollar increase.  The  remaining  dollar
increase  over 1997 is associated with 1998 new store growth and  the  full
year effect of 1997 new stores. SG&A increased as a percentage of net sales
from  22.9% in 1997 to 24.4% in 1998. The increase as a percentage  of  net
sales  is primarily all due to the consolidation of Universal for the  full
fourth  quarter.  The retail operating costs including  rent,  freight  and
advertising, for Universal are greater as a percentage of sales because  of
the  geographic dispersion of the retail stores. In addition,  the  minimum
wage in California increased to $5.75 per hour in March 1998.

  Operating  income.  Operating income increased $13.4 million,  or  43.1%,
from  $31.2 million in the 1997 period to $44.7 million in 1998.  Operating
income  increased as a percentage of net sales from 13.5% in 1997 to  13.8%
in 1998 primarily due to the increase in gross margin as discussed above.


  Interest  (income)  expense.  Interest (income) expense  relates  to  the
interest  income  on the Company's marketable securities, net  of  interest
expense  on the Company's capitalized warehouse lease. The Company  had  no
bank  debt  during 1998. Interest income earned on the Company's marketable
securities was $2.2 million in 1998. At December 31, 1998, the Company held
$43.9  million  in  short-term investments and $2.7  million  in  long-term
investments.  The Company's short-term investments are comprised  primarily
of  investment grade federal and municipal bonds and commercial paper,  all
with  short-term maturities. The Company generally holds investments  until
maturity.

Equity  loss  and  Minority  Interest.   The  equity  loss  represents  the
Company's  share of Universal's loss from January 1, 1998 through September
16,  1998. During this time the Company had a 48 percent ownership interest
in  Universal.  On September 17, 1998 the Company increased  its  Universal
ownership  to  94  percent.  The minority interest  represents  the  income
attributable to the 6 percent outside ownership of Universal.

Provision  for income taxes.  The provision for income taxes  in  1998  was
$17.9  million, or 5.6% of net sales, compared to 13.1 million, or 5.7%  of
net  sales, in 1997. The effective combined federal and state rates of  the
provision  for  income  taxes  were 40.2%  and  40.9%  in  1998  and  1997,
respectively. The effective combined federal and state rates are less  than
the statutory rates in each period due to the benefit of certain tax-exempt
interest and other credits. See Note 5 of "Notes to Financial Statements."

  Net  income.   As  a  result  of the items discussed  above,  net  income
increased  $7.7  million, or 40.9%, from $19.0 million  in  1997  to  $26.7
million  in 1998. Net income as a percentage of net sales was 8.2% in  1998
and 8.2% in 1997.


Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

 Net Sales.  Total net sales increased $47.2 million, or 25.7%, from $183.6
million  in 1996 to $230.9 million in 1997. 99 Cents Only Stores net  sales
increased  approximately $42.9 million, or 29.9%, from  $143.2  million  in
1996  to  $186.0 million in 1997, and Bargain Wholesale net sales increased
approximately $4.4 million, or 10.7%, from $40.5 million in 1996  to  $44.8
million  in  1997.  There  were no other retail  operations  in  1997.  The
increase in 99 Cents Only Stores net sales was attributed to the effect  of
10  stores  opened  in 1997 and the full effect of seven stores  opened  in
1996.  Comparable  stores net sales increased 1.5%, or $2.8  million,  from
1996  to  1997.  The increase in Bargain Wholesale net sales was  primarily
attributed  to  an  increased  focus on large  international  and  domestic
accounts  and  expansion  into  new geographic  markets.  Offsetting  these
positive developments was the adverse effect of the slow-down in the  Asian
markets in which the Company markets its goods.

  Gross profit.  Gross profit, which consists of total net sales less  cost
of  sales,  increased  approximately $21.3 million, or  34.0%,  from  $62.7
million in 1996 to $84.1 million in 1997. The increase in gross profit  was
primarily  due  to  higher net sales. As a percentage of net  sales,  gross
profit  improved  from 34.2% in 1996 to 36.4% in 1997 reflecting  favorable
merchandise cost and mix factors at its 99 Cents Only Stores and the effect
of a large percentage of net sales derived from 99 Cents Only Stores, which
typically operate at higher gross margins than Bargain Wholesale.

  Selling, general and administrative.  Selling, general and administrative
expenses  ("SG&A"), which include operating expenses and  depreciation  and
amortization, increased $13.1 million, or 33.1%, from $39.7 million in 1996
to  $52.8 million in 1997, primarily due to increased costs associated with
new   store   growth  and  increased  executive  compensation  expense   of
approximately  $0.8 million. SG&A increased as a percentage  of  net  sales
from  21.6% in 1996 to 22.9% in 1997. The increase as a percentage  of  net
sales was primarily due to increased payroll costs primarily resulting from
state and federally mandated increases in the minimum wage.



 Operating income.  Operating income increased $8.2 million, or 35.6%, from
$23.0 million in the 1996 period to $31.2 million in 1997. Operating income
increased as a percentage of net sales from 12.6% in 1996 to 13.5% in  1997
for the reasons discussed above.

  Interest  (income)  expense.  Interest (income) expense  relates  to  the
interest  income  on the Company's marketable securities  net  of  interest
expense  on the Company's capitalized warehouse lease. The Company  had  no
bank  debt  during 1997. Interest income earned on the Company's marketable
securities was $1.6 million in 1997. At December 31, 1997, the Company held
$26.2   million   in  short-term  investments.  The  Company's   short-term
investments  are  comprised  primarily  of  investment  grade  federal  and
municipal  bonds and commercial paper, all with short-term maturities.  The
Company generally holds investments until maturity.

  Provision for income taxes.  The provision for income taxes in  1997  was
$13.1 million, or 5.7% of net sales, compared to the pro forma provision of
$9.5 million, or 5.1% of net sales, in 1996. The effective combined federal
and  state rates of the provision for income taxes were 40.9% and 40.8%  in
1997 and 1996, respectively. The effective combined federal and state rates
are  less  than  the statutory rates in each period due to the  benefit  of
certain tax credits. See Note 5 of "Notes to Financial Statements."

  Net  income.   As  a  result  of the items discussed  above,  net  income
increased $5.2 million, or 38.3%, from pro forma $13.7 million in  1996  to
$19.0  million in 1997. Net income increased as a percentage of  net  sales
from 7.5% in 1996 to 8.2% in 1997.


Liquidity and Capital Resources

      Since  inception,  the Company has funded its operations  principally
from  cash  provided  by  operations, and has  not  generally  relied  upon
external  sources  of financing. The Company's capital  requirement  result
primarily  from purchases of inventory, expenditures related to  new  store
openings and working capital requirements for new and existing stores.  The
Company   takes   advantage   of  close-out  and  other   special-situation
opportunities which frequently result in large volume purchases, and  as  a
consequence,  its cash requirements are not constant or predictable  during
the year and can be affected by the timing and size of its purchases.

      During 1996, 1997 and 1998, net cash provided by operations was $15.6
million,  $13.7 million and $27.0 million, respectively. Net cash  provided
by  operations  reflects increases in inventories in  the  amount  of  $2.6
million,  $6.2  million  and  $7.1 million  during  1996,  1997  and  1998,
respectively.  During  1996,  1997 and 1998, net  cash  used  in  investing
activities  for  purchases  of  property and equipment  was  $7.3  million,
$9.4  million  and  $12.6  million, respectively. Cash  used  in  investing
activities  for  the purchase of short-term investments was $27.6  million,
$5.0  and  $26.3  million  in 1996, 1997 and 1998  respectively.  Net  cash
provided  by  financing  activities in 1996 $19.6 million,  which  included
$66.2 million from the Company's initial public offering. In addition,  the
Company  paid  $35.5  million of notes payable to shareholders  and  issued
dividends   to   shareholders  for  $4.4  million.  Another  $5.6   million
represented  payments  of capital lease obligations  and  distributions  to
shareholders to cover, in part, federal and state income taxes  payable  by
the shareholders with respect to the net income of the Company prior to the
change  of  the  corporate  tax  status  from  an  S  corporation  to  a  C
corporation.  In  1997,  net  cash used in financing  activities  was  $0.2
million; these funds represented payments of capital lease obligations  and
proceeds  from  the exercise of employee stock options. In 1998,  net  cash
provided  by  financing activities was $16.4 million, which included  $27.2
million  from  the  Company's secondary public offering. In  addition,  the
Company issued shares of common stock for the purchase of an additional 48%
million of outstanding shares of Universal (336,986 shares at $29.66).  The
company  received  proceeds from the exercise  of  stock  options  of  $2.5
million.



      The  Company does not maintain any credit facilities with  any  bank.
However, the Company maintains a surety bond of approximately $1.2  million
for self-insured workers compensation.

      The Company leases its 880,000 square foot single level warehouse and
distribution facility under a lease accounted for as a capital  lease.  The
lease  requires  monthly  payments of $70,000 and accrues  interest  at  an
annual  rate of 7.0%. At the lease expiration in December 2000, the Company
has  the  option  to purchase the facility for $10.5 million.  The  Company
currently  intends to exercise the option at the end of the lease.  If  the
Company  does not exercise the purchase option, the Company will be subject
to a $7.6 million penalty.

      The  Company  plans to open new 99 Cents Only Stores  at  a  targeted
annual  rate of 20%. The average investment per new store opened  in  1998,
including   leasehold  improvements,  furniture,  fixtures  and  equipment,
inventory and pre-opening expenses, was approximately $660,000. Pre-opening
expenses  are not capitalized by the Company. The Company's cash needs  for
new  store openings are expected to total approximately $9 million in  1999
and  $12 million in 2000. The Company's total planned expenditures in  each
of  1999  and 2000 for additions to fixtures and leasehold improvements  of
existing stores as well as for distribution expansion and replacement  will
be  approximately $5 million. The Company believes that its  total  capital
expenditure  requirements (including new store openings) will  increase  to
approximately  $14 million and $17 million in 1999 and 2000,  respectively.
Capital expenditures in 1998 and 1999 are currently expected to be incurred
primarily  for  new  store openings, improvements to  existing  stores  and
system and general corporate infrastructure. The Company believes that cash
flow from operations will be sufficient to meet operating needs and capital
spending requirements for at least the next twelve months.

Seasonality and Quarterly Fluctuations

      The  Company has historically experienced and expects to continue  to
experience some seasonal fluctuation in its net sales, operating income and
net income. The highest sales periods for the Company are the Christmas and
Halloween  seasons.  A  greater  amount of  the  Company's  net  sales  and
operating  and net income is generally realized during the fourth  quarter.
The   Company's   quarterly  results  of  operations  may  also   fluctuate
significantly  as  a  result of a variety of other factors,  including  the
timing  of  certain  holidays (e.g., Easter) and the timing  of  new  store
openings and the merchandise mix. Further, the operations of Universal  are
even more dependent upon results in the fourth quarter.

       The  following  table  sets  forth,  certain  unaudited  results  of
operations for each quarter during 1997 and 1998 and such information as  a
percentage of net sales. The unaudited information has been prepared on the
same  basis as the audited financial statements appearing elsewhere in this
report  and includes all adjustments, which management considers  necessary
for  a fair presentation of the financial data shown. The operating results
for  any  quarter  are  not necessarily indicative of  the  results  to  be
attained for any future period.





