A New Style At Merry-go-round

January 29, 1995|By Jay Hancock | Jay Hancock,Sun Staff Writer

Leonard "Boogie" Weinglass, former boss of Merry-Go-Round Enterprises Inc., wore a pony tail, lived in blue jeans, skipped college and dated high school girls in his mid-30s.

Thomas Shull, new boss of Joppa-based Merry-Go-Round, worked in the White House, went to Harvard Business School, used to jog with Oliver North and wears horn-rims and tassel loafers.

The vibe has changed at Merry-Go-Round. Or, as Mr. Shull might say, the parameters have been adjusted.

The company that sells bare-tummy T-shirts and leather miniskirts to teens is now in the hands of two of the most button-down, stand-up, blue-chip types outside the U.S. Army. And that's only because they left the Army to pursue corporate careers.

Merry-Go-Round was about to lose its 80 millionth dollar of the year in November when Mr. Shull and sidekick James Kenney were rushed to Joppa for a temporary, "crisis management" assignment. Mr. Shull, 43, is acting chairman and chief executive, following Mr. Weinglass' resignation as chairman 10 days ago. Mr. Kenney, 35, is acting president and chief operating officer.

Their task is daunting, even for people used to corporate chaos.

Under a hothouse bankruptcy schedule, Merry-Go-Round is due to be taken over by its creditors less than six months from now. Mr. Shull's and Mr. Kenney's job is to turn the company into something that the creditors might actually want to own.

The chain, which operates about 1,000 Merry-Go-Round, Dejaiz, Chess King and Cignal boutiques across the country, will have about $700 million in sales for the fiscal year ending this month but hasn't earned money in almost two years. It sought Chapter 11 bankruptcy protection a year ago.

New ad campaigns, fashion changes, store closures, layoffs, Mr. Weinglass' yearlong return to daily operations -- nothing has helped.

Mr. Shull and Mr. Kenney represent Merry-Go-Round directors' latest, and most drastic, attempt at a solution.

"It'll be tough, but it can be done," Mr. Shull said in a measured baritone last week. "In most cases it's a two-step process. You have to stop the bleeding first, and then if it requires brain surgery, you do brain surgery. But the fact is you don't ever try to do brain surgery when the patient's hemorrhaging."

Since November, the two have focused on the blood. They are closing 217 more stores -- on top of 200 previously shut. They fired hundreds of Merry-Go-Round suppliers and are laying off 2,000 workers -- more than 100 at the Joppa headquarters.

Fewer than 600 now work in Joppa; fewer than 12,000 companywide.

The cuts will save $50 million annually -- almost 30 percent of operating expenses and other costs, Mr. Shull said. The reductions haven't been pleasant. Mr. Weinglass received anguished calls to his Colorado home from children and spouses of fired workers, he said.

The brain surgery comes next. On Tuesday in New York, Merry-Go-Round will present a detailed blueprint for recovery to creditors, shareholders and reporters. The plan won't be about fashion trends so much as about disciplines that critics say Merry-Go-Round, long relying on gut and inertia instead of head and data, has lacked.

"We ran a billion-dollar business like it was a boutique," said Frank Tworecke, hired as president of the company's Merry-Go-Round store division last summer.

Customer research has shown that the chain missed millions in sales because it didn't carry enough sizes or colors in each style, Mr. Shull said. As a result, the spring lines will include half as many styles but many more sizes.

The data, Mr. Shull said, refute conventional wisdom about Merry-Go-Round: that to fix itself the chain needs to catch a hot fashion trend. Simply stocking enough sizes could boost sales by 18 percent to 20 percent or more, he said.

"That's just blocking and tackling, operating," he said. "It's not finding the next fad."

You'd expect to hear such a statement from an alumnus, like Mr. Shull, of McKinsey & Co., the big consulting firm that preaches no business muddle is too severe to categorize, measure and analyze into order.

But some retail analysts rue Mr. Weinglass' retirement and wonder whether Merry-Go-Round needs more fashion talent in addition to the cost-cutters. Even the chain's fans aren't predicting a sure recovery.

"I think they know what they have to do, but the end of the story isn't there yet," said Michael Castle, president of In Private, a New York-based Merry-Go-Round supplier.

If resumes were results, Merry-Go-Round would be cured already. Turnaround talent doesn't come much fancier than Mr. Shull and Mr. Kenney, or more highly touted.

Myron E. Ullman III, former chairman of R. H. Macy & Co., said Mr. Kenney "is maybe as bright as any person I've ever worked with." Roger Farah, chairman of Woolworth Corp., called the two "very, very bright, focused and dedicated."

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