Merry-Go-Round sales, earnings up strongly in quarter Stock price climbs to 3-month high

November 19, 1992|By David Conn | David Conn,Staff Writer

Merry-Go-Round Enterprises Inc., the Joppa-based clothing retailer, impressed analysts and investors yesterday with a healthy increase in third-quarter earnings and sales.

The company, which operates more than 970 stores in 38 states, earned $10.5 million, or 20 cents a share, in the three months that ended Oct. 31. The performance was 9.7 percent better than the quarter that ended Nov. 2, 1991, when the retailer earned $9.6 million, or 18 cents a share.

Sales were up 17 percent in the quarter, to $229.8 million from $197.0 million a year ago at the company that runs the Merry-Go-Round, Menz, Dejaiz, Attivo, Cignal, Silvermans, His Place and Boogie's Diner chains. Same-store sales, or sales at stores open for at least a year, fell 3 percent.

"Although we experienced lower 'same-store' sales, our improved results reflect improved inventory and expense control and reduced mark downs," President and Chief Executive Officer Michael D. Sullivan said.

Sales were up 14 percent in the first nine months of the year, the company said. But nine-month earnings fell 4.9 percent, to $24.0 million, or 45 cents a share. And same-store sales fell 3 percent.

The stock market ignored the minor bad news, however, and drove Merry-Go-Round's stock to $14.375 a share, up $1.50, in heavy trading on the New York Stock Exchange, the highest price in almost three months. The rise was due, in part, to a recommendation from Alex. Brown & Sons Inc. analyst Robert Buchanan, who raised the company to a "buy" from a "neutral" grade.

Alex. Brown based its optimism on "the combination of lean inventories and indications of pretty good sales in the first two weeks of November," according to Maria Medaris, an associate analyst who works with Mr. Buchanan.

After a conference call with company officials yesterday morning, Alex. Brown raised its fourth-quarter sales expectations from "flattish" to a slight increase, Ms. Medaris said.

The fourth-quarter results are bound to shine in comparison with last year's poor fourth quarter, according to Paul Bienstock, an analyst at Moran & Associates Inc. in Greenwich, Conn. Plus, he said, "We've seen a pickup in consumer confidence in the last two weeks."

One reason for the poor same-store sales comparison, Mr. Bienstock said, is the lack of "clear-cut fashion trends out there." That hurts Merry-Go-Round, a "fashion-forward retailer," he said.

Three months ended 10/31/92

.. .. .. .. .. .. Revenue.. .. .. .. .. .. Net.. .. .. .. .. Share

92.. .. .. .. .. 229,792,000 .. .. .. .. 10,518,000.. .. .. 0.20

91*.. .. .. .. ..196,995,000 .. .. .. .. 9,588,000 .. .. .. 0.18

% change .. .. .. .. .. +16.6.. .. .. .. ... .. +10.4 .. .. .. +11.1

Nine months ended 10/31/92

.. .. .. .. .. .. Revenue.. .. .. .. .... Net. ............... Share

92.. .. .. .. .. 582,815,000 .. .. .. 23,985,000 .. .. .. .. 0.45

91*.. .. .. .. .. 511,115,000 .. .. .. ..25,211,000 .. .. .. .. 0.48

% change.. .. .. . .. . +14.0 .. .. .. .. .. .-4.9 .. .. .. .. .-6.3

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