Ames nets $780,000 in closeout sale - Ames Department Stores store liquidation earnings

Discount Store News, April 6, 1992

ROCKY HILL, Conn. - Ames' latest round of store closings netted the company more than 50 cents on the retail dollar, after expenses related to running going out of business sales at the 77 stores losing money. The company grossed about 60 cents on the dollar; roughly full cost, according to chief financial officer Peter Thorner.

Thorner noted that the results were "ahead of expectations," particularly since the sales, completed in early March, started in January. Ames faced not only recessionary conditions, but also cash-poor customers drained by Christmas spending, he said.

David Bernstein, chairman and cfo of Nassi Bernstein, the liquidation specialists who ran both this and a previous 277-store Ames liquidation (which netted the chain some $180 million two years ago), noted that return to retailers in store closings generally runs from a low of 50 cents on the dollar to a high of about 62 cents, so Ames received as much as it could have expected. On merchandise ticketed at roughly $1.3 million per store, Ames received $780,000 in cash, despite markdowns that eventually reached 80%.

According to Bernstein, Ames left most of its merchandise in place (although Thorner noted that some high-ticket items and case loads were transhipped before Nassi Berntein was called in), and that the relatively complete selection enhanced Ames' return. Bernstein noted that liquidation is far different from operating a sale at an ongoing operation. "Your signage has to be just right, your advertising has to be right and you have to know when to hit newspapers, radio and television to maximize your budget. Your stores have to look just right, and flow through the store has to managed carefully. You only have one chance at this customer, and a limited time to reach them. So developing a sense of urgency is very important."

Bernstein noted that the liquidation sales stripped the stores to the ground. "We sold everything, and then Ames brought in an auctioneer to sell the fixtures it didn't want."

While liquidation may be a fine art, Bernstein noted, "There are three things that people will always come to; weddings, funerals and going out of business sales."