                    1st    2nd    3rd    4th    1st    2nd    3rd    4th
                   Quart  Quart  Quart  Quart  Quart  Quart  Quart  Quart
                     er     er     er     er     er     er     er     er
                    Year    Year Ended December 31,
                   Ended             1998
                   Decem
                    ber
                    31,
                    1997
                   (Amou
                    nts
                     in
                   thous
                   ands)
Net sales:                                                                 
   99 Cents Only      $39,1  $42,5  $46,9  $57,2  $51,4  $56,6  $59,1  $71,5
Stores                 68     67     91     98     82     95     47     43
  Universal               -      -      -      -      -      -  2,456  28,66
                                                                         1
   Bargain Wholesale  11,57  11,24  11,99  10,01  11,40  15,06  16,35  10,48
                        6      7      5      3      0      2      7      0
                                                                           
                                              
     Total              50,74  53,81  58,98  67,31  62,88  71,75  77,96  110,6
                        4      4      6      1      2      7      0     74
Gross profit         17,41  19,31  21,19  26,13  23,04  25,32  28,09  47,19
                        6      3      2      7      3      1      5      6
Operating income     6,085  7,157  7,879  10,09  8,619  9,405  10,23  16,40
                                             8                    0      7
Net income           3,676  4,369  4,750  6,155  4,541  5,385  6,712  10,05
                                                                         5
Earnings per common                                                        
share:
   Basic              $0.16  $0.19  $0.21  $0.26  $0.19  $0.22  $0.27  $0.42
   Diluted            $0.16  $0.18  $0.20  $0.26  $0.19  $0.22  $0.27  $0.41
(% of Net sales)                                                           
Net sales:                                                                 
   99 Cents Only      77.2%  79.1%  79.7%  85.1%  81.9%  79.0%  75.9%  64.6%
Stores
  Universal               -      -      -      -      -      -    3.1   25.9
   Bargain Wholesale   22.8   20.9   20.3   14.9   18.1   21.0   21.0    9.5
                                                                           
                                              
     Total              100.0  100.0  100.0  100.0  100.0  100.0  100.0  100.0
Gross profit          34.3   35.9   35.9   38.8   36.6   35.3   36.0   42.6
Operating income      12.0   13.3   13.4   15.0   13.7   13.1   13.1   14.8
Net income            7.2%   8.1%   8.1%   9.1%   7.2%   7.5%   8.6%   9.1%
                                                                           


New Authoritative Pronouncements

      In June 1997, the Financial Accounting Standard Board issued SFAS No.
130, "Reporting Comprehensive Income" (SFAS 130). Adoption of SFAS 130  has
not had a material impact on the Company's financial reporting.

      In June 1997, the Financial Accounting Standard Board issued SFAS No.
131,  "Disclosure about Segments of an Enterprise and Related  Information"
(SFAS  131). The Company adopted SFAS 131 in 1998 (see Note 11 of Notes  to
Consolidated Financial Statements).

      In  1998,  the  FASB issued SFAS No. 133, Accounting  for  Derivative
Instruments  and Hedging Activities" (SFAS 133). SFAS 133 is  effective  in
2000  and  management does not expect adoption of this standard to  have  a
material  impact  on  the  Company's  financial  reporting  or  results  of
operations.



Risk Factors

Inflation

      The  Company's ability to provide quality merchandise at the 99 cents
price  point is subject to certain economic factors, which are  beyond  the
Company's  control, including inflation. Inflation could  have  a  material
adverse  effect  on  the  Company's business  and  results  of  operations,
especially  given the constraints on the Company to pass on any incremental
costs due to price increases or other factors. The Company believes that it
will  be  able  to  respond  to  ordinary price  increases  resulting  from
inflationary pressures by adjusting the number of items sold at the  single
price  point  (e.g., two items for 99 cents instead of three items  for  99
cents)  and  by  changing  its  selection of merchandise.  Nevertheless,  a
sustained  trend  of  significantly increased inflationary  pressure  could
require the Company to abandon its single price point of 99 cents per item,
which  could  have a material adverse effect on the Company's business  and
results  of  operations.  See also "Risk Factors Adverse  Economic  Trends;
Change  in Minimum Wage" for a discussion of additional risks attendant  to
inflationary conditions.

We Depend on New Store Openings for Future Growth

     Our operating results depend largely on our ability to open and
operate new stores successfully and to manage a larger business profitably.
In 1996, 1997 and 1998, we opened eight, ten and thirteen of our 99 Cents
Only Stores, respectively (seven, ten and eleven stores, respectively, net
of relocated stores).  From January 1, 1999 through March 26, 1999, we
opened two 99 Cents Only Stores and we expect to open at least eleven 99
Cents Only Stores in Southern California during the remainder of the year.
We plan to open new stores over the next several years at a rate of
approximately 20% [of the number of 99 Cents Only Stores we have] per year.
Our strategy depends on many factors, including our ability to identify
suitable markets and sites for our new stores, negotiate leases with
acceptable terms, refurbish stores, appropriately upgrade our financial and
management information systems and controls and manage our operating
expenses.  In addition, we must be able to continue to hire, train,
motivate and retain competent managers and store personnel.  Many of these
factors are beyond our control.  As a result, we cannot assure you that we
will be able to achieve our expansion goals.  Any failure by us to achieve
our expansion goals on a timely basis, obtain acceptance in markets in
which we currently have limited or no presence, attract and retain
management and other qualified personnel, appropriately upgrade our
financial and management information systems and control or manage
operating expenses could adversely affect our future operating results and
our ability to execute our business strategy.

     We also cannot assure you that when we open new stores, we will
improve our results of operations.  A variety of factors, including store
location, store size, rental terms, the level of store sales and the level
of initial advertising influence if and when a store becomes profitable.
Assuming that our planned expansion occurs as anticipated, our store base
will include a relatively high proportion of stores with relatively short
operating histories.  We cannot assure you that our new stores will achieve
the sales per saleable square foot and store-level operating margins
currently achieved at our existing stores.  If our new stores on average
fail to achieve these results, our planned expansion could produce a
decrease in our overall sales per saleable square foot and store-level
operating margins.  Increases in the level of advertising and pre-opening
expenses associated with the opening of new stores could also contribute to
a decrease in our operating margins.  Finally, the opening of new stores in
existing markets has in the past and may in the future reduce retail sales
of existing stores in those markets, negatively affecting comparable store
sales.




Risks Associated with Our Recent Acquisition

     In September 1998, we acquired Universal International, Inc. and Odd's-
N-End's, Inc.  Acquisitions involve various risks.  For example:

   -  Assimilation of the operations and personnel of an acquired business
   into our own      business;
   
   -  Management information and accounting systems of an acquired business
   must be          integrated into our current systems;
   
   -  Our management must devote its attention to assimilating the acquired
   business         which diverts their attention from our other business
   concerns;
   
   -  We might enter markets in which we have limited prior experience; and
   
   -  We might lose key employees of an acquired business.
   
   The companies we acquired operate in a market where we had little prior
experience.  We have devoted substantial time and resources to integrate
these recently acquired businesses, and we will be required to devote
substantial time and resources to integrate any other business we may
acquire in the future.

     We intend to continue to evaluate potential acquisitions of companies
which we believe will complement or enhance our existing business.  If we
acquire other companies in the future, it may result in the issuance of
equity securities that could dilute your stock ownership.  We may also
incur additional debt and amortize expenses related to goodwill and other
tangible assets if we acquire another company, and this could negatively
impact our results of operations.  We currently do not have any
arrangements or understandings to acquire any company or business, and we
cannot guarantee that we will be able to identify or complete any
acquisition in the future.


Our operations are mainly concentrated in Southern California

      All  of  our  99 Cents Only Stores are currently located in  Southern
California.  In  addition, our retail expansion plans anticipate  that  new
stores  will  be  located  in this region.  As a  result,  our  results  of
operations  and  financial condition depend upon  trends  in  the  Southern
California  economy.  For  example, this  region  experienced  an  economic
recession  in  the early 1990s.  Although this recession  had  no  material
effect  on  our  business, between 1989 and 1993 most California  counties,
particularly  Los  Angeles,  recorded  a  significant  decline  in   retail
spending.    Recovery  in  these retail markets  has  continued  from  1995
through  1997.   However, this trend may not continue and  retail  spending
could  decline in the future. In addition, Southern California historically
has  been vulnerable to certain natural disasters and other risks, such  as
earthquakes,  fires, floods and civil disturbance. At times,  these  events
have  disrupted the local economy.  These events could also  pose  physical
risks  to  our  properties.  Although we  maintain  standard  property  and
business interruption insurance, we do not have earthquake insurance on our
properties.

      With  our  acquisition of Universal and Odd's-N-End's,  we  now  have
stores in the upper Midwest, upstate New York and Texas. These regions have
unique  economic characteristics which we will need to become more familiar
with.  In  addition,  unlike Southern California,  extreme  winter  weather
conditions  in  the  Midwest  and New York may cause  decreases  in  retail
spending during certain times of the year.






We could experience disruptions in receiving and distribution

      We  pick  up  substantially all our inventory for our 99  Cents  Only
Stores  directly  from  suppliers and deliver the  inventory  to  our  only
warehouse in Los Angeles, California.  We distribute all inventory for  our
New  York,  Texas  and Upper Midwest stores through our only  warehouse  in
Minnesota.   Our  success depends upon whether our receiving  and  shipment
schedules are organized and well managed.  As we continue to grow,  we  may
face unexpected demands on our warehouse operations that could cause delays
in  delivery  of merchandise to or from our warehouses to  our  stores.   A
fire,  earthquake  or  other  disaster at our  warehouses  could  hurt  our
business,  financial  condition  and  results  of  operation,  particularly
because   much  of  our  merchandise  consists  of  close-outs  and   other
irreplaceable products. Although we maintain standard property and business
interruption  insurance,  we  do  not  have  earthquake  insurance  on  our
properties.

      Although  we  try to limit our risk of exposure to potential  product
liability  claims, we do not know if the limitations in our agreements  are
enforceable.   We  maintain  insurance covering  damage  from  use  of  our
products.   If any product liability claim is successful and large  enough,
our business could suffer.

We depend upon our relationships with our suppliers and the availability of
     close-out and special-situation merchandise

      Our  success  depends  in large part on our  ability  to  locate  and
purchase  quality close-out and special-situation merchandise at attractive
prices.   This helps us maintain a mix of name-brand and other  merchandise
at  the  99  Cents price point. We cannot be certain that such  merchandise
will continue to be available in the future. Further, we may not be able to
find  and  purchase merchandise in quantities necessary to accommodate  our
growth.  Additionally,  our suppliers sometimes restrict  the  advertising,
promotion   and   method  of  distribution  of  their  merchandise.   These
restrictions  in  turn may make it more difficult for us  to  quickly  sell
these items from our inventory.

      Although we believe our relationships with our suppliers are good, we
do  not have long term agreements with any supplier.  As a result, we  must
continuously seek out buying opportunities from our existing suppliers  and
from   new  sources.   We  compete  for  these  opportunities  with   other
wholesalers   and  retailers,  discount  and  deep-discount  chains,   mass
merchandisers,  food  markets,  drug  chains,  club  stores   and   various
privately-held companies and individuals. Although we do not depend on  any
single  supplier  or  group of suppliers and believe  we  can  successfully
compete  in seeking out new suppliers, a disruption in the availability  of
merchandise at attractive prices could impair our business.

We purchase in large volumes and our inventory is highly concentrated

      To  obtain inventory at attractive prices, we take advantage of large
volume purchases, close-outs and other special situations. As a result, our
inventory  levels  are generally higher than other discount  retailers.  At
December  31,  1996,  1997 and 1998, we recorded  net  inventory  of  $36.9
million, $43.1 million and $78.4 million, respectively.

      We  periodically review the net realizable value of our inventory and
make  adjustments  to  its  carrying value when  appropriate.  The  current
carrying  value of our inventory reflects our belief that we  will  realize
the  net values recorded on our balance sheet.  However, we may not be able
to  do so. If we sell large portions of our inventory at amounts less  than
their  carrying  value  or  if we write down  a  significant  part  of  our
inventory,  our  cost  of sales, gross profits, operating  income  and  net
income could suffer greatly during the period in which such event or events
occur.

We face strong competition

      We  compete  in  both  the  acquisition  of  inventory  and  sale  of
merchandise  with  other  wholesalers, discount and  deep-discount  stores,
single  price  point merchandisers, mass merchandisers, food markets,  drug
chains,  club  stores and other retailers.  Our industry  competitors  also
include  many  privately held companies and individuals.  At  times,  these
competitors are also customers of our Bargain Wholesale division.   In  the
future,  new  companies may also enter the deep-discount  retail  industry.
Additionally, we currently face increasing competition for the purchase  of
quality  close-out  and other special-situation merchandise.  Some  of  our
competitors have substantially greater financial resources and buying power
than  us.   Our capability to compete will depend on many factors including
our ability to successfully purchase and resell merchandise at lower prices
than our competitors.  We cannot assure you that we will be able to compete
successfully against our current and future competitors.

