- Ames Department Stores Inc.
Infobox Defunct Company
company_name = Ames Department Stores, Inc.
company_
fate =Bankruptcy
successor =
foundation =Southbridge, Massachusetts ; 1958
defunct = 2002
location =Rocky Hill, Connecticut
industry = Retail
key_people =
products = Clothing, footwear, bedding, furniture, jewelry, beauty products, electronics and housewares.
num_employees =
parent =
subsid =Ames was a chain of
discount stores based inRocky Hill, Connecticut in theUnited States . The chain wentbankrupt in 2002 and all stores were closed that year.History
Ames began in 1958 when two
Connecticut brothers, Milton and Irving Gilman, opened their first store in theAmes Worsted Textile Co. mill inSouthbridge, Massachusetts . At its height, Ames was the nation's fourth-largest discount retailer with annual net sales of $5.3 billion, operating 700 stores in 20 states, including the Northeast, Southeast, Midwest and theDistrict of Columbia .Ames's original business strategy brought discounting to the smaller towns and rural areas of the Northeast. The company's success in serving a largely
rural customer base in smaller, less-competitive markets resulted in consistently strong financial performance and steady growth combining acquisitions and an aggressive store-building program through the late 1980s.Purchase of Zayre and first bankruptcy
In 1988, Ames doubled its store base for the second time in three years by acquiring the 392-store
Zayre discount chain. Saddled with increased debt and hampered by the additional cost of converting those stores to Ames stores, the company suffered a significant reduction in profitability in late 1989 and early 1990.In April 1990, Ames filed for
bankruptcy protection underChapter 11 of the U.S. Bankruptcy Code. One of the causes of the bankruptcy appeared to be Ames' policy of extending consumer credit to almost anyone who asked, without first checking theircredit rating in an attempt to increase theirmarket share . This often resulted in their givingcredit cards to customers who were already indebt to them, and they tended to attract high risk borrowers who tended to default on their debt payments. During their bankruptcy, Ames closed 370 stores.Emergence from bankruptcy and acquision of Hills
After successfully emerging from
bankruptcy onDecember 30 1992 , the company returned to profitability in 1993 and improved its operating performance. Net income increased to $17.3 million for 1996 (fiscal year endedJanuary 25 1997 ), compared with a net loss of $1.6 million for fiscal 1995. Income before other charges and gains for the fiscal 1996 year was $33.3 million, compared with $6.9 million in the prior fiscal year, a $26.4 million improvement. During the 1990s, Ames was also known for moving into many former discount stores, such as taking over oldBradlees ,Caldor ,Montgomery Ward , Venture, andJamesway store locations.Ames, which bought
Hills Department Stores ofMassachusetts in 1998, became the nation's fourth-largest discount retail chain behindWal-Mart ,Kmart and Target. Its stores, mostly in the Northeast andMidwest , employed about 22,000 people.Expansion into Chicago
In 2000, Ames moved into
Chicago by acquiring all but one of the sevenGoldblatt's department stores. [ [http://www.findarticles.com/p/articles/mi_m3092/is_4_39/ai_59649466 Ames comes to Chicagoland; Midwestern market right mix | Discount Store News | Find Articles at BNET.com ] ] Other locations included former Venture andBuilders Square stores, making for a total of 11 stores. The company hoped to target the low-income and ethnic consumer, using techniques that were proven successful. "The stores are generally on the South Side of Chicago, which has a low income base," aLadenburg Thalmann analyst Beder said. [ [http://www.findarticles.com/p/articles/mi_m3092/is_4_39/ai_59649466/pg_2 Ames comes to Chicagoland; Midwestern market right mix | Discount Store News | Find Articles at BNET.com ] ] Before the opening day, a television marketing campaign showed cheery Ames employees working while singing "My Kind of Town," a song that strongly referred to Chicago. Billboards read, “Our Kind of Town, Your Kind of Discount Store”. OnSeptember 21 ,2000 , Ames opened eight of its Chicago stores and opened the others shortly thereafter. A few months later, Ames opened a few additional stores.Second bankruptcy
In March 1999, Ames closed eight stores. In November 2000, Ames closed 32 stores, with 31 of them being the newly acquired
Hills Department Stores . In August 2001, Ames closed another 47 stores. The company filed forbankruptcy protection onAugust 20 ,2001 . In November 2001, Ames closed 16 more stores and adistribution center . In December 2001, Ames closed 54 additional stores, leaving the chain with only 333 stores. Ames closed another six stores in June 2002.On
August 14 ,2002 , Ames executives announced it would close all 327 stores in the chain and wind down business. "Continued softness in sales, combined with tightening terms and slower shipments from our suppliers, have reduced our funds availability below critical levels," Ames chairman and CEO Joseph R. Ettore said about Ames' decision to go out of business. Analysts generally believe that debt related to the acquisition ofHills Department Stores caused thebankruptcy .References
See also
*
Zayre
*WiseBuys
*Ocean State Job Lot External links
* [http://www.amesfanclub.com Ames Fan Club - tribute site]
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