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

                               FORM 10-K

[ x ]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
                FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR

[   ]         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 Identification No.)
    or organization)

                          4000 UNION PACIFIC AVENUE
                      CITY OF COMMERCE, CALIFORNIA 90023
                   (Address of Principal executive offices)

     Registrant's telephone number, including area code: (213) 980-8145

                                    NONE
Former name, address and fiscal year, if changed since last report

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   [  ]

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 27,1997 was $95,915,244 based on a $19 5/8 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
of stock as of the latest practicable date.

Common Stock, No Par Value, 14,816,635 Shares as of  March 27, 1997

Portions of Part III of this report have been incorporated by reference
from the Company's Proxy Statement for 1997 Annual Shareholders meeting.


99 Cents Only Stores
Table of Contents

                                             Part I

Item 1.   Business..............................................

Item 2.   Properties............................................

Item 3.   Legal Proceedings.....................................

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

                                             Part II

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

Item 6.   Selected Financial Data...............................

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

Item 8.   Financial Statements..................................

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

                                             Part III

Item 10.  Directors and Executive Officers of Registrant........

Item 11.  Executive Compensation................................

Item 12.  Security ownership of Certain Beneficial Owners
             and Management.....................................

Item 13.  Certain Relationships and Related Transactions........

                                             Part IV

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
















Part I  
  
ITEM 1 BUSINESS  
  
GENERAL  
  
     99 Cents Only Stores is a leading, deep-discount 
retailer of primarily name-brand, close-out and 
reorderable general merchandise at an affordable, single 
price point. From its first store opening on August 13, 
1982, the Company's chain of 99 Cents Only Stores has 
expanded to 45 stores at March 27, 1997. The Company 
believes that it operates the nation's oldest, existing one-
price general merchandise chain and that it was the 
first chain to sell all merchandise at a single price point 
of 99 Cents or $1.00. The Company's stores are 
attractively merchandised, clean, full-service locations 
that offer customers significant value on their 
everyday household needs in an exciting shopping environment.
     
     Merchandise purchased by the Company is also 
distributed through its Bargain Wholesale operation at 
prices generally below normal wholesale to both small and 
large domestic retailers, other distributors and 
exporters. Bargain Wholesale complements the Company's 
retail operation 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. 
 
     The Company sells consumer items in staple product   
categories including beverages and food, health and beauty   
aids, household products (cleaning supplies, paper goods,   
etc.), housewares (glassware, kitchen items, etc.), and   
hardware. The Company purchases most of its merchandise   
directly from the manufacturer. The Company's suppliers   
include many of the nation's leading consumer product   
companies. During 1996, the Company purchased merchandise   
from more than 999 suppliers, including Colgate-Palmolive   
Company, The Dial Corp., Eveready Battery Company Inc.,  
General Electric Company, Gerber Products Company, The Gillette
Company, Hershey Foods Corporation, 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.  
  
Industry  
  
     The Company participates primarily in the highly   
competitive "deep-discount" retail industry. The deep-  
discount retail industry is distinguished from other retail   
formats by the purchase of close-out and other special   
situation merchandise at prices substantially less than   
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. According to Discount News (July 3,   
1995), the deep-discount retail industry is a growing subset   
of the $290.4 billion discount retail industry - one of the   
fastest growing retail sectors in the United States.  
  
     The sale of close-out or special situation merchandise   
evolved 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, discontinuation   
due to a change in style, color, size, formulation or   
packaging, inability to move merchandise effectively through  
regular channels, reduction of excess seasonal inventory,  
discontinuation of test-marketed items and financial needs.  
  
     Many deep-discount retailers also sell merchandise that   
can be reordered from a manufacturer or wholesaler on a   
regular basis. Although this merchandise can usually be   
purchased at less than regular wholesale and sold below   
normal retail, the discount, if any, is generally less than   
that of close-out merchandise. Deep-discount retailers 
sell reorderable merchandise to ensure a degree of 
consistency in their product offerings and to establish  
themselves as a reliable source of basic goods.  
  
The Southern California Market  
  
     The Company currently targets the five-county Southern  
California market. As of March 27, 1997, the Company's 
stores are located as follows: Los Angeles (39 stores); 
Orange (5 stores); San Bernardino (1 store); Ventura (none 
currently) and Riverside (none currently). These counties 
have an aggregate estimated 1995 population of 15.6 million 
(9.2 million in Los Angeles County alone), and a non-
agricultural workforce of approximately 5.9 million. 
According to the Economic Development Corporation of Los 
Angeles County, total personal income for Southern 
California was over $360 billion and taxable retail sales 
topped $91 billion in 1995. In addition to providing a  
consumer market greater than that of most nations, 
international trade in the Southern California market  
grew to more than $168 billion in 1995.   
  
Business Strategy  
  
     The Company's business strategy is based on the   
following principles that distinguish it from other "dollar   
stores" as well as other deep-discount operators:  
  
     Excellent Value at an Affordable Price: The Company is  
dedicated to providing exceptional value to its customers.   
The Company strives to be the most competitively priced   
consumable merchandise retailer in the communities it   
serves. Management believes that the items the Company sells   
for 99 cents are typically sold for significantly higher 
prices elsewhere.  
  
     Focus on "Name-Brand" Consumables: The Company provides   
its customers  with a wide variety of first quality, name   
brand consumable merchandise. The Company strives to exceed   
customers' expectations of the range and quality of name-  
brand consumables that can be purchased for 99 cents. A 
majority of the items purchased by the Company in 1996 was 
comprised of name-brand products that have immediate 
consumer recognition. The Company believes that this name-
brand focus, along with a product mix of everyday household 
items, increases the frequency of consumer visits and 
impulse purchases and reduces the Company's exposure to 
seasonality and economic cycles.  
  
      Broad Selection of Reorderable Basic Household  
Consumable Items: A majority of the items offered by the   
Company are reorderable. By consistently offering   
a wide selection of basic household consumable items, the   
Company encourages consumers to regularly shop 99 Cents Only   
Stores for their everyday household needs.  
  
     Strong Long-Term Supplier Relationship: The Company   
believes that it has developed a reputation as a leading   
purchaser of name-brand close-outs through its ability to   
make immediate buy decisions, 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. Other important factors include the Company's   
ability to minimize channel conflict for the manufacturer  
by quickly selling name-brand close-outs without, if   
requested by the supplier, advertising or wholesaling the   
item. The Company believes this reputation along with its   
clean, attractively merchandised stores have helped create   
strong, long-term relationships with many leading consumer   
product companies.     
  
     Savvy Purchasing: 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 is   
willing to take advantage of large-volume purchases, close-  
outs and other special situations in order to obtain 
merchandise at favorable prices.   
  
     Attractive and Consistent Store Economics. The Company  
believes that its attractive store level economics will   
facilitate its planned expansion. The average investment per   
new store opened in 1996, including improvements, fixtures, 
equipment and inventory on-hand, but excluding pre-opening 
expenses, which are expensed as incurred, was approximately  
$550,000. New stores opened in 1995 had average sales of  
approximately $4.35 million during the first year of 
operations. In 1996, the Company's earnings before interest, 
taxes, depreciation and amortization (EBITDA) was 13.7%.  
  
     Focus on Southern California Market: Management   
believes Southern California has significant potential for   
Company growth in store locations, sales and profitability.   
By continuing to focus store openings in Southern 
California, the Company will be able to take advantage  
of its existing warehouse and distribution facility, 
regional advertising and other management and operating 
efficiencies to provide for further growth without incurring 
the additional overhead and risk that would be entailed by 
expansion in new geographic markets.  

     Complementary Bargain Wholesale Operations: Bargain   
Wholesale complements the Company's 99 Cents Only Stores by   
allowing the Company to purchase in larger volumes at more   
favorable pricing, and to generate increased net sales with   
relatively small incremental increases in operating 
expenses.  
  
Expansion Strategy   
  
     Management believes that the primary sources of sales   
growth in the future will be new store openings and growth 
in its wholesale division. In 1994 and 1995, the Company 
opened 4 stores in each year, respectively (including 2  
stores relocated in 1995). In 1996 the Company accelerated   
the pace of its new store openings to 8 stores, including  
1 relocation. The Company plans to open new stores at an 
annual growth rate of 20%. Of the stores planned for 1997, 
the Company has, as of March 27, 1997, opened 2 stores and 
secured leases for 5 additional store locations.   
  
     The Company continues to target Southern California for   
its new store openings. The Company expects to open stores   
in new communities within this region and "fill in" existing   
markets by opening additional stores in communities that are   
currently served. Although locating larger new stores close   
to existing stores has had, and could continue to have, a   
negative impact on comparable store net sales, this strategy   
has generated increased operating income as well as sales. 
management believes Southern California offers significant  
potential for growth in sales and profitability. See   
"Business - The Southern California Market." By continuing 
to focus on Southern California, the Company will be 
able to take advantage of its existing warehouse and   
distribution facility, regional advertising and other   
management and operating efficiencies to provide for further   
growth without incurring the additional overhead and risk   
that would be entailed by expansion in new geographic   
markets.  
  
    While the Company's near-term expansion plans are for   
Southern California, the Company believes the 99 Cents Only   
Stores format could be successful in other densely populated   
areas of the country that also have a wide range of socio-  
economic and demographic characteristics. Densely populated   
geographic markets offer the potential for multiple   
locations. Clustering multiple stores in a single market   
allows the Company to take advantage of distribution,  
advertising and other operational efficiencies. Although the  
Company has no immediate plans to expand into other  
geographic markets, it would consider such an expansion  
by acquisition of a chain or chains of clustered
retail sites in densely populated regions. Any such  
decision would be dependent upon market conditions, the   
terms of any proposed acquisition, the demographics of the   
proposed community or communities and available Company   
resources.  
  