We are  vulnerable to uncertain economic factors and changes in the minimum
     wage

     Our ability to provide quality merchandise at our 99 Cents price point
could be hindered by certain economic factors beyond our control, including
but not limited to:

  -  increases in inflation;
  -  increases in operating costs;
  -  increases in employee health care costs;
  -  increases in prevailing wage levels; and
  -  decreases in consumer confidence levels.

      As a result, increases in federal and state minimum wage requirements
significantly  affect  our  business.   In  California,  the  minimum  wage
increased  [in March 1997 from $4.75 to $5.00 per hour], in September  1997
from $5.00 to $5.15 per hour, in March 1998 to $5.75 per hour [and again in
January  1999  to  $6.75 per hour.] The federal minimum wage  increased  in
September 1997 to $5.15 per hour. Congress has proposed a bill to  increase
the  minimum wage to $6.15 per hour beginning September 1, 1999, and  $6.66
per  hour  beginning September 1, 2000, with later adjustments  to  reflect
increases  in  the Consumer Price Index.  Since we provide  consumers  with
merchandise at a 99 Cents price point, we typically cannot pass on to  them
any  incremental costs. As a result, significant increases in  the  minimum
wage requirements could impair our business.

We face risks associated with international sales and purchases

      Although international sales historically have not been important  to
our  consolidated  net sales, they have contributed to  growth  in  Bargain
Wholesale's  net sales. In addition, some of the inventory we  purchase  is
manufactured  outside the United States.  There are many  risks  associated
with doing business internationally.  Our international transactions may be
subject to risks such as:

  -  political instability;
  -  currency fluctuations;
  -  exchange rate controls;
  -  changes in import and export regulations;
  -  changes in tariff and freight rates.

The  United States and other countries have also proposed various forms  of
protectionist  trade legislation. Any resulting changes in  current  tariff
structures  or  other trade policies could lead to fewer purchases  of  our
products and could adversely affect our international operations.

We could encounter risks related to transactions with our affiliates

      We  currently lease 13 of our 66, 99 Cents Only Stores and a  parking
lot  for  one of these stores from certain members of the Gold  family  and
their  affiliates.  Our annual rental expense for these facilities  totaled
approximately $1.8 million, $2.0 million and $2.2 million in 1996, 1997 and
1998,  respectively. We believe that our lease terms are just as  favorable
to us as they would be for an unrelated party. Under our current policy, we
enter  into  real  estate  transactions with our affiliates  only  for  the
renewal  or  modification  of existing leases and  on  occasions  where  we
determine  that such transactions are in our best interests. Moreover,  the
independent members of our Board of Directors must unanimously approve  all
real  estate  transactions between us, and our affiliates. They  must  also
determine   that   such  transactions  are  equivalent  to   a   negotiated
arm's-length  transaction with a third party. We cannot guarantee  that  we
will  reach  agreements  with the Gold Family  on  renewal  terms  for  the
properties  we currently lease from them.  Also, even if we agree  to  such
terms,  we  cannot be certain that our independent directors  will  approve
them.  If  we  fail  to renew one of these leases, we could  be  forced  to
relocate  or  close  the  leased store.  Any  relocations  or  closures  we
experience will be costly and could adversely affect our business.

We rely heavily on our management team

      Our  success depends substantially on David Gold, our Chief Executive
Officer.  We  also rely on the continued service of our executive  officers
and  other  key  management, particularly Helen  Pipkin,  our  Senior  Vice
President  of  Wholesale  Operations. We have not entered  into  employment
agreements  with any of our executive officers and we do not  maintain  key
person  life  insurance on them. As we continue to grow, our  success  will
depend  on  our  ability  to identify, attract,  hire,  train,  retain  and
motivate  other highly skilled management personnel.  Competition for  such
personnel  is  intense,  and we may not be able  to  successfully  attract,
assimilate or retain sufficiently qualified candidates.

Our operating results may fluctuate and may be affected by seasonal  buying
     patterns

     Historically, our highest net sales and operating income have occurred
during  the  fourth  quarter, which includes the  Christmas  and  Halloween
selling  seasons.  During  1996, 1997 and 1998, we generated  approximately
28.8%,  29.2%  and 34.2%, respectively, of our net sales and  approximately
32.6%,  32.3% and 36.7%, respectively, of our operating income  during  the
fourth  quarter. Furthermore, the operations of Universal and Odd's-N-End's
heavily  depend upon fourth quarter results. Accordingly, any  decrease  in
net  sales  during  the fourth quarter could reduce our  profitability  and
impair our results of operations for the entire year.

      In  addition to seasonality, many other factors may cause our results
of operations to vary significantly from quarter to quarter.  Some of these
factors are beyond our control.  The factors include:

  -  the number and timing of sales contributed to new stores;
  -   the level of advertising and pre-opening expenses associated with new
  stores;
  -  the integration of new stores into our operations;
  -  general economic health of the deep-discount retail industry;
  -  changes in the mix of products sold;
  -  unexpected increases in shipping costs;
  -  ability to successfully manage our inventory levels;
  -  changes in our personnel;
  -  fluctuations in the amount of consumer spending; and
  -   the  amount  and  timing of operating costs and capital  expenditures
  relating to the        growth of our business.


We may need to modify our management information systems

      Our  business  is  currently supported by a standard  accounting  and
financial  reporting system which uses a PC-based local area network  (LAN)
and a separate partially customized inventory control system processed on a
Hewlett-Packard  RISC-based computer.  We believe that our  accounting  and
management information system and inventory control system meet our current
needs.  We  plan to continue updating and enhancing our systems to  improve
our  capabilities and provide for growth. If we grow faster than we expect,
we  may  need to install a new management information or inventory  control
system  or  significantly  modify our current systems  to  accommodate  the
growth in our business.

We face year 2000 risks

     Many existing computer programs use only two digits to identify a
year.  These programs were designed and developed without addressing the
impact of the upcoming change in the century.  If not corrected, many
computer software applications could fail or create erroneous results by,
at or beyond the year 2000.
     
     We use software, computer technology and other services, that may fail
due to the year 2000 phenomenon.  We have determined that we must modify or
replace portions of our software so that our computer systems will function
properly with respect to dates in the year 2000 and after.  We expect to
complete our year 2000 improvements by mid-1999.   Although we do not
expect the year 2000 problem to significantly affect our results of
operations, we could encounter unanticipated delays and other problems in
modifying our systems.  Any difficulties we experience in becoming year
2000 compliant could hurt our ability to communicate with and effectively
purchase from our suppliers, and could adversely impact our business.

     Based upon the results of this assessment, we will develop and
implement, if necessary, a remediation plan with respect to any software
and computer technology used by our vendors that may not be year 2000
compliant.  At this time, we cannot determine the expenses associated with
this assessment and potential remediation plan.  Our business could suffer
significantly if our suppliers' software and computer systems are not year
2000 compliant.

We are subject to environmental regulations

      Under  various  federal,  state  and  local  environmental  laws  and
regulations, current or previous owners or occupants of property may become
liable  for  the costs of removing any hazardous substances  found  on  the
property.  These laws and regulations often impose liability without regard
to  fault.  We currently lease all but three of our stores, as well as  our
warehouse  and  distribution  facility (where  our  executive  offices  are
located).  We  have the option to purchase our warehouse  and  distribution
facility in December 2000, which we plan to do.  However, in the future  we
may  be  required  to  incur substantial costs for preventive  or  remedial
measures  associated with the presence of hazardous materials. In addition,
we operate one underground diesel storage tank and one above-ground propane
storage  tank at our warehouse. Although we have not been notified of,  and
are   not   aware  of,  any  current  environmental  liability,  claim   or
non-compliance, we could incur costs in the future related  to  our  leased
properties and our storage tanks.

     In the ordinary course of our business, we sometimes handle or dispose
of   commonplace  household  products  that  are  classified  as  hazardous
materials under various environmental laws and regulations. We have adopted
policies  regarding  the handling and disposal of these  products,  and  we
train  our employees on how to handle and dispose of them. We cannot assure
you  that  our  policies  and  training will  successfully  help  us  avoid
potential  violations of these environmental laws and  regulations  in  the
future.

Anti-takeover Effect; We are controlled by our existing shareholders

       In  addition  to  some  governing  provisions  in  our  Articles  of
Incorporation  and Bylaws, we are also subject to certain  California  laws
and  regulations  which  could delay, discourage  or  prevent  others  from
initiating  a  potential merger, takeover or other change in  our  control,
even  if  such actions would benefit our shareholders and us. In  addition,
David  Gold, our Chairman and Chief Executive Officer, and members  of  his
immediate   family  and  certain  of  their  affiliates  beneficially   own
11,282,113 of the our voting stock.  As a result, they have the ability  to
control  all matters requiring the vote of our shareholders, including  the
election of our directors and most of our corporate actions.  They can also
control  our  policies  and prevent a change in our  control.   This  could
adversely affect the voting and other rights of our other shareholders  and
could depress the market price of our common stock.

Our stock price could fluctuate widely

     The market price of our common stock has risen substantially since our
initial  public  offering on May 23, 1996. Trading prices  for  our  common
stock could fluctuate significantly due to many factors, including:

  -  the depth of the market for our common stock;
  -    changes   in  expectations  of  our  future  financial  performance,
  including   financial          estimates  by  securities   analysts   and
  investors;
  -  variations in our operating results;
  -   conditions or trends in our industry or in the industries of  any  of
  our significant     clients;
  -  additions or departures of key personnel; and
  -  future sales of our common stock.


Year 2000

General

      The  Year  2000  issue relates to the problems associated  with  many
computer systems (including computer chips and software) not being designed
to  use  dates  for  the Year 2000 and thereafter.  Many of  these  systems
internally record only the last two digits for the year of dates, and  will
not  correctly distinguish between different years ending with the same two
digits (the years 2000 and 1900 would be recorded identically).  Others  of
these  systems will not be able to accept, print, perform calculations,  or
display  dates greater than 12/31/1999.  While others may cease to function
("crash"),  produce miscalculations or produce other undesired  results  in
connection  with  such dates.  The Year 2000 issues are a  concern  to  the
Company  due to potential impacts on the Company's systems and additionally
a  concern  for  the  potential impact to the  systems  of  other  entities
(vendors,  service  providers,  utility providers,  transportation,  banks,
etc.) that provide products and services to the Company.
      Although the Company believes that the Year 2000 issue will not  pose
significant internal operational problems for the Company, if all Year 2000
issues  are not properly identified, or assessment, remediation and testing
are  not  done, in a timely manner, with respect to the potential  problems
that  are  identified, there can be no assurance that the Year  2000  issue
will  not  have  a  material  adverse impact on the  Company's  results  of
operations including, among other things, a temporary inability to  process
credit  sales  transactions, record inventory transactions  and  engage  in
similar  normal business activities.  Additionally, there is  no  assurance
that  the  Year  2000  issues of other entities will not  have  a  material
adverse impact on the Company's systems or operations.

Year 2000 Status

     General phases of the project include (1) cataloging Year 2000 issues;
(2)  assigning priorities and materiality of the issues to the Company; (3)
implementing and testing the necessary modifications and replacements,  and
(4) contingency planning.

     The Company's use of computer systems consists of five major areas (1)
operating  systems;  (2)  purchased  standard  software  applications;  (3)
internally  developed software applications; (4) third party suppliers  and
agents; and (5) embedded chips.  Application software concerns include both
the  conversion  of  software  that is  not  Year  2000  compliant  and  or
replacement of software where applicable.

     The  Company's primary computer systems consist of standard accounting
and  financial reporting packages utilizing a PC-based local  area  network
and  a  packaged  inventory control system, customized  for  the  Company's
needs,  processed by a Hewlett Packard RISC-based system. Based on a review
of the hardware, system software, and application software comprising these
primary  systems, the Company believes that, with some corrective measures,
these primary systems will not be materially impacted by Year 2000 issues.

