California Apparel News

Ames Ladies Wear, a family-owned chain of nine stores in the Los Angeles area that filed for Chapter 11 bankruptcy protection more than a year ago, has been acquired by another local family-run company.

Da-Rue of California Inc., a sportswear manufacturer and retailer in Los Angeles, will pay $622,500 to purchase Ames Ladies Wear, said Da-Rue Vice President Mark McElrath. Da-Rue, which also owns five Neil’s womenswear stores, will not assume any of Ames’ debt, McElrath added. Other assets were retained by Ames and liquidated for the benefit of creditors.

A U.S. Bankruptcy Court judge gave preliminary approval to the purchase on Jan. 19. The acquisition deal is to receive final approval on Jan. 31.

quot;It’s a win-win situation, ”McElrath said. “It seems like a real good operation. With our ability to manufacture, which is our strength, it will now become their strength.”

David Oliver, president of Ames Ladies Wear, concurred. “I think the sale is in the best interest not only for our employees but for our creditors, as well,” said Oliver, who will stay on as president of the new subsidiary, called Ames Apparel LLC. Bank of America, a secured creditor, will recuperate $335,000 from R & H Oliver Corp., the parent company of Ames.

Ames opened a store in the economically challenged Hollywood & Highland shopping center a few months following the Sept. 11, 2001, terrorist attacks. Few customers ventured into the center’s Awards Walk corridor, where the 1,500-square-foot store was located, Oliver said. The space rented for $7.50 per square foot each month.

“On some weeks, we sold only $2,000 worth of merchandise,” he said. “You can’t even cover your costs with that.”

A little more than six months later, Ames moved out of its Hollywood & Highland location, breaking its 10-year lease. Trizec Properties Inc., then the shopping center’s owner, sued Ames for breach of contract, asking for more than $250,000 plus damages.

In August 2003, before the case headed to Los Angeles Superior Court, Ames filed for bankruptcy, saying it had $3.3 million in debt and $2.2 million in assets.

“There were three contributing factors to where we ended up,” Oliver said. “There was 9/11, followed by a down business cycle, followed by bad choices in expansion.”

In 2000, Ames had 13 stores in Southern California. Currently, it operates nine mallbased stores in Culver City, Torrance, Calabasas, Pasadena, Santa Monica, Brea, Westminster, Montclair and Topanga. In the last few years, Ames closed its locations in Cerritos, Santa Ana, Santa Anita and Thousands Oaks

The acquisition gives Ames more financial stability and provides another market for Da- Rue’s sportswear line, which is manufactured in Los Angeles. Ames will keep all its employees and store managers. Richard Oliver, David’s 75-year-old father and Ames’ chairman, will work as a consultant for the next few months. In the next 60 days, Ames will move from its headquarters in Culver City, Calif., to the Da-Rue offices.

Ames Ladies Wear was founded in 1948 by Henry Ames, the great uncle of David Oliver. The first store location was at the Culver Center in Culver City. Ames caters to the 30- to 55-year-old customer.

Da-Rue of California is run by the McElrath family, which acquired the company in 1981. Richard McElrath, Mark’s older brother, is president.

Da-Rue had been one of the main vendors to Neil’s, the small chain of specialty stores launched in 1968 by Neil McElrath, Mark and Richard’s father. The first store opened in Lake San Marcos near San Diego. Neil’s now has locations in San Antonio; Nacogdoches, Texas; Palm Desert, Calif.; Long Beach, Calif.; and Montecito, Calif. The company’s customer base is over the age of 60.

“The synergy of this is good,” McElrath said. “They have nine stores in good locations that sell to a younger demographic than we do. We had plans to grow our retail presence. We are going to make an effort to make our vertical operation work for them by developing products with their own label.”