Merry-Go-Round losses reach $186.3 million

April 01, 1995|By Jay Hancock | Jay Hancock,Sun Staff Writer

Merry-Go-Round Enterprises Inc. disclosed yesterday the extent of its losses after its first year in bankruptcy proceedings: $186.3 million.

The large loss, which came on sales of $782.8 million, was inflated by lawyers' fees, lease-cancellation claims, asset write-offs and other one-time reorganization costs.

But even when taxes, interest, depreciation, write-downs and reorganization expenses are excluded, the Joppa-based Merry-Go-Round lost $52.5 million for the year ended Jan. 28.

The size of the net loss, $3.45 per share, was expected by Merry-Go-Round's creditors.

The story behind the red ink includes poor merchandise choices that led to a January 1994 bankruptcy filing, an unsuccessful attempt to recover last summer, turnover among top managers, the closing of 400 stores, and layoffs and resignations in Joppa.

Merry-Go-Round had a net loss of $45.6 million on sales of $959.9 million for the year that ended Jan. 29, 1994.

The company hopes for a spring revival. In stocking their 1,000 remaining stores, managers have tried to build on

Merry-Go-Round's trend-setting reputation and avoid what the company has said was a thin selection of sizes and colors last year.

An early indication of its prospects will come next week, when Merry-Go-Round and other major retailers will report March sales.

The retailer hopes to emerge from Chapter 11 bankruptcy proceedings this summer. But its reorganization plan depends on a financial turnaround.

For the three months that ended Jan. 28, Merry-Go-Round lost $114.1 million, or $2.11 per share, compared with a loss of $6.6 million, or 12 cents per share, in the same period a year ago. The quarter included reorganization costs of $82.6 million.

The company incurred losses of $29.3 million for the quarter before interest, taxes, depreciation, amortization and reorganization costs.

Sales for the quarter declined by 21.5 percent, to $238.7 million. The decline was caused in part by a drop in the number of stores.

The company's stores, which are in indoor malls, include Merry-Go-Round, Dejaiz, Attivo, Chess King and Cignal.

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