Ames Retail Chain Files for Chapter 11

Ames Department Stores Inc., the discount retailer that has seen earnings plummet because of an ill-timed expansion at the time of a weakening New England economy, said Thursday that it has filed for Chapter 11 bankruptcy protection.

Earlier this month, Ames surprised Wall Street when it said it expected to post a wide loss of $228 million for the fiscal year ended in January because of weak sales in an industry downturn.

Ames operates more than 600 stores nationwide and has annual sales of more than $4 billion. It listed assets of $1.67 billion and $1.44 billion in liabilities in its bankruptcy filing.

It took over the 350-store Zayre department store chain in 1988, just as the Northeast region where it is concentrated began to weaken economically. While industry analysts said the original Ames stores have done well, Zayre’s sales have fallen, sparking a cash crunch.