     The average investment per new store opened in 1996,
including improvements, fixtures, equipment and inventory
but excluding pre-opening expenses which are expensed
as incurred, are approximately $550,000. New stores opened
during 1995 had average net sales of approximately $4.35 million
during the first year of operation. In 1996, the Company's EBITDA   
was 13.7% of sales. The Company seeks to locate new stores 
in suitable existing structures which can be refurbished in 
a manner consistent with its retail concept. This strategy   
allows the Company to open stores in new locations generally   
within two to four months following the conclusion of   
lease negotiations.  
  
     Net sales in the Company's wholesale division grew from   
$18.9 million in 1994 to a record $40.5 million in 1996.   
Bargain Wholesale's recent growth is primarily attributable   
to an increased focus on large domestic and international   
accounts and expansion into new geographic markets. Although   
international sales have historically not been material to   
the Company's consolidated sales, they have contributed to   
recent growth in Bargain Wholesale's net sales and are   
expected to continue to do so in the near future. The   
Company intends to expand its wholesale operation further by   
continuing this focus, increasing its marketing and   
promotional program as well as the number of trade shows at   
which it exhibits improving customer service and aggressively
contacting its customers on a more frequent basis through
telephone, facsimile and mail. Additionally, the Company opened 
a show-room in New York City in February, 1997.

99 Cents Only Stores-Retail Operations  
  
     The Company's 99 Cents Only Stores offer customers  
quality merchandise, generally at a significant discount   
from normal retail. The Company's stores are attractively   
merchandised, clean, full-service "destination" locations   
that offer consumable general merchandise to value-conscious   
consumers for their regular household needs. All merchandise 
is sold in the Company's stores for 99 cents per item or two 
or more items for 99 cents. A majority of the items purchased
by the Company in 1996 was comprised of name-brand merchandise
that has immediate consumer recognition. The Company
strives to exceed the customer's expectations of the range 
and quality of name-brand consumables that can be purchased 
for 99 Cents. Management believes that many of its customers 
purchase more items than they anticipated.  
  
     Merchandising: The Company's stores retail 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 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 were originally priced to retail from $1.29 to   
$9.99, for only 99 cents per item or group of items. Each 
store typically carries several thousand different stock 
keeping units (SKUs). The merchandise sold in the Company's 
stores consist primarily 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.
  
     While 99 Cents Only 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   
substantial portion of the merchandise purchased by the   
Company in 1996 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   
the 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   
imposes no limitations on the quantity of specific items   
that may be purchased by a single consumer.  
  
     The layout of each of the Company's 99 Cents Only 
Stores is customized to the actual size and configuration of 
the individual space. The interior of each store is, 
however, designed to reflect a uniform format, featuring 
attractively displayed products in windows, consistent 
merchandise display techniques, bright lighting, 
cleanliness, 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 strong visual presentation in 
all key traffic areas of the store. Merchandising displays are 
maintained throughout the day and changed or moved 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 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 Locations: At March 27, 1997, The Company's 45  
99 Cents Only Stores are located in Southern California and 
average 13,800 gross square feet. Since January 1, 1994,
the Company has opened 18 new stores (including 2 relocations
in 1995 and 1 in 1996) that average 17,300 gross square 
feet and currently targets new store locations between 
15,000 and 23,000 gross square feet. The Company believes 
that its larger 99 Cents Only Stores allow it to fully 
display its wide assortment of merchandise in a more 
attractive format, carry deeper stock positions and provide 
customers with a more inviting and convenient environment 
that encourages longer shopping and increased purchases.  
The Company's decision to target larger stores reflects the 
higher average annual store revenues and operating profits
typically achieved by these stores.  
  
     Store Management: Substantially all merchandise decisions  
with respect to pricing and advertising are made at the Company's  
headquarters. The Company employs eight district managers 
responsible for store operations. 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 Company's policies, operations and   
merchandising philosophy. District managers also help train   
store management. The Vice President of Retail Operations   
also supervises a cashiers training school located at the   
Company's Corporate offices. Merchandising supervisors and   
their crew (usually three to five 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, two assistant managers, a   
head cashier, 13 cashiers and 12 stockers. Store managers   
are responsible for assessing their respective stores   
stocking needs and ordering accordingly. Accounting and   
general financial functions are performed at the Company's   
corporate offices.  
  
     Advertising: Advertising expenditures were $1.4   
million, $1.2 million and $1.5 million for 1994, 1995 and   
1996, respectively, or 1.0%, 0.8% and 0.8% 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, grand openings often attract long
lines of customers and receive media coverage.  
  
Bargain Wholesale  
  
     The Company conducts its wholesale operations under the   
trade name, "Bargain Wholesale," through its 15,000 square   
foot product showroom located at the Company's 880,000   
square foot single-story warehouse and distribution facility.  
In February, 1997, Bargain Wholesale opened a showroom
in New York City. Bargain Wholesale also conducts business
through general merchandise trade shows and mailed products
circulars.  




     The following table presents certain information   
regarding the Company's wholesale division:  
  
<TABLE>
<CAPTION>
                            Years Ending December 31, (000's)
                         ----------------------------------------
<S>                      <C>       <C>       <C>       <C>       <C>
                            1992      1993      1994      1995      1996
                            ----      ----      ----      ----      ----
Net Sales (in thousands)   $21,938   $18,028   $18,916   $30,337   $48,480
Annual growth 
   in net sales               12.2%    -17.8%      4.9%     60.4%     59.8%

</TABLE>

     Historically, Bargain Wholesale relied upon small and   
medium size Southern California retailers to form its core   
customer base. In December, 1991, the Company began to focus
greater attention on Bargain Wholesale with the hiring of a
Senior Vice President of Wholesale Operations. Outside factors   
including the 1992 Los Angeles civil disturbances and the   
1994 Northridge earthquake, had an adverse impact on Bargain   
Wholesale's traditional core customer base. By shifting its   
focus to large domestic and international accounts and the   
expansion of its geographic markets, Bargain Wholesale was   
able to recover from the outside factors affecting its 1993   
and 1994 results to significantly improve its performance   
in 1995 and continued to grow in 1996 at an accelerated pace.
  
     In 1996, Bargain Wholesale sold merchandise to over 999  
customers. 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 show-room in New York City, improving 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. Typical wholesale 
customers include other wholesalers, small local  
retailers, large regional and national retailers, and 
exporters. During 1996, no single customer accounted  
for more than 4% of Bargain Wholesale's net sales. 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 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 and to generate additional   
net sales with relatively small increments in operating  
expenses. Bargain Wholesale also provides the Company  
with a channel by which it may distribute merchandise   
above the 99 cents price point.  
  
Purchasing   
  
     The Company's purchasing department staff consists of   
eight 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 both the 99 cents Only Stores  
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 that 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 4%   
of the Company's total purchases for 1996. In 1996, the   
Company purchased its inventory from more than 999   
suppliers, including Colgate-Palmolive Company, 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.  
  
     Almost half of the merchandise purchased by the  
Company in 1996 was close-out or special-situation   
merchandise. Close-out or special-situation merchandise   
becomes available for a variety of reasons, including a   
manufacturer's over-production, discontinuation of   
merchandise due to a change in style, color, size,   
formulation or packaging, inability to move merchandise  
effectively through regular channels, reduction of excess   
seasonal inventory, discontinuation of test-marketed items   
and financial needs. 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 Company has developed strong relationships with   
many manufacturers and distributors that recognize their   
special-situation merchandise can be moved quickly through   
the Company's retail and wholesale distribution channels.   
These strong relationships along with the Company's ability   
to purchase in large volumes also enable the Company to purchase
reorderable name-brand goods at discounted wholesale prices.
Reorderable merchandise historically account for over half of
the Company's annual purchases. The key elements to
these supplier relationships include the Company's (i) ability  
to make immediate buy decisions, (ii) experienced buying   
staff, (iii) ability to pay cash or accept abbreviated   
credit terms, (iv) reputation for prompt payment, (v)   
commitment to honor all issued purchase orders and (vi)   
willingness to purchase goods close to a target date or   
out of season. The important factors include the  
Company's ability to minimize channel conflict for the   
manufacturer by quickly selling name-brand close-outs   
without, if requested by the supplier, advertising or   
wholesaling the item. The Company's ability to purchase and   
resell large volume orders and the ability to minimize the   
risk of damage to a product's image by having attractively   
merchandised stores filled with name-brand items. Management   
believes the Company's long-term relationship with its  
suppliers and its reputation for integrity will continue to   
provide the Company with opportunities to acquire quality   
merchandise at reduced wholesale prices.  
  
     Private label consumer products, made exclusively for   
the Company, accounted for approximately 4% of total   
merchandise purchased in 1996. 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 operation called   
Deluxe Imports that imports products primarily from   
Southeast Asia. Deluxe Imports accounted for approximately   
4% of total merchandise purchased in 1996. The Company   
primarily imports merchandise in product categories which  
are not brand sensitive to consumers such as kitchen items,  
housewares, toys, seasonal, petcare and hardware.   
  
Warehousing and Distribution  
  
     The Company maintains an 880,000 square foot, single-  
story 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. The Company believes that its current warehouse 
and distribution facility will be able to support  
distribution to more than 99 stores in Southern California. 
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 over 10
tractors and over 20 trailers which are primarily used to deliver 
merchandise to its stores. Full truck deliveries are made 
from its distribution center to each store typically four 
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 (i.e., ordered by the store 
manager) versus pushed by the distribution center (i.e., 
sent by order of the Company's distribution personnel).   
Approximately 2% of product stocked by the stores is shipped   
by the manufacturer directly to the store. 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. There can be no  
assurance that the Company's existing warehouse will provide  
adequate 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 99 Cents Only 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 and other 
factors, the Company has not determined to install a point 
of sale system. 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 a separate inventory management, 
order processing and accounts receivable system. The Company 
is in the process of integrating these functions. 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's 
accounting and management information system was originally 
installed in 1990 and the Company's inventory control system 
was installed in 1994. These systems have continuously been  
upgraded and enhanced from time-to-time and continue to   
evolve. This process is monitored by a steering committee   
consisting of six department heads including three inside
members of the Board of Directors and one outside member of   
the Board of Directors. 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.  



