Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 12, 1990 TAG: 9004120250
SECTION: BUSINESS PAGE: C5 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
The closings of the former Zayre stores, planned for later this year, are blamed on the Ames acquisition of Zayre two years ago and on a sales shortfall, said Christina Divigard, a spokeswoman at Ames headquarters in Rocky Hill, Conn.
The discount department store, second largest unit at Towne Square, had 110 employees when it opened in July 1987.
Doug Simmons, the Ames manager in Roanoke, said he is not allowed to comment. Mickey Lindeman, senior leasing manager for Towne Square, had not heard of the closing. Ames leases 78,000 square feet of space, she said.
Ames is second in size there to Sam's Wholesale Club. Lindeman said she is working with "a lot of prospects" for the remaining unleased space at the center, off Aviation Drive near Roanoke Regional Airport.
The Ames closing date depends on the company's negotiations for financing and its restructuring, Divigard said.
She said the company usually tries to absorb as many employees as possible by offering them jobs at other locations. After the closings, Ames will have 35 Virginia stores, mainly in the eastern part of the state.
Ames, which bought 318 Zayre stores in October 1988 and converted most to Ames units, "did not accurately forecast sales" and the declining economy in the Northeast, where most of the stores are, Divigard said.
Ames said Monday that it expects to lose $228 million for the fiscal year ending Jan. 27. The company told The Wall Street Journal it is negotiating with banks for a new credit agreement and has hired investment advisers to help with restructuring and an infusion of capital.
A year ago, Ames reported net income of $47.2 million. The company said the loss for the past year includes about $150 million to cover the cost of closing the 74 unprofitable stores. Peter Hollis, chief executive of Ames, said the profitability of the original Ames stores has been maintained.
Ames has been unable to revitalize sagging sales at the Zayre stores, The New York Times said, and business has declined about 16 percent "after a series of strategic blunders."
The Ames mistakes included changing the Zayre name and pricing and advertising policies, the Times said.
Ames planned a leap from a little-known variety chain in New England to the fourth largest discounter in the nation with the Zayre purchase, the Times said, adding that the company, with a reputation "as one of the nation's best-run merchants, has itself begun to stumble."
Retailing experts said Ames tried to integrate the Zayre computer system too quickly, leading to technical problems and late payments to suppliers.
If Ames cannot find new financing and restore positive relations with suppliers by summer, the company will not have enough merchandise for Christmas sales - and that would be a serious blunder, the Times said.
by CNB