Thursday, August 15, 2002

Ames Department Stores Inc. is shutting its doors, despite efforts by the struggling retailer to emerge from bankruptcy over the last year.
The Rocky Hill, Conn.-based regional discount chain will close all of its 327 stores, including the 11 locations in the Washington area, leaving 21,500 employees without jobs. More than 800 full- and part-time workers locally will lose their jobs by the time the stores close in October.
“This was a wrenching decision, but the right course to take,” Joseph R. Ettore, Ames chairman and chief executive, said in a statement yesterday. “Continued softness in sales, combined with tightening terms and slower shipments from our suppliers, have reduced our funds availability below critical levels.”
Ames is one of several discount retailers like Montgomery Ward Inc., Caldor Corp. and Bradlees Inc. that have fallen on hard times in recent years after losing business to successful retail giants Wal-Mart, Target and Kohl’s.
Regional retailers like Ames have struggled to survive against the larger chains’ customer service, advertising, merchandise selection and number of stores, analysts say.
“A chain like Ames doesn’t have pricing power like Wal-Mart,” Kurt Barnard, president of Barnard’s Retail Trend Report, told Bloomberg News. “To prevail in this market, you have to have a national presence or extraordinary offerings that nobody else can match.”
Some shoppers at the Ames store on Rhode Island Avenue in Northeast weren’t shocked. Many shop at Ames when they have sales but find themselves shopping regularly at Wal-Mart and Target stores in Maryland and Virginia.
“I like the prices,” said one shopper, who regularly visits Ames’ arts and crafts section. “In this community, there is no store that has as many items as it has for these prices.”
However, the D.C. resident said she noticed when supplies were low the store didn’t replenish the shelves.
Tuajuana Jenkins, who has worked at the D.C. store for seven “I’m upset,” she said. “They kept the stores open hoping for things to be better. It’s like a slap in the face.”
Ames filed for Chapter 11 bankruptcy protection for the second time in August 2001.
The retailer first filed for bankruptcy in April 1990, successfully reorganized and emerged from Chapter 11 in December 1992. The chain didn’t have a profitable year until 1996.
Ames’ total losses for the fiscal year ending Feb. 2, 2002, were $813.1 million, compared with a $240.6 million loss last year, according to documents filed with the Securities and Exchange Commission.
The latest bankruptcy filing came after Ames purchased Hills Stores Co. in 1998, which resulted in too much debt for the company.
Since filing for bankruptcy a year ago, Ames has closed 123 stores and one distribution center to reduce costs. Ames also added special features in attempt to attract and retain customers.
Earlier this year, the chain added a Great Value Aisle section, which features $1, $2 and two-for-$3 items, including granola bars, cookies, pastas, cleaning supplies, cups, food-storage items, beauty products and pet supplies all items customers had been requesting.
Last month, Ames debuted another section called “Dollar Bargains,” which offered seasonal items, craft products and other trinkets for $1 each.
Ames was also a hit among the 55-and-older crowd. Since 1995, the chain has offered a 10 percent discount on all merchandise every Tuesday for those at least 55 years old. The retailer had more than 2 million active members in its 55 Gold Savings Club.
In a June interview, Mr. Ettore said he was confident Ames was moving closer to emerging from bankruptcy, but would not predict when it would happen. He said company officials would reassess the business after the fourth quarter, which includes the holiday season.
Ames’ going-out-of-business sales will begin Sunday and last for about 10 weeks, pending bankruptcy court approval.
In a letter on Ames’ Web site, Mr. Ettore writes that store employees are expected to report to work during the 10-week liquidation process. However, about 420 employees at its headquarters were fired yesterday.
Ames stores are located mainly in the Northeast, mid-Atlantic and Midwest, including 20 stores in Maryland, six in Virginia and one in the District.

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