Byline: Mark Tosh

NEW YORK — Ames Department Stores said its effort to improve apparel merchandising with special purchases from vendors helped the discount chain increase sales 5.9 percent in the fourth quarter.
Ames reported net sales of $704.5 million in the quarter ended Jan. 28, compared with $665.4 million last year. Same-store sales rose 6.5 percent.
Earnings after a $14 million noncash tax provision fell 24.2 percent to $30.7 million, or $1.44 per share, from the year-ago quarter’s $40.4 million, or $1.91. Ames had a $3.3 million tax provision in 1993’s quarter.
Gross margins, which Ames said were pressured by new competition and weak apparel sales, fell to 26.7 percent of sales from 28.3 percent.
Joseph R. Ettore, president and chief executive officer, said Ames has begun stressing “opportunistic purchases, primarily in apparel,” in its effort to build traffic. He said sluggish apparel sales industrywide helped create special buys from overstocked vendors and closeout specialists.
“We’re going to a lot of vendors who have merchandise that other people aren’t taking or cancellations, and we’re able to make some super buys,” he said. “We’re not advertising this; we’re just putting it [down the main aisle] with good signage.”
The special merchandise includes fleece, activewear, sportswear and men’s shirts.
Ames budgeted $25 million to $30 million for capital expenditures and expects to open three to five new stores and remodel 20 units this year.
For the full year, Ames said earnings rose 57.4 percent to $17 million, or 79 cents per share, from $10.8 million, or 51 cents. Results for 1994 include a nonrecurring gain of $12 million for litigation settlement, $8.3 million for property gains and a $1.3 million charge for the closing of a distribution center.
Sales rose about 1 percent to $2.14 billion from $2.12 billion, and same-store sales increased 1.7 percent.