Competition  
  
     Each of the markets in which the Company operates is   
highly competitive. The Company sells product lines which   
are similar to other wholesalers, deep-discount stores,   
single price point merchandisers, discount merchandisers,   
food markets, drug stores, club stores and other retailers.   
The industry also includes a number of small privately held   
companies and individuals. In some instances, these  
competitors are also customers of the Company's Bargain   
Wholesale division. However, most single price point   
retailers do not have 99 Cents Only Stores' focus on 
consumable name-brand merchandise. Nevertheless, 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  
that could have an adverse effect on its business and 
results of operations.   
  
Employees  
  
     At December 31, 1996, the Company had 1,546 employees   
(1,354 in its retail operation, 135 in its warehouse and  
distribution facility, 48 in its corporate offices and 25  
in its wholesale division). None of the Company's employees  
is party to a collective bargaining agreement. The Company   
considers relations with its employees to be satisfactory.  
The Company offers certain benefits, including health  
insurance and stock options to its full time employees.   
  
Trademarks and Service Marks   
  
      "99 Cents Only Stores" and "99 Cents" 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. The Company currently leases 42 of   
its 43 existing stores, as well as its warehouse and 
distribution facility (where its executive offices are  
located). In connection with such leases, the Company could 
be held liable for the costs of remedial actions  
with respect to hazardous substances. In addition, the 
Company operates one recently installed 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 27, 1997, the Company leases all but 2 of
its store locations, and has been able to add stores without 
incurring indebtedness to acquire real estate. The Company 
currently leases 13 of its 45 store locations and a parking 
lot associated with one of these stores from certain of the 
Existing Shareholders or their affiliates. In addition, the 
Company has entered into a lease with certain existing
Shareholders or their affiliates for one additional location.
See "Part III" Item 13 "Certain Relationships and related
Transactions."

     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 
leases provide for fixed rents, subject to periodic adjustments.
The Company has purchased 2 locations, 1 opened in November, 1996
and 1 opened in February, 1997. The Company may also purchase other
locations in the future. 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 99 Cents Only Stores leases assuming
the exercise of all options to extend:


Expiring          Expiring         Expiring            Expiring 2003
  1997            1998-1999        2000-2002           and Beyond
 ------           ------             ------              ------
       7 (1)           3                  11                  22

(1) Includes 6 stores leased on a month to month basis.

The table below summarizes certain information with respect to
the Company's existing 99 Cents Only Stores as of March 27, 1997:

<TABLE>
<CAPTION>
                                             Gross               Saleable
                         Year                Square              Square
Location                 Open                Footage             Footage
---------                ----------          ----------          ----------
<S>                      <C>                 <C>                 <C>
Westchester Area              1982              10,000               7,500
Azusa                         1983               4,200               3,600
Arcadia                       1984              10,600               6,200
Garden Grove #1               1984              12,000               9,200
Hawthorne #1                  1984              15,000              12,200
Montebello                    1984               5,200               3,800
La Puente                     1985               7,000               5,800
Panorama City                 1985              10,600               9,900
Pico/Union District           1987               4,500               3,400
Van Nuys                      1987               7,600               5,400
Hawthorne #2                  1988              19,600              13,500
Maywood                       1988              12,800               9,400
Fairfax/Wilshire #1           1989               7,400               5,700
North Hollywood               1989               8,600               6,200
Ontario                       1989              10,600               8,100
Paramount                     1990              13,100               9,400
Pico Rivera                   1990              18,900              14,300
Temple City                   1990               7,700               6,300
Whittier                      1990               8,700               6,600
Norwalk                       1991              17,000              11,100
Pasadena                      1991              17,000              11,000
Canoga Park                   1992              14,400              12,300
Huntington Park               1992              12,900               9,500
La Mirada                     1992              18,400              13,800
Lawndale                      1992              14,200              11,500
Santa Monica                  1992               6,300               5,000
North Long Beach              1993              12,000              10,200
Arleta                        1994              20,300              15,700
Fairfax/Wilshire #2           1994              18,600              15,500
Universal City                1994              12,000               8,600
Walnut Park                   1994               7,900               5,900
Garden Grove #2               1995              22,400              19,600
Hawaiian Gardens              1995              15,000              12,400
Reseda                        1995              15,000              11,500
San Pedro                     1995              13,500              10,200
Harbor City                   1996              20,600              17,400
Huntington Beach              1996              24,600              18,200
Anaheim                       1996              26,000              22,600
Lincoln Heights               1996              10,900               8,500
El Monte                      1996              14,800              12,700
Fullerton                     1996              22,400              19,400
Inglewood                     1996              17,700              14,200
Granada Hills                 1996              15,000              11,900
Lakewood                      1997              22,100              19,000
East LA                       1997              16,400              13,600
                                               -------             -------
         Total                                 621,500             487,800
                                                ======              ======
         Average                                13,800              10,800
                                                ======              ======
</TABLE>



       The Company's 45 existing 99 Cents Only Stores (43 at 
December 31, 1996) are located in Southern California average
13,800 gross square feet. Since January 1, 1994, the Company has
opened 18 new stores (including 2 relocations in 1995 and 1 in
1996) that average over 17,300 gross square feet and currently 
targets new store locations between 15,000 and 23,000 gross 
square feet. The Company believes that its larger 99 Cents Only
Stores allows it to fully display its wide assortment of 
merchandise in a more attractive format, carry deeper stock 
positions and provide customers with a more inviting and 
convenient environment that encourages longer shopping and larger
purchases. The Company's decision to target larger stores
reflects higher average annual store revenues typically achieved
by these stores.

     The Company's stores are 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. None of the Companys stores are
located in an indoor shopping mall, outlet mall or small
strip center. The stores are all located within a fifty-mile
radius of downtown Los Angeles, primarily in densely
populated, demographically diverse neighborhoods. Of the
Companys stores, 39 are located in Los Angeles County, 5
are located in Orange County and 1 is located in San
Bernardino County.

     The Company leases 43 of its 45 retail locations. The
Company typically seeks leases with an initial five to ten
year term with one or more five-year options. See Business-
Properties. The Company identifies potential sites through
a network of contacts within the brokerage and real estate
communities and through independent investigation by Company
personnel.

      The Company currently leases 13 of its 45 store
locations and a parking lot associated with one of these
stores from certain of the Existing Shareholders or their
affiliates. In addition, the Company has entered into a lease
with certain Existing Shareholders or their affiliates for
one additional location. See "Part III" Item 13 "Certain
Relationships and Related Transactions."

     Since 1982, the Company has acquired groups of store
sites and inventory from three different chains. The Company
either immediately converted the acquired sites to the
99 Cents Only Stores format, operated the acquired sites
under their original tradename until they were either converted,
closed or sold, or immediately closed the site. The last of such
stores was closed in May, 1995. The Company may acquire additional
sites in the future from existing chains if suitable opportunities
are presented to the Company.

     In the past, as part of its strategy to expand retail
operations, the Company opened certain 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 affect on comparable store net sales as some
customers migrate from the existing store to the close-by
larger new store. Except for 3 relocations to larger, nearby
sites and 1 store closure as a result of a fire, the Company
has never closed one of its 99 Cents Only Stores.


The following table sets forth relevant information with respect to
the growth of the Company's existing 99 Cents Only Stores operations:

<TABLE>
<CAPTION>
                                          Years Ending December 31, (000's)
                                   --------------------------------------------------
                                      1992      1993      1994      1995      1996
                                      ----      ----      ----      ----      ----
<S>                                <C>       <C>       <C>       <C>       <C>       <C>
99 Cents Only Stores net sales       $95,873  $101,828  $110,724  $121,998  $143,163
Annual Growth Rate                       6.6%      6.2%      8.7%     10.2%     17.3%
Store Count Beginning of Year             24        30        31        34        36
New Stores                                 6 (1)     1         4         4         8
Stores Closed                              0         0         1 (2)     2 (3)     1 (3)
Store count at year end                   30        31        34        36        43
Average net sales per store (4)       $3,550    $3,349    $3,267    $3,467    $3,667
Total estimated saleable square
  footage period end                 259,000   269,000   293,000   326,000   487,800
Average sales per estimated
  saleable square foot                  $417      $388      $396      $397      $389
Change in comparable store
  net sales (5)                         -8.6%     -3.5%     -1.4%     -0.2%      2.8%

</TABLE>

     (1) One of the new stores was a June 1992 conversion of 
          an operating retail store run by the Company under a trade 
          name different from the 99 Cents Only Store concept.
     (2) Store closed September 1994 due to fire.
     (3) Store closed due to relocation to larger nearby sites.
     (4) For stores open for the entire fiscal year.
     (5) Change in comparable stores net sales compares net sales
          for stores open for the entire two years compared.


     The Company leases its 880,000 square foot, single-
story warehouse and distribution facility. The company's 
executive offices are also located in this facility. In 
December 1993, the Company entered into a seven year triple-
net lease agreement with a purchase option, that 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. Also, over 25 dock 
levers and new racking with over 10,000 pallet positions
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, then the 
Company will be subject to a $7.6 million penalty.

ITEM 3 LEGAL PROCEEDINGS

     The Company is engaged in litigation in the ordinary 
course of its business, none of which the Company believes 
is material.

