Customers' deep pockets help Merry-Go-Round beat recession Company official says kids spend "a lot more money."

May 30, 1991|By Ross Hetrick | Ross Hetrick,Evening Sun Staff

By appealing to fashionable young men, Merry-Go-Round Enterprises Inc. has been able to avoid the harmful effects of the recession.

In a talk before the Baltimore Security Analysts Society, Isaac Kaufman, executive vice president and chief financial officer of the Joppa-based clothing chain, said the young people that shop at Merry-Go-Round have not run out of money. "The kids are spending a lot more money," he said. "They have more money than they ever have had."

This continued robust market is reflected in Merry-Go-Round's results for the first fiscal quarter, which ended May 4. Sales in that quarter jumped by 30 percent to $157.2 million and net income rose 31 percent to a record $8.7 million, or 25 cents a share.

In one concession to the recession, the company in August lowered its average prices to attract customers who are more price conscious. "We felt the consumer will be sharper in looking at value," Kaufman said.

But, even though customers want value, the total amount each customer is spending has increased in recent months, Kaufman said. "We hear there is a recession out there, but we refuse to participate," he said, quoting a Merry-Go-Round executive vice president.

Kaufman expects this prosperity to continue and predicted that the 675-store chain will reach $1 billion in annual sales sometime in the early 1990s. Sales for Merry-Go-Round have grown from $298.9 million in fiscal 1989 to $628.1 million in fiscal 1991.

The growth has been primarily based on appealing to the tastes of men from 14 to 44 years of age. This market accounts for 65 percent of the company's sales. The other 35 percent of sales are to women.

"It's a lot larger market than a lot of people realize," Kaufman said of the men's market, adding that there is less competition than in women's clothing.

Merry-Go-Round plans to add another 140 stores this year. In December it started work on a 450,000-square-foot addition to its Joppa distribution center, Kaufman said. That expansion should be completed in April 1992.

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