Fourth-quarter earnings fell 25% at 99 Cents Only ( NDN), but the deep discounter projects better results in 2004.

Shares of 99 Cents Only were recently up 13 cents, or 0.5%, to $27.03 in after-hours trading; the stock closed Thursday's regular session down 40 cents, or 1.5%, to $26.90.

The retailer earned $14.98 million, or 21 cents a share, in the holiday quarter, compared to earnings of $19.73 million, or 28 cents a share, in the year-ago period.

The profit plunge came despite healthy sales growth. The company posted $247.47 million in revenue in the fourth quarter, up 17% from the same period a year earlier.

The results were in-line with Wall Street's estimates. Analysts polled by Reuters' MultexNet service projected 99 Cents would earn 21 cents a share in the quarter on $247.24 million in revenue.

But the company warned analysts that its first quarter revenue and profits may fall short of expectations. 99 Cents expects to earn 20 cents to 21 cents a share in the current quarter on sales ranging from $228 million to $235 million. Analysts have forecast earnings in the quarter of 21 cents a share on sales of $239.85 million.

The discount chain projects it will essentially make up for any disappointment in the rest of the year. For all of 2004, 99 Cents expects to earn 90 cents to 96 cents a share on sales ranging from $1.02 billion to $1.06 billion.

The midpoint of the company's earnings range -- 93 cents a share -- is what analysts had projected for the year, and would represent 19% growth year-over year. The midpoint of the company's revenue range -- $1.04 billion -- is about $50 million less than analysts' estimates, but would represent about 21% growth.

The company blamed its earnings downturn in the fourth quarter on an increase in its workers' compensation reserve, the company's struggling Texas stores and transportation costs. Combined, those factors reduced earnings in the quarter by about 9 cents a share, the company said.

The discount chain originally planned to report its earnings last month, but delayed its report after an inquiry from the Securities and Exchange Commission. In a letter, the SEC questioned the company's accounting for a sale of a business division in 2000. The company also attributed the delay in its report to a review of its workers' compensation reserve.

Earlier this week, 99 Cents announced that the SEC had completed its review and that it would not be required to restate its earnings as a result. The company also said it had completed its own review of its workers' compensation reserve.

The company added $7.9 million more to its reserve in the fourth quarter than it did in the year-earlier period.

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