Ames
From Wikipedia, the free encyclopedia
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| Fate | Bankrupt |
|---|---|
| Founded | Southbridge, Massachusetts, 1958 |
| Defunct | 2002 |
| Location | Rocky Hill, Connecticut |
| Industry | Retail |
| Products | Clothing, footwear, bedding, furniture, jewelry, beauty products, electronics and housewares. |
Ames was a chain of discount stores based out of Rocky Hill, Connecticut in the United States. The chain went bankrupt in 2002.
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[edit] History
[edit] Beginnings
Ames began in 1958 when two Connecticut brothers, Milton and Irving Gilman, opened their first store in the Ames Worsted Textile Co. mill in Southbridge, Massachusetts. At its height, Ames was the nation's sixth-largest discount retailer with annual net sales of $2.2 billion, operating 452 stores in 19 states, including the Northeast, Southeast, Midwest and the District 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.
[edit] 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 protection under Chapter 11 of the U.S. Bankruptcy Code. One of the causes of the bankruptcy appeared to be Ames's policy of extending consumer credit to almost anyone who asked without checking their credit rating in an attempt to increase their market share. This often resulted in them 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.
[edit] Emergence from Bankruptcy and Acquision 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.
Ames, which bought Hills Department Stores of Massachusetts in 1998, became the nation's fourth-largest discount retail chain behind Wal-Mart, Kmart and Target. Its stores, mostly in the East and Midwest, employed about 22,000 people.
[edit] 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.
[edit] Second Bankruptcy
The firm requested bankruptcy protection again on August 20, 2001, and a year later, on August 14, 2002, Ames Discount Stores 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 of Hills Department Stores caused the bankruptcy.
