Slowing the Merry-Go-Round

January 16, 1994

The filing for bankruptcy court protection by Merry-Go-Round Enterprises should provide welcome relief for the Joppa-based clothing chain, and a second chance for its charismatic founder to turn around the financially foundering national retailer.

Retailer woes are no novelty in this economic climate, as the cases of Sears Roebuck, Macy's and many others attest. But Maryland and Harford County have much riding on the outcome of this bankruptcy respite and the new direction charted by Leonard "Boogie" Weinglass, the Baltimore native forced out of semi-retirement to reassume command of the former darling of Wall Street.

With 1,100 jobs in Joppa, Merry-Go-Round is the second-largest private employer in Harford County, paying $500,000 in corporate taxes that should more than double this year. A five-year tax break given by the county on the 800,000-square-foot complex has expired, which significantly raises the local stake in the company's recovery.

With its assets nearly double its liabilities, and with over $200 million in cash and assured credit, Merry-Go-Round seems in no immediate danger of going under. Chapter 11 reorganization under bankruptcy law will permit the firm to put off creditors, reduce its overgrown tangle of 1,400 stores, and get a firmer reading of the fickle trends of youthful fashion.

Imprudent aggressive expansion, undisciplined buying and a disastrous bet on cutting-edge gaudy fashions that rapidly fell from customer grace imperiled the chain. The missteps aren't easily corrected. Mr. Weinglass, a sports magnate wannabe, took over the women's merchandising four months ago. Last week, he assumed the chief executive's job, after more bad sales news and failure to reach agreement with the chain's lenders.

After two years of stumbling earnings in a volatile business, Merry-Go-Round was becoming an increasingly greater risk for lenders and merchandise suppliers, who had begun to cut off shipments to the company. As the largest shareholder, Mr. Weinglass's personal fortune was significantly reduced with the sinking price of the firm's stock, a factor that presumably influenced NFL owners in judging his wealth when he sought a pro football franchise for Baltimore last year.

Highly regarded in his hometown and in the clothing industry, Mr. Weinglass hasn't headed daily operations at Merry-Go-Round for almost 15 years and his judgments of teen-ager whims may not be any shrewder than those of the longtime executives he has fired. But he promises the clothing will be less trendy, the management style more conservative, the retailing chain leaner. Those good instincts confirm that Mr. Weinglass may be the best hope for Merry-Go-Round to rebound from bankruptcy and to again grab the brass ring.

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