     Third  party  suppliers include merchandise vendors,  outside  payroll
processing,  freight  companies,  banks, brokerage  firms  which  hold  the
company's securities in street names as well as the underlying institutions
issuing  the securities, customer credit card and ATM authorization  firms,
stock  transfer  agent,  security alarm, fire prevention,  phone  services,
insurance companies, energy and other utility suppliers and various  local,
state and federal governmental regulatory agencies.

     99  Cents Only Stores year 2000 Project is proceeding substantially on
schedule.  The Company has undertaken its year 2000 project internally  and
has  developed a plan to make the Company's business computer systems  Year
2000  compliant.   The  Company has completed  the  assessment  as  to  its
critical  systems.  The Company believes the risks associated with internal
systems  are  minimal.  The  customized internal  modifications  are  being
scheduled, and will be complete in the last quarter of 1999.

     The  Company is in the process of upgrading their P.C. based financial
package  to  its  most current release which has been certified  Year  2000
compliant.   Additionally testing of the Hewlett Packard RISC based  system
will  be completed by the end of the second quarter.  The test will include
using the Companies backup Hewlett Packard and changing the calendar to the
Year  2000, so all core applications can be tested and confirmed Year  2000
ready.

     Many  of  the  Company's third party suppliers have been surveyed  and
identified  as  to  those  having a direct interface  level.   Letters  and
questionnaires  are in the process of being sent to all  critical  entities
with  which  the Company does business to assess their Year 2000 readiness.
The  Company  anticipates that these activities will be on  going  for  the
remainder  of 1999 and will include follow up telephone interviews  and  on
site meetings.  The Company is not currently aware of any single vendor  or
other  third  party that may have a material impact on  the  Company.   The
Company  can  provide  no  assurance that  Year  2000  compliance  will  be
successfully completed by its third party suppliers in a timely manner.

Cost

     The  total cost associated with required modifications to become  Year
2000  compliant  is not expected to be material to the Company's  financial
position. The estimated total cost of the Year 2000 compliance work has not
been established, but is not expected to be material.

Contingency Plan

     The  Company  has not completed a comprehensive analysis for  all  the
operational  problems and costs (including loss of revenue) that  would  be
reasonably  likely  to result from the failure by the Company  and  certain
third parties to complete efforts necessary to achieve Year 2000 compliance
on  a  timely basis. A contingency plan has not been developed for  dealing
with all the most likely worst case scenario. The Company believes that any
failures  of its internal systems to be Year 2000 compliant will not  alone
materially  adversely affect the continuity of core retail business  or  to
receive and ship merchandise to its retail stores.

     The  Year  2000 compliance project is expected to reduce the level  of
uncertainty  about  the  effect  of  Year  2000  on  the  Company  and  the
preparedness of significant third party agents.  The Company believes  that
with   the  implementation  and  completion  of  the  project,  significant
interruptions of normal operations should be reduced.  However, if all Year
2000  issues  are  not properly identified, or assessment, remediation  and
testing  are not affected in a timely manner with respect to problems  that
are  identified, there can be no assurance that Year 2000  issue  will  not
have  a  material  adverse impact on the Company results of  operations  or
adversely  affect the Company's relationships with suppliers, customers  or
other third parties.  Additionally, there can be no assurance that the Year
2000  issues of other entities will not have a material adverse  impact  on
the Company's systems or results of operations.

     Readers  are  cautioned that forward-looking statements  contained  in
this  Year 2000 disclosure should be read in conjunction with the Company's
disclosures  under the heading, "Risk Factors" in the Company's  Form  10-K
for  the year ended December 31, 1997.  Readers should understand that  the
dates on which the Company believes the Year 2000 project will be completed
are  based  upon Management's best estimates, which were derived  utilizing
numerous  assumptions  of  future events,  including  the  availability  of
certain  resources,  third-party modifications  plans  and  other  factors.
However,  there can be no guarantee that these estimates will be  achieved,
or  that there will not be a delay in, or increased costs associated  with,
the  implementation of the Company's Year 2000 compliance project. A  delay
in  specific factors that might cause differences between the estimates and
actual  results include, but are not limited to, the availability and  cost
of  personnel  trained in these areas, the ability to correct all  relevant
computer  code,  timely responses to and corrections by third  parties  and
suppliers, the ability to implement interfaces between the new systems  and
the  systems  not being replaced, and similar uncertainties.   Due  to  the
general  uncertainty inherent in the Year 2000 problem, resulting  in  part
from  the uncertainty of the Year 2000 readiness of third parties  and  the
inter-connection  of  national and international  businesses,  the  Company
cannot  ensure  that  its  ability to timely and cost  effectively  resolve
problems  associated with the Year 2000 issue may not affect its operations
and business, or expose it to third party liability.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      The  Company is exposed to interest rate risk for its investments  in
marketable securities.
      At  December  31,  1998,  the Company had $46,560,000  in  marketable
securities  maturing  at  various dates through June  2000.  The  Company's
investments  are  comprised  primarily  of  investment  grade  federal  and
municipal   bonds  and  commercial  paper.  The  Company  generally   holds
investments  until  maturity.  Any  premium  or  discount  recognized  with
purchase of an investment is amortized over the term of the investment.


Item 8. Financial Statements and Supplementary Data


                      INDEX TO FINANCIAL STATEMENTS

                                                                      Pag
                                                                       e
                                                                           
99 Cents Only Stores                                                       
Report of Independent Public Accountants                                 39
Consolidated Balance Sheets as of December 31, 1997 and 1998             40
Consolidated Statements of Income for the years ended December 31,       42
1996, 1997 and 1998
Consolidated Statements of Shareholders' Equity for the years ended      43
December 31, 1996, 1997 and 1998
Consolidated Statements of Cash Flows for the years ended December 31,   44
1996, 1997 and 1998
Notes to the Consolidated Financial Statements                           45










































                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To 99 Cents Only Stores:

      We  have audited the accompanying consolidated balance sheets  of  99
Cents  Only Stores (a California Corporation) and it's subsidiaries  as  of
December  31,  1997  and  1998 and the related consolidated  statements  of
income, shareholders' equity and cash flows for each of the three years  in
the  period  ended  December 31, 1998. These financial statements  are  the
responsibility  of  the  Company's management.  Our  responsibility  is  to
express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly,  in all material respects, the financial position of 99 Cents  Only
Stores  and  it's subsidiaries as of December 31, 1997 and  1998,  and  the
results of its operations and its cash flows for each of the three years in
the  period  ended December 31, 1998 in conformity with generally  accepted
accounting principles.





                                             ARTHUR ANDERSEN LLP

Los Angeles, California
February 26, 1999






















                           99 CENTS ONLY STORES
                                     
                        CONSOLIDATED BALANCE SHEETS

                        DECEMBER 31, 1997 AND 1998
                 (Amounts In Thousands, Except Share Data)


                                  ASSETS



                                                             1997    1998
                                                                            
CURRENT ASSETS:                                                             
   Cash                                                          $882  $4,516
   Short-term investments                                      26,191  43,850
   Accounts receivable, net of allowance for doubtful accounts               
of $178 and $535 as of December 31, 1997 and 1998,            1,510   2,605
respectively
   Inventories                                                 43,114  78,392
   Other                                                          673   2,389
                                                                            
     Total current assets                                        72,370  131,75
                                                                          2
                                                                            
PROPERTY AND EQUIPMENT, at cost:                                            
   Land                                                         8,072   9,590
   Building and improvement                                    10,804  11,896
   Leasehold improvements                                      10,986  19,179
   Fixtures and equipment                                       8,473  16,860
   Transportation equipment                                       558   1,014
   Construction in progress                                       776   1,680
                                                                            
                                                              39,669  60,219
   Less_Accumulated depreciation and amortization             (10,228  (14,74
                                                                  )      6)
                                                                            
                                                              29,441  45,473
                                                                            
OTHER ASSETS:                                                               
   Deferred income taxes                                        5,947   6,422
   Long term investments in marketable securities               6,393   2,710
   Deposits                                                       234     183
   Receivable from affiliated entity                              230       -
   Investment in Universal International, Inc.                  3,708       -
   Goodwill                                                         -   8,617
   Other                                                        1,120   2,966
                                                                            
                                                              17,632  20,898
                                                                            
                                                             $119,44  $198,1
                                                                  3      23
                                                                            
                                                                           


The  accompanying notes are an integral part of these consolidated  balance
sheets.








                           99 CENTS ONLY STORES
                                     
                        CONSOLIDATED BALANCE SHEETS
                                     
                        DECEMBER 31, 1997 AND 1998
                 (Amounts In Thousands, Except Share Data)

                   LIABILITIES AND SHAREHOLDERS' EQUITY



                                                             1997    1998
                                                                            
CURRENT LIABILITIES:                                                        
Current portion of capital lease obligation                      $704    $923
Accounts payable                                                5,534  13,856
Accrued expenses:                                                            
     Payroll and payroll-related                                  1,352   1,976
     Sales tax                                                    1,467   2,299
     Liability for claims                                           396     306
     Other                                                          824     510
   Workers compensation                                         1,091   1,372
   Income taxes payable                                           211       -
                                                                            
                                                              11,579  21,242
                                                                            
LONG-TERM LIABILITIES:                                                      
   Deferred rent                                                1,476   2,091
   Accrued interest                                             2,075   2,690
   Capital lease obligation, net of current portion             8,005   7,337
                                                                            
                                                              11,556  12,118
                                                                            
                                                                        
MINORITY INTEREST                                                   -     398
                                                                        
COMMITMENTS AND CONTINGENCIES:                                          
                                                                            
SHAREHOLDERS' EQUITY:                                                       
   Preferred stock, no par value                                             
    Authorized_1,000,000 shares                                                
     Issued and outstanding_none                                      -       -
   Common stock, no par value                                                
    Authorized_40,000,000 shares                                               
     Issued and outstanding 23,223,449 at December 31, 1997                    
and 24,740,889 at December 31, 1998                          66,207 107,571
   Retained earnings                                           30,101  56,794
                                                                            
                                                              96,308 164,366
                                                                            
                                                             $119,44 $198,12
                                                                  3       3
                                                                            
                                                                           


The  accompanying notes are an integral part of these consolidated  balance
sheets.


                           99 CENTS ONLY STORES

                     CONSOLIDATED STATEMENTS OF INCOME

               YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
               (Amounts In Thousands, Except Per Share Data)

                                                   1996    1997    1998
                                                                          
NET SALES:                                                                
99 Cents Only Stores                              $143,16 $186,02 $238,86
                                                        3       4       7
Universal                                                 -       -  31,107
Bargain Wholesale                                    40,480  44,831  53,299
                                                                          
                                                   183,643 230,855 323,273
COST OF SALES                                      120,922 146,797 199,618
                                                                          
   Gross profit                                      62,721  84,058 123,666
                                                                          
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:                             
   Operating expenses                                37,683  49,850  73,941
   Depreciation and amortization                      2,009   2,989   5,053
                                                                          
                                                    39,692  52,839  78,994
                                                                          
     Operating income                                  23,029  31,219  44,661
                                                                          
OTHER (INCOME) EXPENSE:                                                   
   Interest income                                    (890) (1,613) (2,186)
   Interest expense                                     764     758     783
                                                      (126)   (855) (1,403)
                                                                          
                                                                           
EQUITY LOSS AND MINORITY INTEREST                         -       -   1,429
                                                                          
                                                                          
Income before proforma and historical provision                           
for income taxes:                                  23,155  32,074  44,635
                                                                          
PROVISION FOR INCOME TAXES:                                               
   Pro forma (unaudited)                              9,453       _       _
                                                                          
   Historical                                         2,418  13,124  17,942
                                                                          
NET INCOME:                                                               
   Pro forma (unaudited)                            $13,702       -       -
                                                                          
   Historical                                       $20,737 $18,950 $26,693
                                                                          
                                                                         
EARNINGS PER COMMON SHARE:
   Pro forma_Basic (unaudited)                        $0.68      $-      $-
   Pro forma_Diluted (unaudited)                      $0.62      $-      $-
   Historical_Basic                                   $1.03   $0.82   $1.11
   Historical_Diluted                                 $0.94   $0.81   $1.09
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                                  
OUTSTANDING:
   Pro forma_Basic (unaudited)                       20,129       -       -
   Pro forma_Diluted (unaudited)                     21,999       -       -
   Historical_Basic                                  20,129  23,178  24,022
   Historical_Diluted                                21,999  23,445  24,562
                                                                          

The accompanying notes are an integral part of these consolidated financial
statements.

