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The Death of a Discount Retailer. TokenSafari Copyright © 2000-2006 TokenSafari.

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Presentation on theme: "The Death of a Discount Retailer. TokenSafari Copyright © 2000-2006 TokenSafari."— Presentation transcript:

1 The Death of a Discount Retailer. TokenSafari Copyright © 2000-2006 TokenSafari.

2 Quick Facts Established in 1958 Operated 467 stores in its peak year 99 $2.2 Billion in sales annually 21,500 Associates Declared Bankruptcy in August 2002 Copyright © 2000-2006 TokenSafari.

3 Ames was founded by Milton and Irving Gilman in the Ames Worsted Textile Co. Mill in Southbridge Mass. In 1958 In its first year of operation did $1 million in sales and opened stores in upstate New York and Northern Vermont. The strategy was simple: Bring a discount store to under-served or rural areas. Beginning Copyright © 2000-2006 TokenSafari.

4 In 1962 Ames went public as Ames Department Stores, Inc. By 1970 Ames had 23 stores and over $ 50 million in annual sales Through-out the 1970s and the 1980s Ames continued to expand, both organically and through acquisitions. Growth Copyright © 2000-2006 TokenSafari.

5 Ames biggest spurt of growth came from acquisitions of other discount chains in the Northeast. Although these buy-outs helped Ames grow, the purchase of Zayre in 1988 proved disastrous. Acquisitions Joseph Leavitt (N/A) K&R Warehouse (1972) Davis Wholesale (1978) Neisner Brothers (1978) Kings (1984) G.C. Murphys (1985) Zayre (1988) Hills (1998) Companies Include: Copyright © 2000-2006 TokenSafari.

6 Zayre The Zayre to Ames conversion proved to be very slow and costly for Ames. Ames closed 74 stores and converted the remaining 318 Zayre Stores. In May of 1989, Ames sold off the Zayre Shoe Concession to J. Baker for $137 million. Former Zayre Stores: Copyright © 2000-2006 TokenSafari.

7 Zayre Cont… Effects of the Zayre buy-out forced Ames to file for Chapter 11 Protection in May of 1990. While in Chapter 11, Ames sold off its Sporting Goods division, Mathew & Boucher in 1992. The Same year Ames also filed suit against the consulting firm that advised the purchase of Zayre. Ames alleged it had paid too much for the chain and was settled for $19 million. Copyright © 2000-2006 TokenSafari.

8 Chapter 11 Ames emerged from Chapter 11 Protection in late 1992. During the bankruptcy protection, Ames closed 370 stores. In the following year, 1993, Ames closed an additional 60 stores that were not slated for closure. Copyright © 2000-2006 TokenSafari.

9 Growth Part II Product base and shopping hours were widely popular among Ames customers. 1998 proved to be a good year for Ames, with the purchase of Hills Department Stores & 10 former Caldor Locations. The purchase increased store count by 50% and made Ames the 4 th largest retailer in the nation. Copyright © 2000-2006 TokenSafari.

10 Hills Ames acquired Hills in 1998 for $127 million and the assumption of lease and obligation debts. The Hills to Ames transition took 1 year to complete costing Ames $170 million. Critics blame the demise of Ames on this acquisition. Founded: 1957 Founder: Herbert H. Goldberger Stores: 155 in 19 states National Ranking: 9 th Employees: 14,600 Assets: $1 billion Sales: $357.2 million (Q3 98) Hills Facts Copyright © 2000-2006 TokenSafari.

11 March of 1999, Ames closed 8 overlapping stores, then in 2000 an additional 32 stores closed. (31 of which were former Hills locations.) August 2001 filed for Chapter 11 Protection for a 2 nd time and closed another 47 stores. Then in November, 16 more stores and a distribution center was closed. December of 2001 saw closure of 54 more stores. This left Ames with 333 stores. Finally in June 2002, 6 stores were close, then on August 14 th, Ames declared bankruptcy. Closing its remaining 326 stores after 44 years of service. Demise Copyright © 2000-2006 TokenSafari.

12 Locally Copyright © 2000-2006 TokenSafari.

13 RetailFanClub AmesFanClub Retailers from Woolworth to Wal*Mart TokenSafari Resources

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