Ames feels impact of closing stores

By Don Hogsett -- Home Textiles Today, 3/26/2001 12:00:00 AM

ROCKY HILL, CT -Weighed down by a $129.8 million price tag for shutting down 32 stores, and squeezed by falling margins and rising costs, Northeastern discounter Ames Department Stores recorded a fourth-quarter loss of $152.2 million, compared with a year-before profit of $96.1 million.

Sales ticked up by 4.2 percent, to $1.33 billion from $1.28 billion last year. But the crucial gauge of same-store sales fell 3.0 percent, compared to a year-before gain of 3.0 percent in the 1999 holiday period.

Acting as a drag on the bottom line, average gross margin thinned by 550 basis points, to 24.2 percent from 29.7 percent the prior year. At the same time, costs climbed higher by 180 basis points, to 22.6 percent from 20.8 percent a year ago. Interest costs shot up by almost a third, rising by 31.6 percent to $23.1 million from $17.6 million, pulling anther $5.6 million away from the bottom line.

For all of last year, Ames recorded a loss of $70.6 million vs. a year-before profit of $29.5 million. Sales moved up by 3.0 percent, to $4.0 billion from $3.8 billion.

"We were adversely affected by poor weather in both spring and summer," said chairman and ceo Joe Ettore. "When you combine these unseasonable weather patterns with sharp increases in fuel prices, the result was a significant decrease in the spending habits of our customer base."

On the upside, he said, "We reduced our inventories throughout the fall season, ending the fiscal year 13 percent lower per store than the prior year. We have also reduced our planned capital spending by nearly $100 million, primarily by planning to open only 5 stores in 2001 as compared to 26 new stores last year."

AMES DEPARTMENT STORES

(loss)

a-Results in the fourth quarter include a $129.8 million pre-tax store closing charge; a $552,000 income-tax benefit, compared with a prior-year tax benefit of $5.8 million; and a $7.0 million after-tax charge stemming form the early retirement of a previous credit agreement.

b-12-month results include a $129.8 million pre-tax store closing charge; an income tax benefit of $54.8 million vs. $49.6 million the previous year; and a $7.0 million after-tax charge stemming form the early retirement of a previous credit agreement. Earnings in the 2000 12-month period included a $1.1 million after-tax credit to earnings.