     In 1989 the Company purchased $220,000 of inventory for
resale. A third party claimed to have a valid lien on such
inventory sold to the Company. After a series of judgments,
reveals and other legal actions, the litigation was settled 
for $200,000 in early 1995. From 1991 through 1993 the 
Company provided a reserve of $3.1 million for estimated 
litigation and interest costs. As a result of the 
settlement, $200,000 was charged to the reserve and the 
remaining $2.9 million was included in income in 1994. 

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders 
during the fourth quarter of the Company's 1996 calendar year.


Part II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          RELATED STOCKHOLDER MATTERS.

     The Company's common stock is traded on the New York Stock
Exchange under the symbol NDN. Trading of the Company's stock
commenced on May 23, 1996. The following table sets forth, for 
the periods indicated, the high and low sales prices of the
shares of the Common Stock as reported by the New York Stock
Exchange.
        Calendar 1996:                High      Low
                First Quarter            -         -
                Second Quarter        15 7/8    13 3/4
                Third Quarter         15 1/4    13 1/4
                Fourth Quarter        17 3/8    13 1/2

     On March 27, 1997, the last reported sale price for the
Company's Common Stock as quoted by the New York Stock Exchange
was $19 5/8 per share. As of March 27, 1997, the Company had 
3,100 beneficial shareholders.

     The Company anticipates that all of its income in the foreseeable
future will be retained for the development and expansion of its 
business and therefore does not anticipate paying dividends on its
Common Stock in the foreseeable future.






ITEM 6. SELECTED FINANCIAL DATA.

     The following table sets forth for the periods indicated
selected financial data for the Company. The selected income statement
and balance sheet items which follow have been derived from the Company's
financial statements and notes thereto included elsewhere herein audited
by Arthur Andersen LLP, independent public accountants, as set forth in 
their report also included elsewhere herein. This information should be
read in conjunction with the Financial Statements and related notes,
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the other financial information included elsewhere
in this form 10-K.

                                  Years Ended December 31
                         --------------------------------------------------
                              1992      1993      1994      1995      1996
                             -----     -----     -----     -----     -----
                         (In thousands, except per share and sales 
                         per square foot data and number of stores)
Statement of Income Data:
Net Sales:
 99 Cents Only Stores      $95,873  $101,828  $110,724  $121,998  $143,163
 Other Retail Sales (1)      3,125     3,093     2,097       492        - 
 Bargain Wholesale          21,938    18,028    18,916    30,337    40,480
                           -------   -------   -------   -------   -------
    Total                  120,936   122,949   131,737   152,827   183,643
Cost of Sales               79,748    81,480    88,045   102,160   120,922
                           -------   -------   -------   -------   -------
Gross profit                41,188    41,469    43,692    50,667    62,721
Selling, general and
 administrative expenses    29,060    32,081    32,661    33,809    39,692
                           -------   -------   -------   -------   -------
Operating Income            12,128     9,388    11,031    16,858    23,029
Special litigation
 provision reversal (2)         -         -     (2,900)       -         - 
Interest (income)
 expense (net)                 (50)       45       764       755      (126)
                           -------   -------   -------   -------   -------
Income before pro forma
 provision for income
 taxes (3)                  12,178     9,343    13,167    16,103    23,155
Pro forma provision for
 income taxes (3)            4,739     3,477     5,163     6,509     9,453
                           -------   -------   -------   -------   -------
Pro forma net income (3)    $7,439    $5,866    $8,004    $9,594   $13,702
                           =======   =======   =======   =======   =======
Pro forma earnings per
 common share (3)(4)                                                 $0.97
                                                                   =======
Pro forma weighted average
 number of common shares
 outstanding (3)(4)                                                 14,079
                                                                   =======
Company Operating Data:
 Sales Growth
  99 Cents Only Stores         6.6%      6.2%      8.7%     10.2%     17.3%
  Bargain Wholesale           12.2%    -17.8%      4.9%     60.4%     33.4%
  Total Company Sales          7.4%      1.7%      7.1%     16.0%     20.2%
 Gross Margin                 34.1%     33.7%     33.2%     33.2%     34.2%
 Operating Margin             10.0%      7.6%      8.4%     11.0%     12.6%
 Pro forma net income          6.2%      4.8%      6.1%      6.3%      7.5%
Retail Operating Data:(5)
 Number of stores end
   of period                    30        31        34        36        43
 Change in comparable
   stores net sales (6)       -8.6%     -3.5%     -1.4%     -0.2%      2.8%
 Average net sales per
   store open the full 
   year                     $3,550    $3,349    $3,267    $3,467    $3,667
 Average net sales per
   estimated salable  
   square foot (7)            $417      $388      $396      $397      $389

                                             At December 31
                         --------------------------------------------------
                              1992      1993      1994      1995      1996
                             -----     -----     -----     -----     -----
Balance Sheet Data:
 Working Capital           $24,173   $19,242   $24,713   $28,690   $58,822
 Total assets               33,343    46,960    51,419    57,598    98,997
 Long-term debt                 -         -         -         -         - 
 Capital lease obligation,
   including current
   portion                      -     11,080    10,548     9,977     9,365
 Total shareholders'
   equity                  $24,494   $23,307   $30,811   $35,558   $76,505

     (1) 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 closed in May 1995.

     (2) See Note 9 to "Notes to Financial Statements"

     (3) Prior to May 1, 1996 the Company was treated as an S 
         corporation for federal and state income tax purposes. The pro
         forma presentation reflects a provision for income taxes as if
         the Company had always been a C corporation, at an assumed
         effective tax rate of 40.1% in 1992 and 41.0% in 1993, 1994,
         1995 and 1996, plus the effect of deferred taxes and tax credits.

     (4) 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 and common stock equivalents outstanding.
         Pro forma weighted average common equivalent shares include
         2,753,000 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.
         Common stock equivalents include all outstanding stock options
         and warrants after applying the treasury stock method. All
         currently outstanding options have been considered outstanding
         for all fiscal years presented and included in the calculation
         of the weighted average number of common shares and common stock
         equivalents outstanding for pro forma earnings per common share
         computations in accordance with the rules of the Commission.

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

     (6) Change in comparable stores net sales compares net sales for 
         stores open the entire two periods compared.

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

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        RESULTS OF OPERATIONS AND FINANCIAL CONDITION


The following discussion should be read in conjunction with 
the Company's Financial Statements and notes thereto and the 
other financial data included elsewhere in this Form 10-K. 
See also "Selected Financial Data."

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 
had distributed 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 27, 1997 operates a chain of 45 deep-discount
99 Cents Only Stores. The Company's growth during the 
last three years has primarily come from new store openings 
and growth in its Bargain Wholesale division. The Company 
opened 4, 4, and 8 stores in 1994, 1995, and 1996, 
respectively (3, 2 and 7 respectively, net of relocated and closed
stores, and 1 store closed as the result of a fire in 1994). The 
Company opened 2 stores in the first three months of 1997, 1 
in Lakewood, California and 1 in East Los Angeles, California
and expects to open new stores at an annual growth of 20%.
Of the additional stores planned for 1997, the Company has
secured 5 locations.

   Other retail operations include operations of acquired 
stores pending their closure or conversion to the 99 Cents Only 
Stores retail format. Since 1982, the Company has acquired 
groups of store sites and inventory from three different 
chains. The Company either immediately converted the 
acquired sites to the 99 Cents Only Stores format, operated the 
acquired sites under the original tradename until they were 
either converted, close or sold, or immediately closed the 
site. The last of such stores was closed in May 1995. The 
Company may acquire sites in the future from existing chains 
if suitable opportunities arise.

     Bargain Wholesale's growth over the three years ending
December 31, 1996 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 
net sales than on 99 Cents Only Stores 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 operating expenses.

     Comparable stores net sales (computed on 99 Cents Only Stores
open during the entire two years compared) improved in each of the
five calendar years from January 1, 1992 through December 31, 
1996. The Company believes that this trend had resulted in 
part from its expansion strategies. In the past, as part of 
its strategy to expand retail operations, the Company opened 
certain 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 migrate from 
the existing store to the close-by new store. The Company 
believes that this strategy has impacted its historical 
comparable sales growth.

     During each of the calendar years in the period from 
January 1, 1992 to December 31, 1996, average net sales per 
estimated saleable square foot (computed on 99 Cents Only Stores 
open for a full year) have declined from $417 per square 
foot in 1992 to $389 per square foot in 1996. This trend 
reflects the Company's determination to target larger locations
for new store development. Existing stores average 13,800
square feet. Since January 1, 1994, the Company had opened 
18 new stores (including 2 relocations in 1995 and 1 in 1996)
that average 17,300 gross square feet. The Company currently 
targets new store locations ranging in size from 15,000 to 23,000 
gross feet. Although it is the Company's experience that 
larger stores generally have lower average net sales per 
square foot than its smaller stores, they generally achieve 
higher average annual store revenues and operating income.

     The Company has experienced a 14.3% compound annual 
growth rate in net sales over the last three years.

Effect of Change in Form from an S Corporation to a C Corporation:

    Effective May 1, 1996 the Company changed in form from an 
S corporation to a C corporation, a change that will affect
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 2.5% of taxable 
income through 1993 and 1.5 % of taxable income in 1994, 
1995 and 1996. Currently, the top federal tax rate
for C corporations is  35% and the corporate tax rate
in California is 9.3%. The pro forma provision for income taxes 
in the accompanying statements of income shows results as if 
the Company had always been a C corporation and had
adopted Statement of Financial Accounting 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.

