Ames Set To Close Money-losing Glen Burnie Store

Bankruptcy Fallout . . .

November 25, 1991|By Lorraine Mirabella | Lorraine Mirabella,Staff writer

Fallout from a bankruptcy last year has prompted Ames to close four more Maryland department stores, including one in Southdale shopping center in Glen Burnie.

Company officials plan to close money-losing stores in Glen Burnie, Baltimore and Randallstown during the first three months of next year. No dates have been set.

"It's part of a continuing effort to get out of Chapter 11," company spokesman Bill Roberts said. "The stores that are closing are stores that are operating at a loss. Closing them will help reduce losses and improve the operating cash flow."

Last year, Ames DepartmentStores Inc. filed for bankruptcy and closed 221 stores, including two in Glen Burnie -- one in Governor's Plaza and another in Eastport Plaza, off Crain Highway. At that time, no additional stores were targeted.

Managers had believed that some stores, in good locations, would likely become profitable again. But after more than a year of monitoring sales at remaining stores, the company ran out of time and money, Roberts said.

The discount chain has decided to sell off 77 locations. The company leases, rather than owns, its buildings and will be seeking buyers for the leasing rights, Roberts said.

"It became important for us to close these stores and focus on the strong stores," he said.

Until early next year, when the stores to be closed will run going-out-of-business sales, it will be business as usual.Stores will continue offering the same merchandise, with the same

number of salespeople on hand, Roberts said. The Glen Burnie Ames had relocated some workers to other stores and now employs 70 people.

"Right now is the busiest time of year," he said. "We plan to run as if we're staying open indefinitely." Customers "will be hard-

pressed to find a significant difference between (the Glen Burnie) store and other Ames stores."

Problems at the discount outlet stem from the company's 1988 leveraged buyout of the 392-unit Zayre chain, involving junk bonds. The purchase more than doubled the size of the 290-

store Ames chain.

After retail sales at Zayre dropped, Ames originally decided to close 74 unprofitable stores, including the twothat closed last year in Glen Burnie, to generate $100 million.

But as the value of company stock plummeted, Ames was forced into bankruptcy court in April 1990. Records show the company owed $1.44 billion to its creditors and suppliers.

After filing for Chapter 11 protection, the company sold merchandise from the 74 stores to Schottenstein liquidators, which runs a small chain of discount stores in Columbus, Ohio. It attempted to sell leasing rights for the stores; any that hadn't sold by last November reverted to the landlord.

Robertssaid the company has yet to complete the lengthy procedure of working out a reorganization plan, submitting it to creditors and getting bankruptcy court approval.

"We spent a good deal of the year in negotiations with creditors and are going to continue to do that," he said. "Because of the size of the Chapter 11 and because so many peopleare involved, it's a lengthy process."

The chain will continue torun 371 stores from Maine to Virginia, with 36 in Maryland, including one in Pasadena and one in Annapolis.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.