Ames Department Stores Inc. was an American discount store chain headquartered in Rocky Hill, Connecticut. Founded in 1958 in Southbridge, Massachusetts, the company grew to operate 700 stores across 20 states, becoming the fourth-largest discount retailer in the United States.
However, despite initial success, Ames faced financial troubles due to debt incurred from acquisitions and a decline in sales influenced by changing market dynamics and suburban development. These challenges led to two bankruptcy filings, ultimately resulting in the closure of the entire chain in 2002. Despite expansion efforts and taking over stores left by competitors, Ames could not sustain its business.
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Ames: The Beginning
In 1958, three brothers from Connecticut, Milton, Irving, and Herbert Gilman, along with their partner Philip Feltman, launched their first store inside the former Ames Worsted Textile Co. mill in Southbridge. They simply repurposed the old mill’s sign for their new venture. In 1971, they replaced this store with a modern one in Sturbridge, Massachusetts, and in October 1959, they opened a second store in St. Johnsbury, Vermont.
Ames originally focused on bringing discount shopping to smaller towns and rural areas in the Northeast. This strategy proved successful, as they catered to a rural customer base in less competitive markets, leading to strong financial performance and steady growth through acquisitions and store expansion until the late 1980s.
Many of Ames’ initial stores were converted industrial sites, like their first store in a former textile mill. They capitalized on affordable real estate in these locations during the early years of the company, later transitioning to purpose-built store facilities with standardized planning and marketing.
In May 1967, Ames’ stock was added to the American Stock Exchange, and they subsequently began trading on the NYSE in November 1972.
Big N Chain
In November 1978, Ames acquired the 32-store “Big N” chain from Neisner Brothers. In 1984, they expanded further by acquiring the King’s Department Stores chain and incorporating most of its 193 stores. A year later, in 1985, Ames added G.C. Murphy of McKeesport, Pennsylvania, to their portfolio, which included both discount and variety stores. However, many smaller G.C. Murphy discount stores and variety stores were sold to McCrory Stores in 1989.
In 1988, Ames continued its expansion by acquiring the 392-store Zayre chain. This move, coupled with the cost of converting these stores to Ames stores, led to increased debt and a significant decline in profitability in late 1989 and early 1990. The Zayre chain also had stores concentrated in two distinct regions, the Northeast and Florida, making coordination challenging.
Chapter 11 Bankruptcy
In April 1990, Ames filed for Chapter 11 bankruptcy protection, with one of the contributing factors being Ames’ practice of extending consumer credit without checking credit ratings to boost market share. They had also replaced the Zayre credit card program with Visa cards, leading to credit cards being issued to customers already in debt, often attracting high-risk borrowers who defaulted on their payments.
During the bankruptcy proceedings, Ames closed 370 land-based stores, primarily located in rural regions of the Northeast. It was during this period that Ames changed its logo, adopting the green color from Zayre stores as their new trademark.
In March 1999, Ames closed 8 stores, and in November 2000, they closed 32 stores, including 31 newly acquired Hills locations. These closures mainly targeted the weakest stores from the Hills chain. Ames faced financial challenges and filed for bankruptcy protection for the second time on August 20, 2001. In the following months, they closed an additional 16 stores and a distribution center in November 2001, and 54 more stores in December 2001. By June 2002, Ames had shut down another six stores, leaving them with only 327 stores, roughly half of their 1998 count.
On August 14, 2002, Ames’ executives made the difficult decision to close the remaining 327 stores and cease operations. They converted their Chapter 11 bankruptcy reorganization into a Chapter 7 bankruptcy liquidation due to persistent weak sales, tightening credit terms, and slower shipments from suppliers. Joseph R. Ettore, Ames’ chairman and CEO, cited these factors as well as the debt incurred from the acquisition of Hills Department Stores and the impact of Walmart’s expansion in the Northeast as contributing to the company’s demise.
After emerging from the first Chapter 11 bankruptcy, Ames’ decision to purchase Hills stores significantly increased its debt-to-income ratio, making it financially vulnerable. As creditors began pulling out of contracts due to payment failures, the company had no alternative but to file for a second and final bankruptcy.
On December 18, 2012, private investment company Oak Point Partners acquired the remaining assets from the Ames Department Stores, Inc. bankruptcy estates.
Ames: A Comeback?
In December 2022, the Molyneux Group, which owns the assets of Bradlees Department Stores PLC, announced the return of Ames Department Stores after a 21-year hiatus. They indicated that new locations would open in Spring 2023. A new website, amesstores.com, was launched, which had previously been the chain’s domain until its bankruptcy in 2002.
However, in the same month, investigative reporters from WJAR and WVIT tried to verify these claims but were unable to contact anyone associated with the Molyneux Group. The project was reportedly overseen by Molyneux Group’s American division, the Silver Knight Group. The website initially displayed the store’s logo and a message announcing the brand’s return in Spring 2023, with promises of future location announcements.
Fast forward to September 2023, the website underwent changes. All references to new store openings and the Spring 2023 timeline were removed. Instead, the site featured a statement from the “Board of Directors” mentioning a board shake-up due to mismanagement and references to stakeholders and the Ames community. This lack of concrete information has led some media outlets to question the legitimacy of the situation and consider the possibility of it being a hoax.