Results of Operations

     The following table sets forth, for the periods 
indicated, certain selected income statement data as a 
percentage of net sales: 
                                             Years Ended December 31,
                                             ==============================
                                                  1994      1995      1996
                                                 =====     =====     =====
Net Sales
  99 Cents Only Stores                            84.0%     79.8%     78.0%
  Other retail                                     1.6%      0.3%      -  
  Bargain Wholesale                               14.4%     19.9%     22.0%
                                                ------    ------    ------
     Total                                       100.0%    100.0%    100.0%
Cost of sales                                     66.8%     66.8%     65.8%
                                                ------    ------    ------
  Gross profit                                    33.2%     33.2%     34.2%
Selling, general and administrative
  expenses                                        24.8%     22.2%     21.6%
                                                ------    ------    ------
Operating income                                   8.4%     11.0%     12.6%
Special litigation reversal                       -2.2%      -         -  
Interest (income) expense, net                     0.6%      0.5%      -  
                                                ------    ------    ------
Income before pro forma provision for 
  income taxes                                    10.0%     10.5%     12.6%
Pro forma provision for income taxes               3.9%      4.2%      5.1%
                                                ------    ------    ------
Pro forma net income                               6.1%      6.3%      7.5%
                                                ======    ======    ======

Year Ended December 31, 1996 Compared to Year Ended December 
31, 1995.

Net Sales: Total net sales increased $30.8 million, or 20.2%
from $152.8 million in the 1995 period to $183.6 million in 
the 1996 period. 99 Cents Only Stores net sales increased 
approximately $21.2 million, or 17.3%, from $122.0 million in 
the 1995 period to $143.2 million in the 1996 period, and 
Bargain Wholesale net sales increased approximately $10.1 
million, or 33.4%, from $30.3 million in 1995 period to $40.5 
million in the 1996 period. There were no other retail 
operations in 1996. The increase in 99 Cents Only Stores net 
sales was primarily attributed to the positive effect of a 
net increase of 7 stores opened in 1996 and 4 stores opened 
in 1995 that were not open for the full year in 1995, and 
a 2.8% or $2.6 million increase in comparable store net 
sales from the 1995 period to the 1996 period. The increase 
in Bargain Wholesale net sales was primarily attributed to 
increased marketing activity during the 1996 period.

Gross profit: Gross profit increased approximately $12.1
million, or 23.8% from $50.7 million in the 1995 period to 
$62.7 million in the 1996 period. The increase in gross 
profit was primarily due to higher net sales. As a percentage 
of net sales, gross profit improved from 33.2% in the 1995 
period to 34.2% in the 1996 period reflecting favorable 
merchandise cost and mix factors.

Selling, general and administrative: Selling, general and 
administrative expenses ("SG&A") increased by $5.9 million, 
or 17.4% from $33.8 million in the 1995 period to $39.7 
million in the 1996 period, primarily due to increased costs 
associated with new store growth and increased executive
compensation expense of approximately $0.8 million. SG&A decreased
as a percentage of net sales from 22.2% in the 1995 period to
21.6% in the 1996 period. The decrease as a percentage of net
sales in 1996 resulted primarily from spreading SG&A over a larger 
revenue base.

Operating income: As a result of the items discussed above,
operating income increased $6.2 million, or 36.6%, from $16.9
million in the 1995 period to $23.0 million in 1996. Operating
income increased as a percentage of net sales from 11.0% in
1995 to 12.6% in 1996.

Interest expense: Interest expense relates to interest
accrued on the Company's capitalized warehouse lease, net of
interest income on the Company's marketable securities. The 
change in interest expense between 1995 and 1996 was not
material. During the 1995 and the 1996 periods, the Company 
had no bank debt. Interest income earned on marketable 
securities was $0.9 million in 1996.

Pro forma provision for income taxes (unaudited): The 
Pro forma provision for income taxes in 1996 was $9.5 
million, or 5.1% of net sales, compared to $6.5 million, or 
4.2% of net sales in 1995. The effective rate of the pro 
forma provisions for income taxes were 40.4% and 40.8% in 
the 1995 period and the 1996 period, respectively. The 
effective 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."

Pro forma net income (unaudited): As a result of the 
items discussed above, pro forma net income increased 
$4.1 million, or 42.8%, from $9.6 million in the 1995 
period to $13.7 million in the 1996 period. Pro forma
net income increased as a percentage of net sales from
6.3% in 1995 to 7.5% in 1996.

Year Ended December 31, 1995 Compared to Year Ended December 
31, 1994 

Net sales: Total net sales increased $21.1 million, or 16.0%
from $131.7 million in 1994 to $152.8 million in 1995. 99 Cents
Only Stores net sales increased approximately $11.3 million, 
or 10.2% from $110.7 million in 1994 to $122.0 million in 
1995, and Bargain Wholesale net sales increased 
approximately $11.4 million, or 60.4%, from $18.9 million in 
1994 to $30.3 million in 1995. Changes in other retail 
operations from 1994 to 1995 reflected the closing of the 
last store in May 1995. The increase in 99 Cents Only Stores net 
sales was primarily attributed to the positive effect
of a net increase of 5 stores opened in 1994 and 1995, which 
were not open for the full year in 1994, offset by a 0.2% or 
$0.2 million decrease in comparable store net sales from 1994 
to 1995. Change in comparable stores net sales compares net 
sales for stores open during the entire two years compared. 
The Company opened 4 new stores and closed 1 store due to a 
fire in 1994, and opened 4 new stores (which included 2 
stores which were relocated) in 1995. The increase in Bargain 
Wholesale net sales was primarily attributed to an increased 
focus on large domestic and international accounts and 
expansion into new geographic markets.


Gross profit: Gross profit increased $7.0 million, or 16.0%, 
from $43.7 million in 1994 to $50.7 million in 1995. The 
increase in gross profit was due to higher net sales. As a 
percentage of net sales, gross profit remained constant at 
33.2% between years.

Selling, general and administrative: SG&A increased by $1.1
million, or 3.5%, from $32.7 million in 1994 to $33.8 
million in 1995, primarily due to increased costs associated 
with new store growth. SG&A decreased as a percentage 
of net sales from 24.8% in 1994 to 22.2% in 1995. The decrease
as a percentage of net sales in 1995 resulted primarily from
spreading SG&A over a larger revenue base.

Operating income: As a result of the items discussed 
above, operating income increased $5.9 million, or 52.8%, 
from $11.0 million in 1994 to $16.9 million in 1995.
Operating income increased as a percentage of net sales from
8.4% in 1994 to 11.0% in 1995.

Special litigation reversal: The benefit from 
litigation expense in 1994 of $2.9 million, or 2.2% as a 
percentage of net sales, reflects the reversal of previously 
provided reserves not used due to the settlements of 
litigation for $200,000. See "Business-Legal Proceedings" 
and Note 9 to "Notes to Financial Statements."

Pro forma provision for income taxes (unaudited): The pro forma 
provision for income taxes in 1995 was $6.5 million, or 4.2% 
of net sales, compared to $5.2 million, or 3.9% of net sales 
in 1994. The effective rate of the pro forma for income 
taxes was 40.4% and 39.2% 'in 1995 and 1994, respectively. 
The effective 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."

Pro forma net income (unaudited): As a result of the items
discussed above, pro forma net income increased $1.6 
million, or 19.9%, from $8.0 million in 1994 to $9.6 million 
in 1995. Pro forma net income increased as a percentage of
net sales from 6.1% in 1994 to 6.3% in 1995.

Liquidity and Capital Resources

    Since inception, the Company had funded its operations
principally from cash provided by operations, and has not
generally relied upon external sources of financing. The 
Company's capital requirements result primarily from 
purchases of inventory, expenditures related to new store 
openings and the working capital requirements for new and 
existing stores. The Company takes advantage of close-out 
and other special-situation opportunities which frequently 
results 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 1994, 1995 and 1996, net cash provided by (used 
in) operations was $7.6 million, $17.3 million and $(12.0) 
million, respectively. The $12.0 million used in operations 
in 1996 reflects the impact of $27.6 million of available 
cash, invested in trading securities. Trading securities are 
securities that consist of high grade debt securities, 
purchased and held principally for the purpose of selling 
them in the near term. Interest, including amortization of 
acquisition premium and discount is included in current 
period earnings. Excluding the $27.6 million purchase of the 
short term investments in 1996, net cash provided from 
operations would have been $15.6 million. Net cash provided 
by operations also reflects increases in inventories in the 
amount of $5.3 million, $1.8 million and $2.6 million during 
1994, 1995 and 1996, respectively. During 1994, 1995 and 
1996, net cash used in investing activities for purchases of 
property and equipment was $1.9 million, $2.7 million and 
$7.3 million, in 1994, 1995 and 1996, respectively. Net cash 
used in financing activities in 1994 and 1995 was $6.1 
million and $11.8 million respectively. These funds 
represented payments of capital lease obligations and 
distributions to shareholders to cover, in part, federal and 
state income taxes payable by the Existing Shareholders with 
respect to the net income of the Company. In 1996 proceeds 
from financing activities was $19.6 million and included 
$65.2 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 Existing Shareholders with respect to the net income of 
the Company prior to the change of the Corporate tax status 
from an S corporation from a C corporation.   

     The Company plans to aggressively open new stores at an
annual rate of at least 20%. The average investment per new
store opened in 1996, including improvements, fixtures,
equipment and inventory but excluding pre-opening expenses, which
are expensed as incurred, was approximately $550,000 per store.
The Company's cash needs for new stores opening are expected to
total approximately $5.0 million and $6.2 million in each of 1997
and 1998, respectively. The Company's total planned expenditures
in each of 1997 and 1998 for additions to fixtures and leasehold
improvements of existing stores are approximately $600,000.

     The Company has a $7.0 million bank credit facility 
bearing interest at the bank's prime rate. Under the terms 
of its credit facility, the Company must comply with one
financial covenant, the ratio of total liabilities to tangible
net worth (as defined by the agreement). Noncompliance with respect
to this covenant would constitute an event of default that gives 
the bank the right to call the credit facility and to pursue certain 
remedies. At December 31, 1996, the Company was in compliance 
with this covenant. The credit agreement expires in 
June 1997, at which time the Company expects that it will 
be renewed.

