Merry-Go-Round's sales still slowing

June 03, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

As expected, Merry-Go-Round Enterprises Inc. turned in more poor sales results last month. Revenue in stores open for at least a year dropped by a substantial 24 percent.

Merry-Go-Round's sales have been down sharply since the Joppa-based retailer experienced a cash shortage last year and was temporarily unable to buy clothes.

The company sought bankruptcy protection in January and has regained financing to purchase merchandise. But its shelves and racks still aren't full -- and won't be until midsummer, Merry-Go-Round officials have said.

"They've been saying all along that they do not expect dramatic improvement in same-store numbers until the back-to-school season," a company spokesman said.

Instead of risking merchandise problems by rushing to fill stores this spring, management is moving deliberately, hiring new talent and shooting for a turnaround in August.

Meanwhile, financial results are dismal. In April, same-store sales fell by 35 percent, hurt in part by the fact that this year's Easter sales spurt came in March instead of April. In March, store-for-store sales dropped by 21 percent. Financial analysts consider same-store sales a crucial gauge of retail strength.

Despite Merry-Go-Round's announced intention to get it right this summer, some analysts who follow the company are becoming impatient.

"It's really disappointing that we're not seeing any change," said Peter N. Schaeffer of Dillon Read & Co. Inc. in New York. "We're just all sitting back waiting for something to happen. At some point, the blood has to stop flowing."

Merry-Go-Round's overall sales decrease for May was 18 percent. The figure was less severe than the same-store drop because the company purchased hundreds of stores from Melville Corp. last year that weren't included in the May 1993 results.

Merry-Go-Round lost $45.6 million on sales of $959.9 million for the year ended in January. Its shares closed at $1.875 yesterday, down 12.5 cents.

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