HARTFORD, Conn. — Ames Department Stores Inc., trying to jettison unprofitable operations, announced plans Friday to close 221 stores and lay off about 17,500 employees as it struggles to emerge from bankruptcy protection.
The closings, which represent nearly a third of Ames’ 679 stores nationwide, must be approved by the U.S. Bankruptcy Court in New York, where the nation’s fourth largest retailer filed for protection from its creditors under Chapter 11 of the federal bankrutpcy laws on April 25.
If the court approves, the company plans to close the stores in August or September after conducting inventory liquidation sales.
“This is a critical first step towards our primary goal of leading Ames out of Chapter 11,” said Stephen L. Pistner, the new chief executive officer brought in by Ames to steer it through its current troubles.
Bill Roberts, public relations manager for Ames, said no Ames stores in Maine would be closed. Ames operates 30 stores in Maine, from Wells to Madawaska. The Maine stores are believed to employ more than 2,000 full- and part-time workers.
The 221 stores being closed include 33 stores Ames previously said it would close and 184 former Zayre stores. Analysts have said Ames’ acquisition two years ago of the Zayre chain led to Ames’ downfall.
The stores being closed are in 16 states: Connecticut, Florida, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and West Virginia.
“This downsizing will cut our expenses, reduce operating losses and allow us to focus our efforts on serving our customers,” Pistner said.
The 458 stores staying open are mostly in the Northeast. The company employed about 55,000 people at the time of the bankruptcy filing.
Ames also plans to close distribution centers in Plant City, Fla., and Worcester, Mass. The retailer plans to complete construction of a distribution center in Leesport, Pa., in early 1991, subject to court approval.
Ames, which is based in Rocky Hill, hopes to realize $180 million in cash from liquidation sales this summer.
The stores being closed lost about $48 million last year, Pistner said.
“By making this move now, not only do we stem losses immediately, but we cut out the losses from those unprofitable stores,” he said.
Ames already has placed its orders for fall merchandise. Pistner said 85 percent of Ames’ suppliers have agreed to ship merchandise or take orders from the company.
The closings will help ensure the “pipeline” remains open by reassuring vendors that their merchandise is going to stores that Ames is committed to keeping open, Pistner said.
Analysts said the move should help the company return to profitability.
“Steven Pistner is an imaginative manager,” said Walter Loeb of Loeb Associates, a New York retail consultant. “He is showing that he will not sit back and let this company bleed to death.”
Ames, which reported losses of $228 million last year, has attributed its troubles to the sluggish retail market in the Northeast and to problems with its 1988 acquisition of the 392-store Zayre chain.
The company has been unable to revitalize the stores by renaming them and has even lost some Zayre customers by changing that chain’s advertising and pricing policies.