     As of December 31, 1996, there were no borrowings 
outstanding under the line of credit and outstanding letters 
of credit were approximately $1.9 million ($1.6 million of which
related to a standby letter of credit required by the State
of California to be self-insured for worker's compensation).


     The Company leases its 880,000 square foot single-story
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%.  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 believes that it can adequately fund its 
planned capital expenditures and working capital requirements 
for the next 12 months from net cash provided by operations, 
availability under its credit facilities, and marketable
securities.

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.


    The following table sets forth certain unaudited results 
of operations for each quarter during 1995 and 1996. The 
unaudited information has been prepared on the same basis as 
the audited financial statements appearing elsewhere in this 
Form 10-K 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.

<TABLE>
<CAPTION>
                                   Year Ended December 31, 1995                        Year Ended December 31, 1996
                                   ==========                                          =========
                                     First     Second    Third     Fourth                First   Second    Third   Fourth
                                    Quarter   Quarter   Quarter   Quarter    Total      Quarter  Quarter  Quarter  Quarter   Total
                                    =======   =======   =======   =======   =======     =======  =======  =======  =======  =======
<S>                                <C>       <C>       <C>       <C>       <C>         <C>      <C>      <C>      <C>      <C>
Net Sales
  99 Cents Only Stores               $27,092   $29,807   $30,096   $35,003  $121,998    $32,256  $34,136  $35,211  $41,560 $143,163
  Other Retail                           327       165        -         -        492         -        -        -        -        - 
  Bargain Wholesale                    6,138     6,370     8,017     9,812    30,337     10,020    9,037   10,173   11,250   40,480
                                     -------   -------   -------   -------   -------    -------  -------  -------  -------  -------
     Total                            33,557    36,342    38,113    44,815   152,827     42,276   43,173   45,384   52,810  183,643
Cost of Sales                         22,430    24,291    25,475    29,964   102,160     28,810   28,239   29,266   34,607  120,922
                                     -------   -------   -------   -------   -------    -------  -------  -------  -------  -------
  Gross Profit                        11,127    12,051    12,638    14,851    50,667     13,466   14,934   16,118   18,203   62,721
Selling, general and
  administrative expenses              7,753     8,302     8,459     9,295    33,809      9,066    9,607   10,334   10,685   39,692
                                     -------   -------   -------   -------   -------    -------  -------  -------  -------  -------
Operating Income                       3,374     3,749     4,179     5,556    16,858      4,400    5,327    5,784    7,518   23,029
Interest (Income) Expense                189       189       189       188       755        189       63     (242)    (136)    (126)
                                     -------   -------   -------   -------   -------    -------  -------  -------  -------  -------
Income before pro forma 
  provision for income taxes           3,185     3,560     3,990     5,368    16,103      4,211    5,264    6,026    7,654   23,155
Pro forma provision for 
  income taxes                         1,238     1,408     1,665     2,198     6,509      1,719    2,162    2,474    3,098    9,453
                                     -------   -------   -------   -------   -------    -------  -------  -------  -------  -------
Pro forma net income                  $1,947    $2,152    $2,325    $3,170    $9,594     $2,492   $3,102   $3,552   $4,556  $13,702
                                     =======   =======   =======   =======   =======    =======  =======  =======  =======  =======
</TABLE>






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's ability 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.


New Authoritative Pronouncements

     In March 1995, the Financial Accounting Standards Board
("FASB") issued Statements of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment for Long-
Lived Assets to be Disposed Of." The statement requires 
impairment losses to be recorded on long-lived assets used 
in operations when indications of impairment are present and 
the undiscounted cash flows estimated to be generated by 
those assets are less than the assets' carrying amount. The 
Company adopted this statement in the fourth quarter of 
1995. No adjustment was required to reflect the adoption of 
this statement.

     The FASB has issued SFAS No. 123, "Accounting for 
Stock Based Compensation." The Company has adopted
this standard effective in 1996. The Company adopted
the disclosure requirements under this standard,
and as such, the adoption did not have a material impact on 
the Company's financial position or results of operations.
See Note 10 of "Notes to Financial Statements".

    In March 1997, the FASB issued SFAS No. 128, "Earnings per
Share" (SFAS 128) and SFAS No. 129, "Disclosure of Information
about Capital Structure" (SFAS 129). SFAS 128 revises and
simplifies the computation for earnings per share and requires
certain additional disclosures. SFAS 129 requires additional
disclosures regarding the Company's capital structure. Both
standards will be adopted in fiscal 1997. Management does
not expect the adoption of these standards to have a material
effect on the Company's financial position or the results
of operations.

Forward looking Statements

     The Company had made in this report, and from time to 
time may otherwise make, forward-looking statements 
concerning the Company's operations, economic performance 
and financial condition. This report may include, in 
particular, forward-looking statements. The information 
contained herein includes certain forward-looking statements 
regarding store openings, purchasing abilities, and capital 
requirements. Such forward looking statements are subject to 
various risks and uncertainties. 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 risks attendant to the importing 
of merchandise, particularly from China, including the 
potentially higher costs and lower quality of merchandise 
should the Company be forced to buy large quantities of 
domestic goods, (iii) the orderly operation of the Company's
receiving and distribution process, operations, (iv) 
inflation, consumer confidence and other general economic 
factors, (v) the availability of adequate inventory, capital 
resources and external financing, (vi) the risk of a 
disruption in sales volume in the fourth quarter and other
seasonal factors as discussed in "Management's Discussion 
and Analysis and Results of operations--Seasonality and 
Quarterly Fluctuations." and (viii) dependence on key 
personnel and control for the Company by existing 
shareholders. In addition, the market price of the Company's 
Common Stock, which is quoted on the New York Stock 
Exchange, may be subject to significant fluctuations in
response to operating results, comparable store sales
announcements, announcements by competitors, or in response 
to market fluctuations unrelated or disproportionate to the 
operating performance of the Company.









ITEM 8. FINANCIAL STATEMENTS

                  Index to Financial Statements                     Page
                                                                   ------
         Report of Independent Public Accountants

         Balance Sheets as of December 31, 1995 and 1996

         Statements of Income for the years ended 
                 December 31, 1994, 1995 and 1996

         Statements of Shareholders' Equity for the years ended 
                 December 31, 1994, 1995 and 1996

         Statements of Cash Flows for the years ended 
                 December 31, 1994, 1995 and 1996

         Notes to Financial Statements









































Report of Independent Public Accountants


To 99 Cents Only Stores:

   We have audited the accompanying balance sheets of 99 Cents Only
Stores (a California Corporation) as of December 31, 1995 and 1996, and
the related statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial 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 as of December 31, 1995 and 1996, and the results of its operations 
and its cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.


                                   ARTHUR ANDERSEN LLP

Los Angeles, California
March 11, 1997




























99 CENTS ONLY STORES
BALANCE SHEETS
DECEMBER 31, 1995 and 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
                                                            1995      1996
                                                        -------   -------

ASSETS

CURRENT ASSETS:
   Cash                                                   $3,057    $3,375
   Short-term investments                                     -     27,619
   Accounts receivable, net of
    allowance for doubtful accounts   
    of $34,000 and $211,000 as of
    December 31, 1995 and 1996,
    respectively                                           1,360     1,561
   Inventories                                            34,313    36,933
   Other                                                     324       323
                                                         -------   -------
      Total current assets                                39,054    69,811
                                                         -------   -------
PROPERTY AND EQUIPMENT, at cost:
   Land                                                    5,107     7,159
   Building and improvements                               8,553    10,195
   Leasehold improvements                                  5,025     6,546
   Fixtures and equipment                                  3,992     5,840
   Transportation equipment                                  421       438
   Construction in progress                                   -        134
                                                         -------   -------
                                                          23,098    30,312
   Less - Accumulated
   depreciation and amortization                          (5,311)   (7,239)
                                                         -------   -------
                                                          17,787    23,073
OTHER ASSETS:                                            -------   -------
   Deferred income taxes                                     378     5,702
   Deposits                                                  231       246
   Receivable from affiliated entity                         107       165
   Other                                                      41        - 
                                                         -------   -------
                                                             757     6,113

                                                         -------   -------
                                                         $57,598   $98,997
                                                         =======   =======






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







99 CENTS ONLY STORES
BALANCE SHEETS
DECEMBER 31, 1995 and 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

                                                            1995      1996
                                                        -------   -------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of capital
    lease obligation                                        $612      $656
   Accounts payable                                        5,750     6,577
   Accrued expenses:
     Payroll and payroll-related                             818     1,086
     Sales tax                                               900     1,056
     Liability for claims                                    959       706
     Other                                                    20        34
   Workers' compensation                                   1,209       771
   Income taxes payable                                       96       103
                                                         -------   -------
      Total current liabilities                           10,364    10,989
                                                         -------   -------

LONG-TERM LIABILITIES:
   Deferred rent                                           1,346     1,294
   Accrued interest                                          965     1,500
   Capital lease obligation,
    net of current portion                                 9,365     8,709
                                                         -------   -------
                                                          11,676    11,503
                                                         -------   -------
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 -
    9,929,135 shares at December 31,
    1995 and 14,816,635 shares at
    December 31, 1996                                        195    65,354
   Retained earnings                                      35,363    11,151
                                                         -------   -------
                                                          35,558    76,505

                                                         -------   -------
                                                         $57,598   $98,997
                                                         =======   =======


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



99 CENTS ONLY STORES              
STATEMENTS OF INCOME              
YEARS ENDED DECEMBER 31, 1994, 1995 and 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)


                                                1994      1995      1996
                                              -------   -------   -------

NET SALES:
   99 Cents Only Stores                       $110,724  $121,998  $143,163
   Other Retail                                  2,097       492        - 
   Bargain Wholesale                            18,916    30,337    40,480
                                               -------   -------   -------
                                               131,737   152,827   183,643
COST OF SALES                                   88,045   102,160   120,922
                                               -------   -------   -------
   Gross Profit                                 43,692    50,667    62,721

SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES                                       32,661    33,809    39,692
                                               -------   -------   -------
   Operating Income                             11,031    16,858    23,029
                                               -------   -------   -------
OTHER (INCOME) EXPENSE:
   Reversal of special litigation reserve       (2,900)       -         - 
   Interest income                                  (9)      (14)     (890)
   Interest expense                                773       769       764
                                               -------   -------   -------
                                                (2,136)      755      (126)
                                               -------   -------   -------
   Income before pro forma provision
    for income taxes                            13,167    16,103    23,155

PRO FORMA PROVISION FOR
    INCOME TAXES (unaudited)                     5,163     6,509     9,453
                                               -------   -------   -------
PRO FORMA NET INCOME (unaudited)                $8,004    $9,594   $13,702
                                               =======   =======   =======

PRO FORMA EARNINGS PER COMMON SHARE (unaudited)                      $0.97
                                                                   =======
PRO FORMA WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING (unaudited)                               14,079
                                                                   =======




The accompanying notes are an integral part of these statements.


