Same-store sales dip for Merry-Go-Round

April 08, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

In yesterday's Business section, an article about Merry-Go-Round Enterprises Inc. incorrectly reported the decrease in March sales for stores operating for at least one year. The actual drop was 21 percent.

The Sun regrets the errors.

Hampered by its inability to keep its shelves stocked, Merry-Go-Round Enterprises Inc. said yesterday that a crucial measure of sales dropped by 23 percent last month.

Separately, the Joppa-based clothing chain reported that it lost $6.6 million during the fourth quarter, which ended Jan. 29, mostly because of $6.9 million in costs related to its Chapter 11 bankruptcy reorganization.

FOR THE RECORD - CORRECTION

The March drop in same-store sales, which compare the sales at stores open for at least one year, continues a string of monthly declines for Merry-Go-Round sales that dates to December 1992. Same-store sales are a good barometer of performance because they eliminate the effect of new stores or closed stores.

Michael D. Sullivan, president of the 1,400-store chain, said the company continues to suffer from low inventory levels that were caused by the company's inability to finance purchases before pTC and immediately after the filing of Chapter 11 bankruptcy reorganization on Jan. 11.

While the flow of new merchandise is now strong, it has not been enough to fill the earlier inventory gap, Mr. Sullivan said.

"We don't want to rush out and place orders for the sake of getting merchandise," he said. "It's going to take a few months."

Finding the proper fashion mix is crucial to the company. Last year, it badly misjudged fashion trends by offering baggy, hip-hop styles whileits target audience of teen-age boys and girls moved to the grunge look of jeans and sweat shirts.

Hiring the right people to find the company's new look has also been difficult for the company.

Mr. Sullivan confirmed that Hank J. Belsky, who was to be Merry-Go-Round's new executive vice president in charge of selecting clothes for the company's DeJaiz and Chess King chains, has decided to stay with his old company, Americo Group.

Last month's sales results were not unexpected and were better than what the company had projected for the month when it applied for a line of credit from the CIT Group of New York, Mr. Sullivan said.

Excluding the reorganization costs and income taxes in the fiscal fourth quarter, Merry-Go-Round had income of $4.6 million, compared with $22 million in the previous fourth quarter.

For the entire year, the company lost $45.6 million, or 85 cents a share, which includes a $35.1 million after-tax charge for a third-quarter write-down of inventory.

During the previous year, the company had a net income of $38 million, or 71 cents a share. In the previous fourth quarter, net income was $14 million, or 26 cents a share.

The profit before reorganization charges and taxes shows the company is still viable, according to Peter A. Chapman, president of Bankruptcy Creditors' Service Inc. of Princeton, N.J., which publishes a weekly newsletter on the Merry-Go-Round bankruptcy.

But he said he is surprised by the large charge for reorganization. "The lawyers, the accountants and the investment counselors are making a cool million a week," he said. "A million a week is outrageous.

"Things that should be handled in a normal routine basis are taking forever," he said.

In another development, U.S. Bankruptcy Judge E. Stephen Derby extended Merry-Go-Round's deadline for rejecting leases to July 31.

A hearing will be held in July to decide on whether further extensions will be granted.

Lawyers for landlords had urged that Merry-Go-Round be forced to choose which stores it would reject by at least September. That way, new tenants for the Christmas season could be found in time.

Merry-Go-Round Enterprises Inc

.. ..Ticker.. .. .. .. .. .. .. .. .. Yesterday's

.. ..Symbol.. .. .. .. .. .. .. .. .. Cls... Chg.

.. ..MGR .. .. .. .. .. .. .. .. .. .. 2 3/4 ... ..-

Period ended

Jan. 29 .. .. .. ..4th qtr.. .. .. .. ..Year ago.. .. Chg.

Revenue .. .. .. ..$304,067 .. .. .. .. $294,684 .. ..+3.2%

Net Income .. .. ..$(6,558)*. .. .. .. $13,996 .. . .. --

Primary EPS .. .. .$(0.12)*. .. .. .. . $0.26 .. .. .. --

.. .. .. .. .. .. .. 12 mos.. .. .. .. .. Year ago.... Chg.

Revenue.. .. .. .. ..$959,878 .. .. .. .. $877,499... +9.4%

Net Income.. .. .. $(45,624)*. .. .. .. $37,981 .. ....--

Primary EPS .. .. ..$(0.85)*. .. .. .. . $0.71.. .. ...--

*Includes $6.9 million before taxes, or 12 cents a share, for reorganization costs.

Figures in thousands (except per share data.)

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