                           99 CENTS ONLY STORES

        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

                          (Amounts In Thousands)

                                                      Share Amount  Retain
                                                        s             ed
                                                                    Earnin
                                                                      gs
                                                      Common        
                                                      Stock
                                                                            
                                                                            
                                                                           
BALANCE, December 31, 1995                             15,51    $195  $35,36
                                                          4               3
   Net income                                               -       -  20,737
   Cash distributions to shareholders                       -       -  (5,000
                                                                          )
   Distributions to shareholders in the form of notes       -       -  (35,54
payable                                                                  9)
   Distributions to shareholders in the form of             -       -  (4,400
dividends payable                                                         )
   Net proceeds from initial public offering            7,637  66,159       -
                                                                            
                                                                           
BALANCE, December 31, 1996                             23,15  66,354  11,151
                                                          1
   Net income                                               -       -  18,950
   Tax benefit from exercise of stock options               -     350       -
   Proceeds from exercise of stock options                 72     503       -
                                                                            
                                                                           
BALANCE, December 31, 1997                             23,22  66,207  30,101
                                                          3
   Net income                                                          26,693
   Tax benefit from exercise of stock options               -   2,195       -
   Proceeds from exercise of stock options                243   2,477       -
   Net proceeds from secondary public offering            938  27,188       -
   Shares issued in connection with acquisition of        337   9,504       -
Universal
                                                                            
                                                                           
BALANCE, December 31, 1998                             24,74 $107,57  $56,79
                                                          1       1       4
                                                                            
                                                                           
                                                                           


The accompanying notes are an integral part of these consolidated financial
statements.

                           99 CENTS ONLY STORES

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

               YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

                          (Amounts in Thousands)

                                                   1996    1997     1998
                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES:                                      
   Net income                                       $20,737 $18,950  $26,693
   Adjustment to reconcile net income to net cash                           
provided by operating activities:
     Provision for doubtful accounts                      177      20        -
     Depreciation and amortization                      2,009   2,989    5,053
     Loss on disposition of property and equipment         13       _        _
    Equity loss and minority interest                       _       _    1,429
     Benefit for deferred income taxes                (5,324)   (245)    (475)
   Changes in asset and liabilities associated with                         
operating activities net of businesses acquired:
     Accounts receivable                                (378)      31    (816)
     Inventories                                      (2,620) (6,181)  (7,117)
     Other assets                                          42 (1,470)  (2,396)
     Deposits                                            (15)      12        -
     Receivable from affiliated entity                   (58)    (66)      230
     Accounts payable                                     827 (1,043)    4,379
     Accrued expenses                                     185   (843)    (766)
     Worker's compensation                              (438)     320      281
     Income taxes payable                                   7     458    (211)
     Deferred rent                                       (52)     182      185
     Accrued interest                                     535     575      524
                                                                           
        Net cash provided by operating activities       15,647  13,690   26,994
                                                                           
CASH FLOWS FROM INVESTING ACTIVITIES:                                      
   Purchases of property and equipment              (7,308) (9,357)  (12,600
                                                                         )
   Purchases of short-term investments              (27,619 (4,966)  (26,324
                                                        )                )
  Cash paid for Odd's-N-End's shares                      -       -    (843)
   Investment in Universal International, Inc.            - (1,708)        -
                                                                           
        Net cash used in investing activities          (34,927 (16,030  (39,767
                                                        )       )        )
                                                                           
CASH FLOWS FROM FINANCING ACTIVITIES:                                      
   Payments of capital lease obligation               (612)   (666)    (758)
  Retirement of revolving line of credit                  -       -  (12,500
                                                                         )
   Net proceeds from sale of stock                   66,159       _   27,188
   Proceeds from exercise of stock options                _     503    2,477
   Payment of notes payable to shareholders         (35,549       _        _
                                                        )
   Payment of dividend payable                      (4,400)       _        _
   Distributions to shareholders                    (5,000)       _        _
                                                                           
        Net cash provided (used in) financing           19,598   (153)   16,407
activities
                                                                           
NET INCREASE (DECREASE) IN CASH                        318 (2,493)    3,634
CASH, beginning of period                            3,057   3,375      882
                                                                           
CASH, end of period                                 $3,375    $882   $4,516
                                                                           
                                                                          


The accompanying notes are an integral part of these consolidated financial
statements.


                           99 CENTS ONLY STORES

              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                            December 31, 1998



1.  Line of Business

      The  Company, 99 Cents Only Stores and its subsidiaries (the Company,
including the operations of its 99 Cents Only Stores, Only Deals and Odd's-
N-End's  retail  locations and Bargain Wholesale) primarily retail  various
consumable products and operated 53 and 139 stores at December 31, 1997 and
1998,  respectively. The Company is also a wholesale distributor of various
consumable products.

2.  Investment in Universal International, Inc.

      On  September 16, 1998, the Company completed its exchange  offer  to
purchase  additional shares of the outstanding common stock  of  Universal.
The  Company acquired an additional 46% of the outstanding common stock  of
Universal  in  exchange for 336,986 shares of 99 Cents Only  Stores  common
stock.  After  the  exchange  the Company owns  approximately  94%  of  the
outstanding  shares  of Universal's common stock. In addition  the  Company
completed  a  merger  with Odd's-N-End's Inc. on September  30,  1998.  The
Company  paid  $0.30  per  share  or $843,243  for  all  of  the  remaining
outstanding shares of Odd's-N-End's common stock. Included in 99 Cents Only
Stores'  results of operations for the year ended December 31,  1998  is  a
$1.4  million charge representing the Company's 48% share of the  Universal
loss  for  the  period  from January 1, 1998 through  September  16,  1998.
Universal's  results of operations, including the results of Odd's-N-End's,
from  September  17, 1998 through December 31, 1998 are  consolidated  with
that  of  the  Company.  Also during September 1998,  the  Company  retired
Universal's secured revolving note payable of approximately $12.5  million.
Goodwill  of  $8.6 million associated with the acquisition of Universal  is
being  amortized over a 30-year period. During the period from  January  1,
1998 to September 16, 1998, the date of the purchase of the additional  46%
interest in Universal common stock, the Company recorded wholesale sales to
Universal of $11,970,000.

      The following unaudited pro forma results of operations for the years
ended December 31, 1997 and 1998 (in thousands, except per share data) have
been  prepared  as  if  the  acquisitions of  Universal  and  Odd's-N-End's
occurred on January 1, 1997.

                                     Years Ended December 31,
                                             1997           1998
          Net Sales                      $299,560       $358,067
          Net Income                       14,726         25,813
          Earnings per share:                                   
               Basic                        $0.62          $1.06
               Diluted                      $0.62          $1.04

      The pro forma financial information presented does not purport to  be
indicative of the financial position or operating results which would  have
been achieved had the transactions described above taken place at the dates
indicated  and  are  not necessarily indicative of the Company's  financial
position or results of operations for any future period.







3.  Concentration of Operations in Southern California

       Most  of  the  Company's  retail  stores  are  located  in  Southern
California.  In  addition,  the Company's current  retail  expansion  plans
anticipate  that  new  stores will be located in  this  geographic  region.
Consequently,  the Company's results of operations and financial  condition
are  dependent  upon  general  economic trends  and  various  environmental
factors in Southern California. With the acquisition of Universal and Odd's-
N-End's,  the Company also has retail stores in the upper Midwest,  upstate
New York and Texas.

4.  Summary of Significant Accounting Policies

Principles of Consolidation

     The consolidated financial statements include the accounts of 99 Cents
Only   Stores  and  its  majority  owned  subsidiaries.  All  inter-company
transactions have been eliminated.

Use of Estimates

      The  preparation of consolidated financial statements  in  conformity
with  generally accepted accounting principles requires management to  make
estimates  and assumptions that affect the reported amounts of  assets  and
liabilities and disclosure of contingent assets and liabilities at the date
of  the  financial  statements and the reported  amounts  of  revenues  and
expenses  during  the reporting period. Actual results  could  differ  from
those estimates.

Inventories

      Inventories are priced at the lower of cost (first in, first out)  or
market.

Depreciation and Amortization

      Goodwill, property and equipment are amortized and depreciated on the
straight-line basis over the following useful lives of the assets:

Goodwill                        30 years
Building and improvements       30 - 27.5 years
                                Lesser of 5 years or
Leasehold improvements          Remaining lease term
Fixtures and equipment          5 years
Transportation equipment        3 years

      The  Company  follows  the policy of capitalizing  expenditures  that
materially   increase  asset  lives  and  charging  ordinary  repairs   and
maintenance to operations as incurred.

Stock Split

      All  common shares and per share amounts have been adjusted  to  give
retroactive effect for a five and four stock split effected in the form  of
a  stock dividend distributed on November 12, 1998 to holders of record  on
November 5, 1998.

Earnings per share

      Earnings per share calculations are in accordance with SFAS No.  128,
"Earnings per Share" (SFAS 128). Accordingly, "basic" earnings per share is
computed  by dividing net income by the weighted average number  of  shares
outstanding  for  the  year. "Diluted" earnings per share  is  computed  by
dividing  net income by the total of the weighted average number of  shares
outstanding plus the dilutive effect of outstanding stock options (applying
the treasury stock method).

      A  reconciliation  of  the basic weighted average  number  of  shares
outstanding  and the diluted weighted average number of shares  outstanding
for each of the three years in the period ended December 31, 1998 follows:

                                            1996  1997  1998
                                           (Amou
                                            nts
                                             in
                                           thous
                                           ands)
                                                              
Weighted average number of common shares                      
outstanding-Basic                           20,12 23,17 24,02
                                                9     8     2
Dilutive effect of outstanding stock options   168   267   540
Weighted average shares offered as a part of               
the public offering; the proceeds from                    
such shares being used to fund a $39.9                    
million distribution to shareholders        1,702     -     -
                                                              
Weighted average number of common shares                      
outstanding-Diluted                         21,99 23,44 24,56
                                                9     5     2
                                                              
                                                             


     Pro forma earnings per common share have been computed by dividing pro
forma  net income by the pro forma weighted average number of common shares
outstanding plus the dilutive effect of common stock equivalents.

Concentration of Risk

      The  Company  maintains cash and short-term investments  with  highly
qualified financial institutions. At various times such amounts may  be  in
excess of insured limits.

Pro Forma Statements of Income

      Through  April 30, 1996, the Company had elected treatment  as  an  S
corporation under provisions of the Internal Revenue Code. Effective May 1,
1996,  the  Company terminated its S corporation election and  became  a  C
corporation.

     See Note 5 for explanation of pro forma provision for income taxes and
related pro forma net income.

Deferred Rent

      Certain  of  the Company's operating leases for its retail  locations
include scheduled increasing monthly payments. In accordance with generally
accepted accounting principles, the Company has accounted for the leases to
provide straight-line charges to operations over the lives of the leases.

Revenue Recognition

     Revenue is recognized at the point of sale for retail sales and at the
time of shipment for wholesale sales.

Pre-Opening Costs

      The  Company expenses, as incurred, all pre-opening costs related  to
the opening of new retail stores.




Stock Based Compensation

      During  1996,  the Company adopted Statement of Financial  Accounting
Standards  No. 123, "Accounting for Stock Based Compensation"  (SFAS  123).
The   Company  has  elected  to  comply  with  the  pro  forma   disclosure
requirements of this standard (see note 10) and to continue to account  for
stock options issued to employees under the provisions of APB 25.

Statements of Cash Flows

      The  Company prepares its statements of cash flows using the indirect
method as prescribed by the Statement of Financial Accounting Standards No.
95. The Company considers all investments with original maturities of three
months or less to be cash equivalents.

      Cash  payments  for  income  taxes were $7,735,000,  $12,911,000  and
$16,727,000 in 1996, 1997 and 1998, respectively. Interest payments totaled
approximately  $228,000, $184,000 and $168,450 for the years  December  31,
1996, 1997 and 1998, respectively.

