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| Fate | Bankruptcy |
|---|---|
| Founded | Southbridge, Massachusetts; 1958 |
| Defunct | 2002 |
| Headquarters | Rocky Hill, Connecticut |
| Industry | Retail |
| Products | Clothing, footwear, bedding, furniture, jewelry, beauty products, electronics and housewares. |
Ames was an American chain of discount department stores based in Rocky Hill, Connecticut, USA. The company was founded in 1958 with a store in Southbridge, Massachusetts, and at its peak operated 700 stores in 20 states, including the Northeast, Upper South, Midwest and the District of Columbia, making it the fourth largest discount retailer in America.
Despite its successes in its later years, Ames was plagued by debt and a slow decline in sales. This resulted in two bankruptcy filings and ultimately put an end to the chain. The company, despite expanding into other markets and taking over many closed stores that had been abandoned by competitors, went out of business in 2002.
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History
Ames began in 1958 when two Connecticut brothers, Milton and Irving Gilman, opened their first store in the Ames Worsted Textile Co. mill. The name of the Ames Department Store was due to simply reusing the old sign of the textile mill for the new business. .
Ames' 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.
Many of the first stores were converted industrial sites, such as the first store in a former textile mill. Ames exploited the availability of cheap real estate in this manner in the first decades of the company, later moving to custom-built store facilities that provided stardardized planning and marketing. Many Ames stores from the 1980s were the department store 'anchor store' for many discount mall developments.
Wave of expansion and first bankruptcy
In 1984 Ames acquired the King's chain of stores and added most of its 193 stores to the fold. In 1985 Ames acquired the G.C. Murphy chain, based in McKeesport, Pennsylvania, and converted most of its larger stores to the Ames banner (the remaining stores would be sold to McCrory Stores in 1989). Three years later Ames expanded further, acquiring the 392 store Zayre chain in 1988. 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. The Zayre chain also operated with stores concentrated in two distinct regions, the Northeast and Florida, which made coordination difficult.
In April 1990, Ames filed for bankruptcy protection under Chapter 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 their credit rating in an attempt to increase their market share. This often resulted in their giving credit cards to customers who were already in debt 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 acquisition of Hills
After successfully emerging from bankruptcy on December 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 ended January 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 locations of their competitors. The chain added several Bradlees stores that were closed in the early part of the decade and most of the stores remaining in the Jamesway chain when those stores went out of business in late 1995. Ames also added a few former Caldor locations after that chain liquidated in 1999 and also took over stores from Montgomery Ward.
With the acquisition of Hills Department Stores of Massachusetts in 1998, Ames became the nation's fourth-largest discount retail chain behind Wal-Mart, Kmart and Target. Although Hills was technically headquartered in suburban Boston, Hills stores were concentrated in Western New York, Pennsylvania, Ohio, Indiana, and Kentucky, which was a regional compliment to Ames stores in the northeast. At this time Ames had just over 600 stores, mostly in the Northeast and Midwest, employing about 22,000 people.
Expansion into Chicago
In 2000, Ames moved into Chicago by acquiring all but one of the seven Goldblatt's department stores. [1] Other locations included former Venture and Builders 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," a Ladenburg Thalmann analyst Beder said. [2] 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”. On September 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. (Some of these closings had been anticipated back at the acquisition of the Hills stores, as these were considered the weakest of the Hills chain.) In August 2001, Ames closed another 47 stores. The company filed for bankruptcy protection for the second time on August 20, 2001. In November 2001, Ames closed 16 more stores and a distribution center. In December 2001, Ames closed 54 additional stores, leaving the chain with only 333 stores. Ames closed another six stores in June 2002, leaving the chain with almost half of what they had at four years earlier..
On August 14, 2002, Ames executives announced they would close the remaining 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, who had presided over the bankruptcy and liquidation of Stuart's and Jamesway prior to joining Ames, said about Ames' decision to go out of business. Analysts generally believe that debt related to the acquisition of Hills Department Stores, at the same time as the tightened credit markets of 2001, caused the bankruptcy. The increasing penetration of WalMart into the Northeast also made Ames fate inevitable.
Because of the smaller size of many Ames stores, they have been difficult to convert to newer uses, and many times remain empty fixtures of small northeastern cities. Many of the smaller New England area stores have been taken over by Ocean State Job Lot, a Rhode Island-based closeout store.
See also
References
External links
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