99 CENTS ONLY STORES
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 and 1996
(AMOUNTS IN THOUSANDS)



                                             Common Stock
                                               ----------------- Retained 
                                               Shares    Amount   Earnings
                                              -------   -------   -------
BALANCE, December 31, 1993                       9,929      $195   $23,111
  Net Income                                        -         -     13,105
  Cash distributions to shareholders                -         -     (5,600)
                                               -------   -------   -------
BALANCE, December 31, 1994                       9,929       195    30,616
  Net Income                                        -         -     15,947
  Cash distributions to shareholders                -         -    (11,200)
                                               -------   -------   -------
BALANCE, December 31, 1995                       9,929       195    35,363
  Net Income                                        -         -     20,737
  Cash distributions to shareholders                -         -     (5,000)
  Distributions to shareholders in the
      form of notes payable                         -         -    (35,549)
  Distributions to shareholders in the
      form of dividends payable                                     (4,400)
  Net proceeds from initial public offering      4,888    65,159        -

                                               -------   -------   -------
BALANCE, December 31, 1996                      14,817   $65,354   $11,151
                                               =======   =======   =======




The accompanying notes are an integral part of these statements.
99 CENTS ONLY STORES
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1995 and 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                          1994      1995      1996
                                                        -------   -------   -------
<S>                                                    <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                               $13,105   $15,947   $20,737
Adjustment to reconcile net income to net
   cash provided by (used in) operating activities:
    Provision for doubtful accounts                          (69)       -        177
    Depreciation and amortization                          1,342     1,640     2,009
    Loss on disposition of property and
     equipment                                                66        32        13
    Benefit for deferred income taxes                       (155)     (145)   (5,324)
    Reversal of special litigation reserve                (2,900)       -         - 
    Provision for inventory reserve                        1,650        -         - 
Changes in asset and liabilities
 associated with operating activities:
    Accounts receivable                                     (387)     (466)     (378)
    Purchases of short-term investments                       -         -    (27,619)
    Inventories                                           (5,347)   (1,795)   (2,620)
    Other assets                                            (202)       77        42
    Deposits                                                 145        90       (15)
    Receivable from affiliated entity                         -       (107)      (58)
    Accounts  payable                                       (642)    1,018       827
    Accrued expenses                                         420      (291)      185
    Worker's compensation                                    462       147      (438)
    Income taxes payable                                      -         96         7
    Deferred rent                                           (119)      534       (52)
    Accrued interest                                         466       499       535
    Special litigation reserve                              (200)       -         - 
                                                         -------   -------   -------
     Net cash provided by (used in)
       operating activities                                7,635    17,276   (11,972)
                                                         -------   -------   -------
CASH FLOWS FROM INVESTING ACTIVITIES --
    Purchases of property and equipment                   (1,919)   (2,660)   (7,308)
                                                         -------   -------   -------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments of capital lease obligation                    (532)     (571)     (612)
    Net proceeds from initial public offering                 -         -     65,159
    Payment of notes payable to shareholders                  -         -    (35,549)
    Payment of dividend payable                               -         -     (4,400)
    Distributions to shareholders                         (5,600)  (11,200)   (5,000)
                                                         -------   -------   -------
     Net cash provided (used in) financing
       activities                                         (6,132)  (11,771)   19,598
                                                         -------   -------   -------
NET INCREASE (DECREASE) IN CASH                             (416)    2,845       318
CASH, beginning of period                                    628       212     3,057
                                                         -------   -------   -------
CASH, end of period                                         $212    $3,057    $3,375
                                                         =======   =======   =======
The accompanying notes are an integral part of these statements.
</TABLE>
99 CENTS ONLY STORES
NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1996




1.      Line of Business

    The Company, 99 Cents Only Stores is primarily a retailer of
various consumable products through 36 and 43 stores at December 31,
1995 and 1996, respectively, in Southern California. The Company is
also a wholesale distributor of various consumable products.

2.      Concentration of Operations in Southern California

    All of the Company's retail stores are located in Southern 
California. In addition, the Company's current retail 
expansion plans anticipate that all planned 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.

3.      Public Offering of Stock

In May 1996, the Company completed its initial public 
offering of 4,887,500 shares (including 637,500 shares from 
the exercise of the over allotment option granted to the 
underwriters) of common stock at an offering price of $14.50 
per share. In connection with this offering, the Company
received net proceeds of $65,159,000.


4.      Summary of Significant Accounting Policies

Use of Estimates

   The preparation of 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

   Property and equipment are depreciated and amortized on 
the straight-line basis for financial reporting purposes 
over the following useful lives of the assets:

     Building and improvements     27.5 years
     Leasehold improvements        Lesser of 5 years or
                                    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. Repairs and maintenance expense was $726,000, $629,000
and $620,000 in 1994, 1995 and 1996 respectively.,

Pro Forma Presentation

   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.
   
   Pro Forma Statements of Income

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

   Pro Forma Earnings Per Common Share

   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. Pro forma 
weighted average number of common shares outstanding also 
includes 2,753,000 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.

    Pursuant to the rules of the Securities and Exchange Commission,
historical per share data are not presented and pro forma per 
share data are presented for the latest fiscal year only in the 
accompanying statements of income. Also pursuant to these rules,
the number of common shares issuable due to options granted
during the twelve months preceding the Company's public offering
are included in the calculation of shares outstanding using the 
the treasury stock method from the beginning of all periods 
presented.


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).

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 $134,000, $200,000
and $7,735,000 in 1994, 1995 and 1996 respectively. 
Interest payments totaled approximately $308,000, $269,000 
and $228,000 for the years ended December 31, 1994, 1995 and 
1996 respectively. 

New Authoritative Pronouncements

    In March 1995, the Financial Accounting Standards Board (FASB)
issued SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets to be disposed of" (SFAS 121), which requires
impairment losses to be recorded on long-lived assets used in
operations when indications of impairment are present and the
undiscounted cash flows estimated to be generated by those assets
are less than the assets' carrying amount. The Company adopted
SFAS 121 in the fourth quarter 1995 and the impact on the Company's
financial position and results of operations was insignificant.

    In March 1997, the FASB issued SFAS No. 128, "Earnings per
Share" (SFAS 128) and SFAS No. 129, "Disclosure of Information
about Capital Structure" (SFAS 129). SFAS 128 revises and
simplifies the computation for earnings per share and requires
certain additional disclosures. SFAS 129 requires additional
disclosures regarding the Company's capital structure. Both
standards will be adopted in fiscal 1997. Management does
not expect the adoption of these standards to have a material
effect on the Company's financial position or the results
of operations.

Reclassifications

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



5.      PRO FORMA INCOME TAX PROVISION

   Effective May 1, 1996, the Company terminated its S 
corporation election and became a C corporation. As such, 
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 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 a 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 provision for income taxes for the years 
ended December 31, 1994, 1995 and 1996 are as follows:

                                   Years Ended December 31,
                                   (Amounts in thousands)
                                   ------------------------------
                                      1994      1995      1996
                                     ------    ------    ------
         Current
            Federal                   $4,215    $5,952    $8,695
            State                        723     1,020     1,490
                                     -------   -------   -------
                                       4,938     6,972    10,185
         Deferred                        225      (463)     (732)
                                     -------   -------   -------
         Pro forma provision
            for taxes                 $5,163    $6,509    $9,453
                                     =======   =======   =======



   Differences between the pro forma provision for taxes and 
income taxes at the statutory federal income tax rate for each  
of the three years in the period ended December 31, 1996 are as 
follows:

<TABLE>
<CAPTION>
                                  Year Ended December 31, (Amounts in thousands)
                         ------------------------------------------------------------
                               1994                 1995                1996
                           Amount   Percent    Amount   Percent    Amount   Percent
                          -------   -------   -------   -------   -------   -------
<S>                      <C>       <C>       <C>       <C>       <C>       <C>
Income tax at statutory
   federal rate.........    $4,608      35.0%   $5,636      35.0%   $8,104      35.0%
State income taxes, net
  of federal income tax
  effect................       790       6.0%      966       6.0%    1,389       6.0%
Effect of permanent
  differences...........        12       -          14       -          60       0.2%
LARZ and targeted jobs
  credits...............      (247)     -1.8%     (107)     -0.6%     (100)     -0.4%
                           --------  --------  --------  --------  --------  --------
                            $5,163      39.2%   $6,509      40.4%   $9,453      40.8%
                           ========  ========  ========  ========  ========  ========
</TABLE>

   A detail of the Company's deferred tax asset as of 
December 31, 1995 (pro forma) and 1996 (actual) is as follows:  
                                             Years Ended
                                             December 31,
                                             (Amounts in thousands)
                                             --------------------
                                                1995      1996
                                             (Pro Forma (Actual)
                                              -------   -------
         Inventory Reserve                      $1,675    $1,661
         Uniform inventory capitalization          931       912
         Depreciation                              805     1,180
         Liability for claims                      393       289
         Workers' Compensation                     496       316
         Deferred rent                             552       531
         Larz credit                               195       300
         State taxes                               -         491
         Other, net                                (77)       22
                                               --------  --------
                                                 4,970     5,702
         Valuation allowance                       -         -  
                                               --------  --------
                                                $4,970    $5,702
                                               ========  ========

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." Under the
requirements of SFAS No. 115, trading securities are
bought and held principally for the purpose of selling in
the near term. Unrealized holding gains and losses
are included in the determination of current earnings.
Quoted market prices are used to determine fair value. The
Company's short-term investments are all considered trading
securities and are bought and held principally for the
purpose of selling in the near term. Cash flows from
purchases and sales of trading securities are classified as
cash flows from operating activities.

