Progress at Merry-Go-Round?

June 29, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

JOPPA — :TC JOPPA -- Merry-Go-Round's managers and some shareholders found unusual solace yesterday in a 17 percent decline in store-for-store sales so far this month, saying the large fashion retailer is showing subtle signs of recovery.

Double-digit sales drops normally aren't something merchants brag about. But for Merry-Go-Round Enterprises Inc., the June figures disclosed yesterday are the best monthly results this year and, executives say, a sign of progress at the struggling chain.

Last month, sales at Merry-Go-Round stores open for at least a year dropped by 24 percent compared with the previous year; in April they plunged by 35 percent.

"While this is by no means a turnaround, the trend is at least heartening," Chairman and Chief Executive Leonard "Boogie" Weinglass said at the company's annual shareholders' meeting at its Joppa headquarters.

Merry-Go-Round's board of directors faced stock owners for the first time since dismal holiday sales forced the company to enter bankruptcy proceedings in January. The meeting was polite and businesslike, despite the 200-plus attendees packing the room and despite the fact that Merry-Go-Round's stock has dived more than 80 percent in the last year.

The chain, with 1,300 stores selling apparel to teens and young adults, is pinning its recovery hopes on the back-to-school selling season, which begins in August. It lost $24.1 million for the quarter ended April 30.

In an interview, Mr. Weinglass said fall merchandise will be more conservative than what Merry-Go-Round has sold in the past. The company's problems are widely blamed on the fact that it filled stores last year with baggy, "hip-hop" styles while teens favored the jeans-and-flannel "grunge" look.

Mr. Weinglass described this fall's clothes as "preppy," "more toward the mainstream" and, in womenswear, "more feminine." Labels include Tommy and Nautica, he said.

Also yesterday, Merry-Go-Round executives said:

* The company will spend more than $6 million on TV and magazine advertising between August and year-end, "a lot more than we've ever spent," said President Michael D. Sullivan.

* Even after fall merchandise is shipped, store inventory on average will still be 20 percent below what it was last year.

Managers have blamed disappointing sales results so far this year on a lack of goods in stores. Even though shelves will be less full in the fall than last year, the merchandise will be better and sales results should improve significantly, Mr. Weinglass said.

* Merry-Go-Round will ask for more time to submit its reorganization plan to U.S. Bankruptcy Court in Baltimore.

* Mr. Sullivan and Mr. Weinglass meet monthly with representatives of Boston-based Fidelity Investments, Merry-Go-Round's biggest creditor and second-biggest shareholder. Mr. Weinglass said Fidelity is "supportive, so far."

In interviews, shareholders said they were encouraged. "The numbers still aren't good," said Jerry Kahl of Parkville, who owns 6,100 shares. But, he added, "I'm thinking about buying some more."

Merry-Go-Round stock closed yesterday unchanged, at $1.875.

Several shareholders said they were pleased to hear Mr. Weinglass, Merry-Go-Round's colorful founder, admit mistakes.

"We realize we screwed up in a big-time way," he told shareholders.

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