Ettore aims to improve results for Ames in '01
June 16, 2001,
ROCKY HILL, CT — The new millennium has not been kind to retailers, chairman Joe Ettore told shareholders here at last week's annual meeting, and Ames is among those hurt by the downturn.
"There is no one in this room more dissatisfied with last year's results than I am," he said.
3 percent, partly because of 24 new stores. It had a net loss of $240.6 million, down from a profit of $17.1 million.
Ames' customer, whose income ranges from $20,000 to $40,000 annually, has "restricted spending to the bare essentials," Ettore said, citing such factors as increasing gas prices and layoffs. "We've seen a smaller market basket in the past year."
In addition, the unseasonal weather presented another challenge last year. "Customers do not buy according to the calendar, but according to need," Ettore said, meaning they don't buy shovels just because it's December, but because it's snowing. The retailer, on the other hand, plans its calendar according to typical weather conditions for a given season, which can sometimes backfire.
However, the Ames management team, he added, spotted the downturn when it began and reacted quickly by adjusting inventories and having margins above plan. "It kept a bad year from becoming a disastrous year," he said.
The discounter also completed the closing of 32 stores in the first quarter this year, as well as opening five stores in March, the only new stores for the year.
"It will continue to be a challenging climate for the next few quarters," Ettore said. Ames will maintain or improve margins, he added, by keeping SG&A to a minimum, introducing new and fresh products and keeping inventories at appropriate levels — all "prudent and responsible" actions.
"We must focus on long-term profitability, not on quick fixes," he said, adding that he's been through difficult times before during his more than 40 years in retailing.
Ames "fills a niche and will continue to fill one," he said, mentioning a letter-writing campaign from an upstate New York community asking Ames to open a store in their area because they appreciate its products and service. Ames is a retailer with "a strategy of differentiation — a popular alternative to national behemoths."
He continued, "We know our turf, and we have the strategy to tough it out."
After the meeting, he said that during a slowdown such as this one, the products that do the best across all categories are promotional goods.
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