    The amortized cost basis of these trading securities
was $27.4 million at December 31, 1996. The basis for
which costs were determined in computing realized gains
was specific identification.

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 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.

Total minimum payments under the lease are as follows:

                                   (Amounts in
                                   Thousands)
   Year ending December 31:          --------
             1997                       $840
             1998                        840
             1999                        840
             2000                     11,340
                                     --------
                                      13,860
   Less - Amount representing
           interest                   (4,495)
                                     --------
   Present value of minimum 
           lease payments              9,365

   Less - Current portion               (656)
                                     --------
                                      $8,709
                                     ========





8.     Related-Party Transactions

   The Company leases certain retail facilities from its 
principal shareholders. Rental expense for these facilities 
was approximately $1.5 million $1,6 million and $1,8 million 
in 1994, 1995 and 1996, respectively.

   The Company pays the premium on a split dollar life 
insurance agreement with two of its principal shareholders.
Under a collateral assignment agreement, the premiums paid 
by the Company will be reimbursed to the Company out of 
death benefit proceeds at the death of both shareholders. 
The Company has recorded a receivable of $107,000 and 
$165,000 as of December 31, 1995 and 1996, respectively, from 
an affiliated entity in the accompanying balance sheets for 
the present value, not exceeding the cash surrender value of 
the policy, based on mortality tables, of the premiums paid 
through December 31, 1995 and 1996. 

   During 1994, 1995 and 1996 the Company expensed legal 
fees to the law firm of Van Petten & Hollen of $36,000 
$109,000 and $82,000 respectively. Marvin Holen, a 
director of the Company, is a partner in this law firm.

9.     Commitments and Contingencies

   Credit Facility
     In December, 1996, the Company renewed the line of
credit facility with a bank. The facility provides for a
line of credit of $7 million that can be used for working
capital purposes and issuance of letters of credit. The
line of credit bears interest at the bank's prime interest
rate (8.25% at December 31, 1996). The line of credit
expires on June 30, 1997 at which time the Company expects 
that it will be renewed.

     The Company must comply with one covenant, the ratio
of total liabilities to tangible net worth. At December 31,
1996 the Company was in compliance with this covenant.

     As of December 31, 1996, there were no borrowings 
outstanding under the line of credit and outstanding letters 
of credit were approximately $1.9 million ($1.6 million of 
which related to a standby letter of credit for self-insured 
workers' compensation).

   Special Litigation 

     In 1989, the Company purchased $220,000 of inventory for resale.
A third party claimed to have a valid lien on the merchandise sold 
to the Company. After a series of judgments, reversals and other
legal actions, the litigation was settled for $200,000 in early 1995.

     From 1991 to 1993, the Company provided a reserve for $3.1 million
for estimated litigation and interest costs. As a result of the 
settlement, $200,000 was charged to the reserve and the remaining $2.9
million was included in income in 1994.




   Lease Commitments

     The Company leases various facilities under operating 
leases which expire at various dates through 2005. 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 1994, 1995 and 1996 was approximately
$4.7, $5.1 and $5.6 million respectively.

     As of December 31, 1996, the minimum annual rentals 
payable under all non-cancelable operating leases were as 
follows:
                                             (Amounts in
                                             Thousands)
Year ending December 31:                       --------
             1997                               $6,298
             1998                                6,411
             1999                                6,090
             2000                                5,969
             2001                                4,656
         Thereafter                             13,117
                                               --------
                                               $42,541
                                               ========

     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, 
1996 were approximately $34,000.

    
   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. Through March 11, 1997, the Company has not made 
a claim against the policy. The Company provides for losses 
of estimated known and incurred but not reported insurance 
claims. Known claims are estimated and accrued when 
reported. Incurred but not reported claims are estimated and 
accrued based on the Company's experience and the experience 
of a third-party administrator. At December 31, 1996, the 
Company had accrued approximately $771,000 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 standby letter of credit. As of 
December 31, 1996, there was $1.6 million under the standby 
letter of credit.




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 1,000,000 shares of
common stock. Options may be granted to officers, employees,
directors and consultants. Options vest over a three year
period, 33 1/3% one year from date of grant and 33 1/3% per
year thereafter. Options expire ten years from date of
grant. Information regarding the Company's stock option plan
is summarized below:
                                                        Weighted
                                                        Average
                                                        Exercise
                                     Shares              Price
                                     --------            --------
Outstanding, December 31, 1995           -               $   -  
  Granted                            510,800               11.05
  Forfeited                          (61,950)              10.99
                                     --------            --------
Outstanding, December 31, 1996       448,850              $11.06
                                     ========            ========
Exercisable, December 31, 1996           -                   -  
                                     ========            ========

Range of exercise                   $10.99 to
      prices                          $13.94
Weighted average remaining 
      contract life                9.3 years

   The Financial Accounting Standard Board issued Statement 
of Financial Accounting Standard No. 123 ("SFAS No. 123")
"Accounting for Stock Based Compensation" which is effective
for fiscal years ending after December 15, 1995. 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", accordingly
under SFAS No. 123, the expected impact on the Company's
consolidated financial statements is included in this
expanded footnote disclosure.

   The fair value of each option grant is estimated on the 
date of grant using the Black-Scholes option pricing model. A
weighted average fair value of options granted during the
year was calculated assuming no dividend yield, an expected
volatility of 28 percent, a risk free interest rate of 5.0 percent
and expected lives of 5.6 years. Had compensation cost for 
this stock option plan been determined consistent with SFAS No.
123, the Company's net income and earnings per share would have
been reduced to $13.5 million and $0.96 per share respectively.


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 the 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 1997
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 1997 Annual
Meeting of Shareholders, and is incorporated herein by
reference.

Item 12. Security ownership of Certain Beneficial Owner
           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 1997 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 1997 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 17 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 in the Exhibits hereto.

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






                  SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) Securities 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 Cents Only Stores

DATE: March 27, 1997               By:        /s/ERIC SCHIFFER
                                   Eric Schiffer
                                   Senior Vice President
                                   Finance and Operations


      Pursuant to the requirements of the Securities Exchange Act
of 1934 this report 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
         ---------       ---------                     ---------

/S/ David Gold           Chairman of the Board, Chief  March 27, 1997
                         Executive Officer and President

/S/ Howard Gold          Senior Vice President         March 27, 1997
                         Distribution and Director

/S/ Jeff Gold            Senior Vice President         March 27, 1997
                         Real Estate and Information System
                         and Director

/S/ Eric Schiffer        Senior Vice President Finance March 27, 1997
                         and Operations and Director

/S/ William O. Christy   Director                      March 27, 1997

/S/ Lawrence Glascott    Director                      March 27, 1997

/S/ Marvin L. Holen      Director                      March 27, 1997

/S/ Ben Schwartz         Director                      March 27, 1997












                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To 99 Cents Only Stores:

   We have audited in accordance with generally accepted auditing standards,
the financial statements of 99 Cents Only Stores included in this Form 10-K
and have issued our report thereon dated March 11, 1997. Our audits were made
for the purpose of forming an opinion on the basic 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
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic 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 financial statements taken as
a whole.


                                   ARTHUR ANDERSEN LLP

Los Angeles, California
March 11, 1997




99 Cents Only Stores 
Schedule II - Valuation and Qualifying Accounts
For Each of the Three Years in the Period Ended December 31, 1996


                                   Amounts in thousands
                                             --------------------
                                   Beginning                      End of 
                                    of Year  Provision Reduction    Year
                                     --------  --------  --------  --------
For the year ended December 31, 1996:
     Allowance for doubtful account      $34      $237       $60      $211
                                     ========  ========  ========  ========
     Inventory reserve                 4,085       -          33     4,052
                                     ========  ========  ========  ========
For the year ended December 31, 1995:
     Allowance for doubtful account       42       -           8        34
                                     ========  ========  ========  ========
     Inventory reserve                 4,085       -         -       4,085
                                     ========  ========  ========  ========
For the year ended December 31, 1994:
     Allowance for doubtful account      111       -          69        42
                                     ========  ========  ========  ========
     Inventory reserve                $2,435    $1,650       -      $4,085
                                     ========  ========  ========  ========



                                                       Exhibit 11.1

99 Cents Only Stores
Statement Regarding Computation of
Pro Forma Per Share Earnings
Amounts in thousands

                                                       Year Ended
                                                       December 31,
                                                            1996
                                                         -------

Pro Forma Net Income                                     $13,702
                                                         =======
Common Stock:
    Shares outstanding from Beginning of period            9,929

    Pro-rata shares - stock issuance                       2,960

    Common Stock Equivalents                                 104

    Pro rata - pro forma Common Shares to fund
      distribution to shareholders                         1,086
                                                         -------
    Pro forma weighted Average number of common
      shares outstanding                                  14,079
                                                         =======
    Pro forma earnings per common share                    $0.97
                                                         =======