Merry-Go-Round sales improve, but not much

August 05, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

Merry-Go-Round Enterprises Inc. improved its sales results slightly again last month, but analysts said the figures were still very disappointing and didn't indicate a significant turn in the struggling retailer's fortunes.

The poor results weren't unexpected. As in previous months, July sales were hurt by a supply drought earlier in the year that caused the amount of spring and summer merchandise in Merry-Go-Round's stores to be far less than normal.

Sales will be watched much more closely for August and beyond, because Merry-Go-Round has said it has re-established supply lines and expects inventories to move closer to normal levels for the back-to-school and fall seasons. And the company plans an ambitious, $7 million advertising campaign to spur fall sales.

The Joppa-based fashion chain, which has been in bankruptcy proceedings since Jan. 11, said sales in stores that have been operating for at least a year declined 14 percent during July, compared with July 1993.

Such "same-store" results are considered a key retail indicator because they discount the boost that new stores add to a company's revenue. Generally, merchants strive for same-store results that exceed the inflation rate -- about 2.5 percent annually so far this year.

For the first five months of the year, Merry-Go-Round had same-store sales declines of more than 20 percent. For June, same-store sales fell 16 percent.

Even though revenue continued to decline for July, "we really are trending positively," said Leonard "Boogie" Weinglass, Merry-Go-Round's chairman and co-founder. Sales in men's apparel continue to be disappointing, Mr. Weinglass said. But women's sales have improved significantly, he added, rising by roughly 15 percent company-wide for July even though inventory was down by 18 percent.

But one analyst said July's results aren't encouraging. "Nothing has changed," said Peter N. Schaeffer, who follows retailers for New York investment house Dillon Read & Co. Inc.

One factor helping Merry-Go-Round's revenue comparisons is the fact that it has closed more than 120 poorly performing stores in recent months.

Average sales per store fell by 10 percent for July, compared with July 1993. That was an improvement over the 27 percent decline in sales per store for the 26-week period ending July 30, Merry-Go-Round said.

Overall, Merry-Go-Round's sales fell by 18 percent in July, to $53.5 million, compared with July 1993.

The company operates about 1,300 stores under the names of Merry-Go-Round, Chess King, Dejaiz, Cignal and others.

It lost $24.1 million for the quarter ending April 30.

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