New Authoritative Pronouncements

      In June 1997, the Financial Accounting Standard Board issued SFAS No.
130, "Reporting Comprehensive Income" (SFAS 130). Adoption of SFAS 130  has
not had a material impact on the Company's financial reporting.

      In June 1997, the Financial Accounting Standard Board issued SFAS No.
131,  "Disclosure about Segments of an Enterprise and Related  Information"
(SFAS 131). The Company adopted SFAS 131 in 1998 (see Note 11).

      In  1998,  the  FASB issued SFAS No. 133, Accounting  for  Derivative
Instruments  and Hedging Activities" (SFAS 133). SFAS 133 is  effective  in
2000  and  management does not expect adoption of this standard to  have  a
material  impact  on  the  Company's  financial  reporting  or  results  of
operations.

Reclassifications

      Certain amounts in the prior years have been reclassified to  conform
to the current year's presentation.

5.  Pro Forma and Historical Income Tax Provision

      Effective  May  1,  1996, the Company terminated  its  S  corporation
election  and became a C corporation. The actual taxes due by  the  Company
through  December 31, 1996 are based on S corporation tax rates for  income
from  January  1, 1996 through April 30, 1996 and C corporation  tax  rates
from  May  1,  1996  through  December 31, 1996.  In  connection  with  the
Company's  change in tax status, the Company recorded an  increase  in  the
deferred  tax  asset of $4,570,000. As a C corporation, the computation  of
deferred taxes is based on federal C corporation tax rates, which  are  not
applicable to S corporations, and C corporation state tax rates, which  are
significantly larger than S corporation state tax rates. In accordance with
SFAS 109, the gain resulting from the increase in the deferred tax asset is
included  as  a credit to tax expense during the period ended December  31,
1996.


      The  historical  provision (benefit) for income taxes  and  resulting
historical net income, based on S corporation and C corporation  tax  rates
as discussed above and including the effect of the increase in deferred tax
asset  as  discussed  above, for the year ended December  31,  1996  is  as
follows:



                                                    (Amounts
                                                       in
                                                   Thousands
                                                       )
                                                              
Income before provision (benefit) for income taxes     $23,155
Historical provision (benefit) for income taxes:              
   During period as an S corporation                          75
   During period as a C corporation                        6,913
   Change in tax status                                  (4,570)
                                                              
                                                         2,418
                                                              
Historical net income                                  $20,737
                                                              
                                                             


     As an S corporation, the Company's income, whether distributed or not,
was  taxed  at  the shareholder level for federal income tax purposes.  For
California  franchise tax purposes, as an S corporation,  the  Company  was
taxed at 1.5 percent of taxable income.

      Because of the Company's change in tax status, historical results  of
operations,  including  income  taxes,  and  related  earnings  per   share
information  may  not  in all cases, be comparable  to,  or  indicative  of
current  and future results. Therefore, pro forma information, which  shows
results  as if the Company had always been a C Corporation is presented  on
the face of the accompanying statements.

      The pro forma provision for income taxes included in the accompanying
statements  of  income  shows results as if the  Company  had  always  been
subject  to taxes as a C Corporation and had adopted Statement of Financial
Accounting  Standards No. 109 (SFAS 109), "Accounting  for  Income  Taxes,"
prior to fiscal 1991.

     Under SFAS 109, deferred income tax assets or liabilities are computed
based  on temporary differences between the financial statement and  income
tax  bases of assets and liabilities using the enacted marginal income  tax
rate  in  effect  for  the year in which the differences  are  expected  to
reverse.  Deferred income tax expenses or credits are based on the  changes
in the deferred income tax assets or liabilities from period to period.

      Under  SFAS 109, deferred tax assets may be recognized for  temporary
differences  that will result in deductible amounts in future  periods  and
for  loss carry forwards. A valuation allowance is recognized if, based  on
the  weight  of  available evidence, it is more likely than not  that  some
portion  or  all  of the deferred tax asset will not be realized.  The  pro
forma  provisions for income taxes for the year ended December 31, 1996  is
as follows:


                                            Year
                                            ended
                                          December
                                             31,
                                          (Amounts
                                             in
                                          thousands
                                              )
                                            1996
                                               
Current:                                       
   Federal                                      $8,695
   State                                         1,490
                                                    
                                              10,185
Deferred                                       (732)
                                                    
Pro forma provisions for income taxes         $9,453
                                               





      The  historical  provisions for income  taxes  for  the  years  ended
December 31, 1996, 1997 and 1998 are as follows:


                                       Years
                                       Ended
                                      Decembe
                                       r 31,
                                      (Amount
                                       s in
                                      thousan
                                        ds)
                                       1996     1997    1998
                                                               
Current:                                                       
   Federal                                $6,111  $10,678 $14,879
   State                                   1,631    2,691   3,538
                                                               
                                         7,742   13,369  18,417
Deferred                               (5,324)    (245)   (475)
                                                               
Provisions for income taxes             $2,418  $13,124 $17,942
                                                               
                                                              


      Differences  between the pro forma provisions for  income  taxes  and
income  taxes at the statutory federal income tax rate for the  year  ended
December 31, 1996 is as follows:


                                   Amoun  Perce
                                     t      nt
                                      
                                    Year ended
                                   December 31,
                                       1996
                                    (Amounts in
                                    thousands)
                                                 
Income tax at statutory Federal      $8,10    35%
rate                                    4
State income taxes, net of federal   1,389    6.0
income tax effect
                                                 
Effect of permanent differences         60    0.2
LARZ and targeted jobs credits       (100)  (0.4)
                                                 
                                     $9,45  40.8%
                                        3
                                                 
                                                


      Differences  between the historical provisions for income  taxes  and
income  taxes at the statutory federal income tax rate for the years  ended
December 31, 1996, 1997 and 1998 are as follows:

                                  Year
                                 Ended
                                 Decem
                                  ber
                                  31,
                                 (Amou
                                  nts
                                   in
                                 thous
                                 ands)
                                  1996      1997          1998
                                 Amoun  Perce  Amoun  Perce  Amoun  Perce
                                   t      nt     t      nt     t      nt
                                                                           
Income tax at statutory federal    $6,12  26.4%  $11,2  35.0%  $15,6  35.0%
rate                                  2            26            22
State income taxes, net of                                                 
federal income tax effect         1,049    4.5  1,924    6.0  2,566    5.7
State income taxes as an S            85    0.4      _      _      _      _
corporation
Effect of permanent differences       31    0.1  (204)  (0.6)  (254)  (0.5)
Effect of Universal equity losses      _      _      _      _    580    1.3
LARZ and targeted job credits      (100)  (0.4)  (280)  (0.9)  (393)  (0.9)
Change in tax status               (4,57  (19.7      _      _             _
                                     0)      )
Other                              (199)  (0.9)    458    1.4  (178)  (0.4)
                                                                           
                                   $2,41  10.4%  $13,1  40.9%  $17,9  40.2%
                                      8            24            42
                                                                           
                                                                           




      A  detail of the Company's deferred tax asset as of December 31, 1997
and 1998 is as follows:

                                                  Years
                                                  Ended
                                                 December
                                                   31,
                                                 (Amounts
                                                    in
                                                 thousand
                                                    s)
                                                  1997   1998
                                                                
Inventory                                         $1,542  $1,061
Uniform inventory capitalization                     886   1,712
Depreciation                                       1,666   1,566
Liability for claims                                 162     125
Workers' compensation                                447     599
Deferred rent                                        605     755
LARZ credit                                          195       _
State taxes                                          511     724
Other, net                                          (57)     369
Net operating loss carry-forward                       -  10,330
                                                                
                                                   5,947  17,240
                                                                
Net deferred tax liabilities                           -   (488)
                                                   5,947  16,752
Valuation allowance                                    - (10,330
                                                              )
                                                  $5,947  $6,422

     In connection with the acquisition of Universal and Odd's-N-End's, the
Company  has  federal  net operating loss carry-forwards  of  approximately
$29.5  million  which  it  can  use to offset Universal  and  Odd's-N-End's
income.  Future use of these loss carry-forwards may be limited and  expire
at  various dates through 2012. Due to the uncertainty of the future use of
such  loss  carry-forwards, the Company has recorded a valuation  allowance
equal to the tax effect of the loss carry-forward. In accordance with  SFAS
109,  any  benefits  realized from future use of these loss  carry-forwards
will  be  recorded  as  a  reduction of the  goodwill  generated  from  the
acquisition.


6.  Short-Term Investments

      Investment in debt and equity securities are recorded as required  by
SFAS  No.  115,  "Accounting for Certain Investments  in  Debt  and  Equity
Securities."   The  Company's  investments  are  comprised   primarily   of
investment  grade  federal and municipal bonds and  commercial  paper.  The
Company generally holds investments until maturity. Any premium or discount
recognized  in connection with the purchase of an investment  is  amortized
over the term of the investment. As of December 31, 1997 and 1998, the fair
value of investments approximated the carrying values and were invested  as
follows:

 (Amounts in thousands)   1997    Maturity     1998    Maturity
                                 Withi   1 to        Withi   1 to
                                   n 1      2          n 1      2
                                  year  years         year  years
                                                                  
Federal bonds              $1,50      $  $1,50  $1,50     $  $1,50
                              0      -      0      0     -      0
Municipal bonds            18,58  13,69  4,893  15,84 14,63  1,210
                              3      0             6     6
Commercial paper           12,50  12,50      -  29,21 29,21      -
                              1      1             4     4
                                                                  
                           $32,5  $26,1  $6,39  $46,5 $43,8  $2,71
                             84     91      3     60    50      0
                                                                  
                                                                 



7.  Capital Lease Obligations

      The Company leases its warehouse, distribution and corporate facility
(approximately  880,000  square feet) under a  lease  accounted  for  as  a
capital  lease.  Included in property and equipment is approximately  $13.7
million of land and building, at cost, related to this lease.

      The  lease  requires fixed payments of $70,000 per  month  and  bears
interest   at   7.0  percent  per  annum.  At  the  lease   expiration   in
December  2000,  the Company has the option to purchase  the  facility  for
$10.5  million. The Company plans to exercise the option at the end of  the
lease.  In  the event the option is not exercised, there is a $7.6  million
penalty.

      Universal  also  has  various capital lease  obligations  payable  in
various  monthly  installments through August 2000, including  interest  at
5.0% and 11.1%.


     Total minimum payments under the lease are as follows:

                                                   (Amounts
                                                      in
                                                  thousands
                                                      )
                                                             
Year ending December 31:                                     
         1999                                                1,155
         2000                                               11,566
                                                             
                                                       12,720
Less_Amount representing interest                     (4,460)
                                                             
Present value of minimum lease payment                  8,260
Less_Current portion                                    (923)
                                                             
                                                       $7,337
                                                             

8.  Related-Party Transactions

      The  Company  leases  certain retail facilities  from  its  principal
shareholders.  Rental expense for these facilities was  approximately  $1.8
million,   $2.0  million  and  $2.2  million  in  1996,  1997   and   1998,
respectively.
     During 1996, 1997 and 1998 the Company incurred legal fees of $82,000,
$61,000  and $60,000, respectively, to the law firm in which a director  of
the Company is a partner.

9.  Commitments and Contingencies

Credit Facility

      The  Company does not maintain any credit facilities with  any  bank.
However, the Company maintains a surety bond of approximately $1.2  million
for self-insured workers' compensation.

Lease Commitments

      The  Company leases various facilities under operating leases,  which
expire  at various dates through 2009. Some of the lease agreements contain
renewal  options and/or provide for scheduled increases or increases  based
on  the  Consumer Price Index. Total minimum lease payments under  each  of
these  lease  agreements,  including scheduled increases,  are  charged  to
operations on a straight line basis over the life of each respective lease.
Certain  leases  require  the payment of property  taxes,  maintenance  and
insurance. Rental expense charged to operations in 1996, 1997 and 1998  was
approximately $5.6 million, $7.3 million and $10.6 million, respectively.

