Ames Selects Spotlight Markdown Optimizer to Increase Gross Margins.

Business Editors & High Tech Writers

NEW YORK--(BUSINESS WIRE)--Jan. 15, 2001

Price optimization software to help nation's largest regional

full-line discount retailer to optimize profits

in markdown merchandise

Leading regional full-line discount retailer Ames Department Stores, Inc. (Nasdaq:AMES) will use Spotlight Solutions Inc.'s Markdown Optimizer, a software solution that helps increase sales, margins and clear merchandise more effectively. Ames, based in Rocky Hill, Connecticut, operates 479 retail stores in the U.S. and has annual revenues of approximately $4 billion.

The Spotlight Markdown Optimizer is a software application that applies mathematical algorithms to sales, inventory and other operating data to help retailers better optimize, manage and automate markdowns. The Markdown Optimizer determines the timing, depth, and location of markdowns enabling dramatic increases in gross margins.

Ames will use the Spotlight Rapid Results program to quickly implement the Markdown Optimizer and generate optimized markdowns in selected softline and hardline categories beginning in the Spring 2001 season. The retailer plans to deploy the application across all categories later in 2001.

"We want to increase our sales and profits, and are looking at price optimization to help us accomplish these things. Current economic and retail conditions mandate that we find new and innovative ways to improve our performance. We selected Spotlight because of their proven ability to deliver these results," said Ames CFO and Senior Executive Vice President Rolando de Aguiar.

Spotlight's Rapid Results program for markdown optimization reduces implementation time and costs, and accelerates financial and merchandising benefits by deploying best practices via an application service provider (ASP) delivery model. All infrastructure, platforms, application software and services are pre-configured and tuned to reduce the time-to-benefit.

Spotlight Simplifies Complex Business Processes

Jim Kelly Jr., president and CEO of Spotlight Solutions, formed the company in 1999 along with several other industry veterans to provide a new breed of optimization software to analyze, optimize, automate and manage knowledge-intensive retail business processes automatically for the business user, providing dramatic financial returns.

"Retail executives that we work with tell us they are constantly challenged to respond to changing trends in consumer demand, deal with competitive pressures, and manage vast assortments of items," said Kelly. "They need tools that are smart enough and powerful enough to solve these problems, they need them integrated with their broader business processes, and they need to get these capabilities up and running quickly."

Kelly added that the need to better manage the markdown process has never been more important to a retailer's profitability. He stated that markdowns as a percent of total retail sales have grown from 8 percent in 1971 to more than 33 percent in some segments today.

Industry Analysts Support Innovative Approach to Improving the

Bottom Line

According to an article by John Hutchins published in the AMR Research Alert on Retail Applications, May 5, 2000: "Two of the most effective ways to immediately drive financial performance are through pricing optimization and markdown control. Applying mathematical algorithms to key data points like sales, inventory, and other operational data, the Spotlight Markdown Optimizer helps squeeze more profit out of markdowns."

Henry Morris, Ph.D., research vice president of data warehousing and applications, IDC, an information technology market research and analysis firm, said analytic software applications are moving beyond performance measurement and reporting to predictive modeling that optimizes a specific business activity. "It really makes sense to select a specific operational action point such as a price change that the business can act on and develop analytics targeted to optimize that action point," Morris said.

About Ames

With 479 stores located in 19 states and the District of Columbia, Ames is the nation's largest regional, full-line discount retailer with annual sales of $4 billion. Ames offers a broad range of merchandise categories including family apparel, housewares, domestics, electronics, ready-to-assemble and patio furniture, jewelry, craft and pet supplies, health and beauty care items, stationery, sporting goods, toys, seasonal products and more.

About Spotlight

Spotlight helps retail and e-commerce companies and their suppliers more effectively price, promote, markdown, source, and allocate merchandise. Spotlight's software solutions apply mathematical algorithms to sales, inventory, and other operating data to recommend specific courses of action. Spotlight's new approach optimizes, automates, and manages complex decision processes enabling merchants to dramatically increase gross margins by squeezing more revenue out of existing merchandise. Spotlight customers include retail leaders like ShopKo, Liz Claiborne, Meijer, and Ames. For more information on Spotlight Solutions, visit www.spotlightsolutions.com or call 513.339.0777.

NOTE TO EDITORS: Spotlight(TM), Markdown Optimizer(TM), Rapid Results(TM)and Software for Brighter Retail Decisions(SM) are trademarks of Spotlight Solutions, Inc. All other trademarks are the property of their respective owners.

See Spotlight Solutions at NRF 2001 in New York on January 15 - 16, 2001, at booth No. 1507.