Hope store in Seekonk.
Ann & Hope, which announced recently that it is scaling back its retail operation by closing four of six stores, is selling four of the buildings and a large part of another to a Massachusetts development firm, anticipating millions in profits from the sale of the property.
The land for the buildings was initially purchased before 1982, with the Warwick store, the oldest, purchased in 1962.
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Steve Maurano of marketing firm Duffy & Shanley, who is acting as spokesperson for the company, confirmed that four Massachusetts stores and two-thirds of the Warwick store are being sold to Eastern Development Co. of Woburn, Mass.Maurano said he did not know what that company intended to do with the properties. Officials of Eastern Development were contacted several times, but did not return phone calls.
Irwin Chase, president of Ann & Hope, was said by his secretary to be unavailable for comment.
The sales agreement between Ann & Hope and Eastern Development coincided with the recent announcement that Ann & Hope is closing its Massachusetts stores and scaling back its Rhode Island operation.
In news releases the company said it intends to reopen as a smaller operation, characterized as outlet style with three stores and garden shop in Danvers, Mass., while keeping both Warwick and Cumberland stores open in Rhode Island, but at a much smaller scale than the current stores. The company also announced that it intends to open four smaller stores in what they call their specialty division within six months.
Irwin and Sam Chase will continue to run the operation.
The company will redirect some of the proceeds from the sale of the land to finance the openings of the seven new, smaller stores in their specialty division (CFO Fashion Outlet, Kids Outlet, Curtain & Bath Outlet), and to finance the severance packages for those employees who will lose their jobs as a result of the company’s restructuring.
The company employs 1,900 people. The restructuring will reduce that to 500. Maurano said the company hopes it can retain some employees in the new operation.
The company’s Seekonk property, located on Route 6, has been assessed at close to $9 million. Tenants on the property include Firestone Tire & Auto and Applebee’s Neighborhood Grill & Bar. Ann & Hope’s Watertown property has been assessed at $12.8 million, and the company’s 28 acres in North Dartmouth is valued at $7.6 million. Figures for the Danvers location were unavailable.
The company’s 9.7 acres on Warwick’s Post Road is assessed at over $2 million.
Figures were not immediately available for valuations for the properties when originally purchased, except for Seekonk. According to town officials and the deeds to the property, the current assessed value of the Seekonk property (including the buildings) is nearly $9 million. The land was purchased by Ann & Hope in 1974 for $1 from Goodrich Development Corp. of Massachusetts, which had purchased it only a short time before for some $250,000.
The announcement that the stores were closing was a shock to the area’s retail sector. Ann & Hope has been an institution in the area, and served as a model for Sam Walton when he founded Wal-Mart. Ironically, officials have said it was the growth of giants like Wal-Mart that cut into Ann & Hope’s profits.
“(With profits decreasing year after year), Ann & Hope has found it increasingly more difficult to compete as the larger national chains have encroached into their area,” Maurano said. “The last four to five years have been particularly difficult.”
Maurano said the company did not see any profits in 1999 or 2000.
“They did not see the trend reversing,” he said.
The transition includes employee cuts at every level — sales, warehouse, inventory control and corporate — and will result in the displacement of 672 full-time and 728 part-time employees.
“They definitely plan on offering jobs to some of the folks who are in their employ to staff some of the smaller specialty stores,” Maurano said.
Severance packages for displaced workers include a financial severance as well as extended health care benefits for people who are with the company until the stores close in May.
Not affected by the announcement are 13 CFO Fashion Outlet stores, 10 Kid’s Outlet stores and two Curtain & Bath Outlets, all of which are affiliated with Ann & Hope.
Maurano said the company’s two Rhode Island stores will remain open, on a smaller scale: emphasis will be on clothing and housewares, with a lot of the hard goods – electronics, toys and sporting goods – eliminated.
“I think they will continue to maintain relationships with some of the suppliers they are currently using, but certainly not all,” he said.
Maurano stressed that the company is not going bankrupt and that the store’s current suppliers will be paid in full.
“They will begin to liquidate merchandise in mid-February through the end of April,” he said. “The large Ann & Hope stores will be closing in early May.”
Ann & Hope plans to open its new stores during the first half of this year.John Gounaris, professor of international business at Johnson & Wales University and former chief executive officer of Apex said it all comes down to “buying power. The more business you do, the better savings you can give to your customer. The more you can buy, the less you can buy it for, and that is never going to change. When you don’t have buying power, you can’t pass your savings on to the customer. You’re going to get eaten alive. In this same climate, you’ve got Bradlees announcing they’re going out, and last year you had Caldor’s.”
Braintree, Massachusetts-headquartered discount chain Bradlees has filed for Chapter 11 bankruptcy and expects to liquidate assets over the next two months.
After 128 years in business, Chicago-based Montgomery Ward & Company will cease operations in 30 states, closing 250 stores and displacing 28,000 workers.
And even the largest retailers have run into trouble of late: Sears Roebuck and Company has announced the closing of 89 stores and the elimination of 2,400 jobs and J.C. Penney Company Inc. has reported same-store sales at its department stores fell 1.6 percent during the month of December. Target Corporation has reported that sales at its stores open at least one year fell 0.1 percent in December from a year ago.
Gounaris said that specialty is a strong line of defense for smaller stores competing with the large chains, and a good move for Ann & Hope.
“I applaud them for that,” he said. “I think that’s one of the things that can be done. They’ll be around as a niche market.”
As to the likelihood of more such consolidations in the current economic downturn, Gounaris said, “In my opinion, we’re going to see somewhat more of it.”