      As of December 31, 1998, the minimum annual rentals payable under all
non-cancelable operating leases were as follows:
                                                   (Amounts
                                                      in
                                                  thousands
                                                      )
                                                             
Year ending December 31:                                     
         1999                                              $14,467
         2000                                               13,304
         2001                                               10,547
         2002                                                8,925
         2003                                                7,918
         Thereafter                                         15,549
                                                             
                                                      $70,710
                                                             
      In  addition, the Company also leases certain retail facilities on  a
month-to-month   basis.   The  aggregate  monthly   rental   payments   for
month-to-month leases at December 31, 1998 were approximately $30,000.

Workers' Compensation

      Effective  August  11, 1993, the Company became  self-insured  as  to
workers'   compensation  claims.  The  Company  carries   excess   workers'
compensation  insurance, which covers any individual  claim  in  excess  of
$250,000  with a $2.0 million ceiling. The Company provides for  losses  of
estimated  known  and  incurred but not reported  insurance  claims.  Known
claims  are estimated and accrued when reported. At December 31, 1998,  the
Company  had  accrued  approximately $1.4 million  for  estimated  workers'
compensation claims.

      In  connection with the self-insurance of workers' compensation,  the
Company is required, by the State of California, to maintain a $1.2 million
surety bond.

      The  Company is named as a defendant in various legal matters arising
in  the  normal course of business. In management's opinion, none of  these
matters will have a material effect on the Company's financial position  or
its results of operations.

10.  Stock Option Plan

      The  Company's 1996 Stock Option Plan is a fixed plan, which provides
for  the granting of non-qualified and incentive options to purchase up  to
3,125,000  shares  of  common stock. Options may be  granted  to  officers,
employees, directors and consultants. Grants may be at fair market value at
the  date  of grant or at a price determined by the compensation  committee
consisting  of  three  outside  members of  the  board  of  directors  (the
"Committee").  Options vest over a three year period, one  third  one  year
from  the  date of grant and one third per year thereafter. Options  expire
ten years from the date of grant.
The following table summarizes stock options available for grant.

                                Year       Year       Year
                                ended     ended      ended
                              December   December   December
                                 31,       31,        31,
                                1996       1997       1998
                                                              
Beginning Balance                      _    861,173     16,500
Authorized                     1,562,500          _  1,562,500
Granted                        (798,124)  (885,705)  (917,284)
Cancelled                         96,797     41,032    132,699
                                                         
Available for future grant       861,173     16,500    794,415
                                                              






      A  summary of the status of the Plan for the years ended December 31,
1997 and 1998 follows:
                               December 31,   December 31,    December 31,
                                   1996           1997            1998
                                      Weight          Weight         Weight
                                        ed              ed             ed
                                      Averag          Averag         Averag
                              Shares    e     Shares    e    Shares    e
                                      Exerci          Exerci         Exerci
                                        se              se             se
                                      Price           Price          Price
                                                                            
Outstanding at the beginning                                                
of the year                         -  $   -  701,327  $7.08 1,474,0 $11.18
                                                                  44
Granted                        798,124   7.07  885,705  14.12 917,284  31.29
Exercised                            -      -  (71,956   7.00 (242,95   8.75
                                                    )             4)
Cancelled                      (96,797   7.03  (41,032  10.87 (132,69  13.59
                                    )               )             9)
                                                                            
Outstanding at the end of the  701,327  11.18  1,474,0  11.18 2,015,6  13.97
year                                               44             75
                                                                            
                                                                            
Exercisable at the end of the        -      -  166,894  $7.11 446,102 $11.59
year
                                                                            
Weighted average fair value of                                              
options granted                        $3.62          $11.55         $31.29

      The  following  table  summarizes  information  about  stock  options
outstanding at December 31, 1998.

                        Weighted    Weight            Weight
 Range of                Average      ed                ed
 Exercise    Options    Remaining   Averag  Options   Averag
  Prices    Outstandi  Contractual    e    Exercisab    e
               ng         life      Exerci     le     Exerci
                                      se                se
                                    Price             Price
                                                            
$7.03_$8.56   442,490           7.3  $7.50    232,627  $7.05
  $8.88-       13,751           6.9   9.20      9,688   9.33
  $11.64
$14.08_$17.   679,552           8.3  14.09    166,270  14.08
    04
$17.40_$21.     6,563           8.7  20.11      2,188  20.11
    20
$26.85_$30.   753,912           9.3  30.10     18,750  26.85
    20
$30.40_$32.    24,564           7.2  31.93     17,579  32.00
    00
$41.00_$43.    94,843           9.9  41.14          -      -
    26
                                                            
            2,015,675           8.5  20.01    446,102  11.59
                                                            
                                                            
     
      The  Company  has  elected to continue to measure compensation  costs
associated with its stock option plan under APB 25, "Accounting  for  Stock
Issued  to  Employees" and accordingly, under SFAS No.  123,  the  expected
impact  on the Company's financial statements is included in this  expanded
footnote disclosure.

      Had  the  Company applied the fair value based method of  accounting,
which is not required, to all grants of stock options, under SFAS 123,  the
Company  would have recorded additional compensation expense  and  computed
pro  forma  net  income and earnings per share amounts as follows  for  the
years  ended December 31, 1997 and 1998 (amounts in thousands,  except  for
per share data):

                                            December 31,
                                         1996   1997   1998
                                                             
Additional compensation expense            $850  $3,11  $8,36
                                                    2      0
Pro forma net income                      20,22  17,08  21,67
                                             7      3      7
Pro forma earnings per share:                                
         Basic                                 $1.01  $0.74  $0.76
         Diluted                               $0.92  $0.73  $0.75
                                                             



      These pro forma amounts were determined by estimating the fair  value
of  each  option  on its grant date using the Black-Scholes  option-pricing
model with the following assumptions:

                                                  December 31,
                                              1996    1997     1998
                                                                      
Risk free interest rate                          5.0%    5.4%     4.9%
Expected life                                     5.6      10      8.8
                                               years   years    years
Expected stock price volatility                   28%     77%      67%
Expected dividend yield                          None    None     None
                                                                      

11.    Operating Segments

     The Company has two business segments, retail operations and wholesale
distribution.  The  retail  segment  includes  99  Cents  Only  Stores  and
Universal's,  Only Deals and Odd's-N-End's retail stores. The  majority  of
the product offerings include recognized brand-name consumable merchandise,
regularly  available  for  reorder.  Bargain  Wholesale  sales   the   same
merchandise  at  prices generally below normal wholesale levels  to  local,
regional and national distributors and exporters.

      The  accounting  policies  of the segments  are  the  same  as  those
described  above  in  the summary of significant accounting  policies.  The
Company  evaluates segment performance based on net sales and gross  profit
of each segment. Management does not track segment data or evaluate segment
performance  on  additional financial information. As such,  there  are  no
separately   identifiable  segment  assets  nor  is  there  any  separately
identifiable  statements  of  income  data  (below  gross  profit)  to   be
disclosed.

      The  company accounts for inter-segment transfer at cost through  its
inventory  and  inter-company  accounts.  All  such  transfers  have   been
eliminated in consolidation.

      The  Company  had no customers representing more than 10  percent  of
consolidated net sales. Substantially all of the Company's net  sales  were
to customers located in the United States.

      Reportable segment information for the years ended December 31, 1996,
1997 and 1998 follows (in 000's).

                                    Retail   Wholesale       Total
            1996                                                  
            Net sales             $143,163     $40,480    $183,643
            Gross Margin            54,607       8,114      62,721
                                                                  
            1997                                                  
            Net sales             $186,024      44,831     230,855
            Gross Margin            75,211       8,847      84,058
                                                                  
            1998                                                  
            Net sales             $269,974     $53,299    $323,273
            Gross Margin           113,617      10,038     123,666
                                                                  
                                                                  
12.  401(k) Plan

      In  1998 the Company adopted a 401(k) Plan (the Plan). All full  time
employees  are  eligible  to participate in the  plan  after  3  months  of
service. The Company does not match employee contributions. The Company may
elect  to make a discretionary contribution to the Plan. For the year ended
December 31, 1998, no discretionary contributions were made.



Item  9.  Changes in and Disagreements with Accountants on  Accounting  and
Financial Disclosure

     None.

                                 PART III

Item 10. Directors and Executive Officers of the Registrant

     Information regarding directors of the registrant required by Item 401
of  Regulation  S-K  and  information  regarding  Directors  and  Executive
Officers  of  the  registrant required by Item 405  of  Regulation  S-K  is
presented  under  the  captions "Election of Directors,"  "Management"  and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the definitive
Proxy Statement for the Company's 1999 Annual Meeting of Shareholders,  and
is incorporated herein by reference.

Item 11. Executive Compensation

      The  information required by Item 402 of Regulation S-K is  presented
under   the  caption  "Executive  Compensation"  in  the  definitive  Proxy
Statement  for  the Company's 1999 Annual Meeting of Shareholders,  and  is
incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      The  information required by Item 403 of Regulation S-K is  presented
under   the  caption  "Principal  Shareholders"  in  the  definitive  Proxy
Statement  for  the Company's 1999 Annual Meeting of Shareholders,  and  is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

      The  information required by Item 404 of Regulation S-K is  presented
under the caption "Certain Relationships" in the definitive Proxy Statement
for  the Company's 1999 Annual Meeting of Shareholders, and is incorporated
herein by reference.

                                 PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K



1.   Financial  Statements.  Reference  is  made  to  the  Index   to   the
     Consolidated  Financial Statements set forth on page 32 of  this  Form
     10-K.

2.   Financial  Statement Schedules. All Schedules for which  provision  is
     made  in  the applicable accounting regulations of the Securities  and
     Exchange Commission are included herein.

3.   Exhibits.  The Exhibits listed on the accompanying Index  to  Exhibits
     are filed as part of, or incorporated by reference into, this report.

4.   Reports on Form 8-K.
          A Report on Form 8-K was filed on February 19, 1998 Item 5.
          A Report on Form 8-K was filed on April 9, 1998 Item 5.
          A Report on Form 8-K was filed on April 22, 1998 Item 5.
          A Report on Form 8-K was filed on May 1, 1998 Item 5.
          A Report on Form 8-K was filed on October 27, 1998 Item 5.
SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange  Act  of 1934, the Registrant has duly caused this  annual  report
Form  10-K  to  be signed on its behalf by the undersigned, thereunto  duly
authorized.

                               99
                              CE
                              NT
                              S
                              ON
                              LY
                              ST
                              OR
                              ES
                               By                      
                              :                       
                                               Eric Schiffer
                                    Senior Vice President of Finance and
                                                 Operations
                                               and Treasurer

      Pursuant to the requirements of the Securities Exchange Act  of  1934
this  Annual  Report  on Form 10K has been signed below  by  the  following
persons on behalf of the Registrant and in the capacities and on the  dates
indicated.

          Signature                        Title                  Date
                                                                    
                                                                    
                              Chairman of the Board, Chief      March 25,
         David Gold           Executive Officer and President     1999
                                                                    
                              Senior Vice President of          March 25,
         Howard Gold          Distribution and Director           1999
                                                                    
                              Senior Vice President of Real     March 25,
          Jeff Gold           Estate and Information Systems      1999
                              and Director
                                                                    
                              Senior Vice President of Finance  March 25,
        Eric Schiffer         and Operations and Director         1999
                                                                    
                                                                March 25,
         Andy Farina              Chief Financial Officer         1999
                                                                    
                                                                March 25,
       William Christy                    Director                1999
                                                                    
                                                                March 25,
      Lawrence Glascott                   Director                1999
                                                                    
                                                                March 25,
       Marvin L. Holen                    Director                1999
                                                                    
                                                                    
        Ben Schwartz                      Director              March 25,
                                                                  1999
                                                                    

                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To 99 Cents Only Stores:

      We  have  audited  in  accordance with  generally  accepted  auditing
standards,  the consolidated financial statements of 99 Cents  Only  Stores
and it's subsidiaries included in this Form 10-K and have issued our report
thereon  dated February 26, 1999.  Our audits were made for the purpose  of
forming an opinion on the basic consolidated financial statements taken  as
a   whole.   The  schedule  listed  in  the  accompanying  index   is   the
responsibility of the Company's management and is presented for purposes of
complying  with the Securities and Exchange Commission's rules and  is  not
part of the basic consolidated financial statements. This schedule has been
subjected  to  the auditing procedures applied in the audits of  the  basic
consolidated financial statements and, in our opinion, fairly states in all
material  respects the financial data required to be set forth  therein  in
relation to the basic consolidated financial statements taken as a whole.




                                                                     ARTHUR
                              ANDERSEN LLP

Los Angeles, California
February 26, 1999

                              99 ONLY STORES
             SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
    For Each of the Three Years in the Period Ended December 31, 1998


                                 Beginni                            End
                                    ng    Additio Reducti   Other    of
                                 of Year     n       on             Year
                                           Amounts in Thousands
For the year ended December 31,                                           
1998:
   Allowance for doubtful account       $178      $-       $9 $366(a)   $535
   Inventory reserve                   3,762       _    1,173       _  2,589
For the year ended December 31,                                           
1997:
   Allowance for doubtful account       $211      $_      $33      $_   $178
   Inventory reserve                   4,052       _      290       _  3,762
For the year ended December 31,                                           
1996:
   Allowance for doubtful account        $34    $237      $60      $_   $211
   Inventory reserve                   4,085       -       33       -  4,052

(a)  Represents the allowance for doubtful accounts recorded in  connection
with the acquisition of Universal International, Inc.


Exhibit Index



Exhib Exhibit Description
it
Numbe
r
      
  3.1 Amended and Restated Articles of Incorporation of the
      Registrant.(1)
  3.2 Amended and Restated Bylaws of the Registrant.(1)
  4.1 Specimen certificate evidencing Common Stock of the Registrant.(1)
 10.1 Form of Indemnification Agreement and Schedule of Indemnified
      Parties.(1)
 10.2 [Reserved]
 10.3 Form of Tax Indemnification Agreement, between and among the
      Registrant and the Existing Shareholders.(1)
 10.4 1996 Stock Option Plan.(1)
 10.5 Lease for 730 West Foothill Boulevard, Azusa, California, dated as
      of December 1, 1995, by and between the Registrant as Tenant and
      HKJ Gold, Inc. as Landlord, as amended(1).
 10.6 Lease for 13023 Hawthorne Boulevard, Hawthorne, California, dated
      April 1 1994, by and between the Registrant as Tenant and HKJ Gold,
      Inc. as Landlord, as amended.(1)
 10.7 Lease for 6161 Atlantic Boulevard, Maywood, California, dated
      November 11, 1985, by and between the Registrant as Lessee and
      David and Sherry Gold, among others, as Lessors.(1)
 10.8 Lease for 14139 Paramount Boulevard, Paramount, California, dated
      as of March 1 1996, by and between the Registrant as Tenant and
      14139 Paramount Properties as Landlord, as amended.(1)
 10.9 Release Agreement, dated March 25, 1996, regarding 11382 Beach
      Boulevard, Stanton, California, by and between the Registrant and
      11382 Beach Partnership.(1)
10.10 Lease for 6124 Pacific Boulevard, Huntington Park, California,
      dated January 31, 1991, by and between the Registrant as Tenant and
      David and Sherry Gold as the Landlord, as amended.(1)
10.11 Lease for 14901 Hawthorne Boulevard, Lawndale, California, dated
      November 1, 1991, by and between Howard Gold, Karen Schiffer and
      Jeff Gold, dba 14901 Hawthorne Boulevard Partnership as Landlord
      and the Registrant as Tenant, as amended.(1)
10.12 Lease for 5599 Atlantic Avenue, North Long Beach, California, dated
      August 13, 1992, by and between the Registrant as Tenant and HKJ
      Gold, Inc. as Landlord, as amended.(1)
10.13 Lease for 1514 North Main Street, Santa Ana, California, dated as
      of November 12, 1993, by and between the Registrant as Tenant and
      Howard Gold, Jeff Gold, Eric J. Schiffer and Karen R. Schiffer as
      Landlord, as amended.(1)
10.14 Lease for 6121 Wilshire Boulevard, Los Angeles, California, dated
      as of July 1, 1993, by and between the Registrant as Tenant and HKJ
      Gold, Inc. as Landlord, as amended; and lease for 6101 Wilshire
      Boulevard, Los Angeles, California, dated as of December 1, 1995,
      by and between the Registrant as Tenant and David and Sherry Gold
      as Landlord, as amended.(1)
10.15 Lease for 8625 Woodman Avenue, Arlets, California, dated as of July
      8, 1993, by and between the Registrant as Tenant and David and
      Sherry Gold as Landlord, as amended.(1)
10.16 Lease for 2566 East Florence Avenue, Walnut Park, California, dated
      as of April 18, 1994, by and between HKJ Gold, Inc. as Landlord and
      the Registrant as Tenant, as amended.(1)
10.17 Lease for 3420 West Lincoln Avenue, Anaheim, California, dated as
      of March 1, 1996, by and between the Registrant as Tenant and HKJ
      Gold, Inc. as Landlord, as amended.(1)
10.18 Master Lease for 4000 East Union Pacific Avenue, City of Commerce,
    . California ("Warehouse and Distribution Facility Lease"), dated as
      of December 20, 1993, by and between the Registrant as Lessee and
      TBC Realty II Corporation ("TBC") as Lessor, together with Lease
      Guaranty ("Lease Guaranty"), dated December 20, 1993, by and
      between Sherry and David Gold and TBC with respect thereto and
      Letter Agreement, dated December 15, 1993, among Registrant, The
      Mead Corporation, TBC and Citicorp Leasing, Inc. with respect to
      the Lease Guaranty.(1)
10.10 Hawaiian Gardens Indemnity Agreement, dated as of March 25, 1996,
      by and between the Registrant and HKJ Gold, Inc.(1)
10.20 North Broadway Indemnity Agreement, dated as of May 1, 1996, by and
      between HKJ Gold, Inc. and the Registrant.(1)
10.21 Lease for 2606 North Broadway, Los Angeles, California, dated as of
      May 1, 1996, by and between HKJ Gold, Inc. as Landlord and the
      Registrant as Tenant.(1)
10.22 Grant Deed concerning 8625 Woodman Avenue, Arleta, California,
      dated May 2, 1996, made by David Gold and Sherry Gold in favor of
      Au Zone Investments #2, L.P., a California limited partnership.(1)
10.23 Grant Deed concerning 6101 Wilshire Boulevard, Los Angeles,
      California, dated May 2, 1996, made by David Gold and Sherry Gold
      in favor of Au Zone Investments #2, L.P., a California limited
      partnership.(1)
10.24 Grant Deed concerning 6124 Pacific Boulevard, Huntington Park,
      California, dated May 2, 1996, made by David Gold and Sherry Gold
      in favor of Au Zone Investments #2, L.P., a California limited
      partnership.(1)
10.25 Grant Deed concerning 14901 Hawthorne Boulevard, Lawndale,
      California, dated May 2, 1996, made by Howard Gold, Karen Schiffer
      and Jeff Gold in favor of Au Zone Investments #2, L.P., a
      California limited partnership.(1)
 11.1 Statements Regarding Computation of Per Share Earnings*
 21.1 Subsidiaries of the Registrant. Universal International Inc., Only
      Deals, Inc., Odd's-N-End's Inc.
 23.1 Consent of Arthur Andersen LLP.*
 27.1 Financial Data Schedule*
      
      
      



*    Filed herewith

(1)Incorporated by reference from the Company's Registration  Statement  on
Form S-1
 as filed with the Securities and Exchange Commission on May 21, 1996.




















Exhibit 11.1

                           99 CENTS ONLY STORES
                   STATEMENTS REGARDING COMPUTATION OF
                            PER SHARE EARNINGS
              (Amounts in Thousands, Except Per Share Data)

                                                       1996   1997   1998
                                                      Decem
                                                       ber
                                                       31,
Net Income                                              $20,7  $18,9  $26,6
                                                          37     50     93
Common Stock:                                                              
   Shares outstanding from beginning of period            15,51  23,15  23,22
                                                           4      1      3
   Pro-rata shares_stock issuance                         4,615     27    799
                                                                           
     Basic weighted average number of common shares        20,12  23,17  24,02
outstanding                                                9      8      2
                                                                           
   Pro-rata common shares to fund distribution to         1,702      -      -
shareholders
   Common stock equivalents                                 168    267    540
                                                                           
     Diluted weighted average number of common shares      21,99  23,44  24,56
outstanding                                                9      5      2
                                                                           
                                                                   
                                                                   
Earnings per Common Share:                                                 
   Basic                                                  $1.03  $0.82  $1.11
   Diluted                                                $0.94  $0.81  $1.09







































                 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As  independent public accountants, we hereby consent to the  incorporation
of  our  reports included in this Form 10-K, into the Company's  previously
filed Registration Statement File No. 33-66729.




                                        ARTHUR ANDERSEN LLP


Los Angeles, California
March 24, 1999











































                                SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report Form  10-K
to be signed on its behalf by the undersigned, thereunto duly authorized.

                               99
                              CE
                              NT
                              S
                              ON
                              LY
                              ST
                              OR
                              ES
                               By                      
                               :                       
                                                Eric Schiffer
                                     Senior Vice President of Finance and
                                                 Operations
                                               and Treasurer

      Pursuant to the requirements of the Securities Exchange Act  of  1934
this  Registration Statement has been signed below by the following persons
on  behalf  of  the  Registrant  and in the capacities  and  on  the  dates
indicated.

          Signature                        Title                  Date
                                                                    
                                                                    
                                                                    
         David Gold           Chairman of the Board, Chief      March 25,
                              Executive Officer and President      1999
                                                                    
                                                                    
                                                                    
         Howard Gold          Senior Vice President of          March 25,
                              Distribution and Director           1999
                                                                    
                                                                    
                                                                    
          Jeff Gold           Senior Vice President of Real     March 25,
                              Estate and Information Systems      1999
                              and Director
                                                                    
                                                                    
                                                                    
        Eric Schiffer         Senior Vice President of Finance  March 25,
                              and Operations and Director         1999
                                                                    
                                                                    
         Andy Farina              Chief Financial Officer       March 25,
                                                                  1999
                                                                    
                                                                    
     William O. Christy                   Director              March 25,
                                                                  1999
                                                                    
                                                                    
      Lawrence Glascott                   Director              March 25,
                                                                  1999
                                                                    
                                                                    
       Marvin L. Holen                    Director              March 25,
                                                                  1999
                                                                    
                                                                    
        Ben Schwartz                      Director              March 25,
                                                                  1999
                                                                    


EXHIBIT 27.1
                                                
                           
                                                
[PERIOD-TYPE]                            12-MOS 
[FISCAL-YEAR-END]                   DEC-31-1998 
[PERIOD-START]                      JAN-01-1998 
[PERIOD-END]                        DEC-31-1998 
[CASH]                                    4,516 
[SECURITIES]                             46,560 
[RECEIVABLES]                             2,605 
[ALLOWANCES]                              (535) 
[INVENTORY]                              78,392 
[CURRENT-ASSETS]                        131,752 
[PP&E]                                   60,219 
[DEPRECIATION]                         (14,746) 
[TOTAL-ASSETS]                          198,123 
[CURRENT-LIABILITIES]                    21,242 
[BONDS]                                       0 
[PREFERRED-MANDATORY]                         0 
[PREFERRED]                                   0 
[COMMON]                                107,571 
[OTHER-SE]                               56,794 <FN 1>
[TOTAL-LIABILITY-AND-EQUITY]            198,123 
[SALES]                                 323,273 
<TOTAL-REVENUE>                         323,273 
[CGS]                                   199,618 
[TOTAL-COSTS]                            78,994 
[OTHER-EXPENSES]                              0 
[LOSS-PROVISION]                              0 
[INTEREST-EXPENSE]                      (1,403) 
[INCOME-PRETAX]                          44,635 
[INCOME-TAX]                             17,942 
[INCOME-CONTINUING]                      26,693 
[DISCONTINUED]                                0 
[EXTRAORDINARY]                               0 
[CHANGES]                                     0 
[NET-INCOME]                             26,693 
[EPS-PRIMARY]                              1.11 
[EPS-DILUTED]                              1.09 
[FN]                                            
<FN1> Retained Earnings