Merry-Go-Round mulls more cuts Chain reportedly considers layoffs, added store closings

November 09, 1995|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Merry-Go-Round Enterprises Inc., reeling under declining sales and the cost of bankruptcy, is now plagued with another problem: fear.

Sources within the company and industry observers say the fashion retailer, looking to cut its losses, is considering cutting the payroll and closing more stores.

Company spokesman Michael W. Kempner said yesterday, "As a company policy, we don't respond to rumors, and these are rumors."

Layoffs, sources said, would affect not only store clerks and managers but possibly upward of 100 workers at corporate headquarters, which had a payroll of about 600 at the beginning of the year. Estimates fluctuate wildly, but the sources said the company is considering shuttering as many as 200 to 300 stores -- which would account for about a third of the chain.

"I don't have the number yet, but it's under consideration," said a source familiar with Merry-Go-Round. "Performance continues to be poor."

Indeed, the retailer has not registered a gain in sales in stores open at least a year, a key gauge of performance, in nearly three years.

Meanwhile, the chain continues to shrink in size. Over the past year, the company has shed about 270 stores. More than 460 stores have been shut down and 4,000-plus employees have lost their jobs since the company filed for reorganization bankruptcy-law protection in January 1994.

The downward spiral has not slowed since Richard P. Crystal was named on July 10 as the retailer's fourth chief executive officer in two years. October sales, announced last week, dropped 25 percent to $39 million, compared with the same period last year.

But after four months on the job, sources say, the new CEO has begun to find his bearings.

More recently, they said, he has reviewed, behind closed doors, potential cutbacks.

That's what happened last year when a newly installed leadership team -- turnaround specialists Thomas Shull and James Kenney -- announced the layoff of 70 employees across all departments at headquarters in December 1994, less than a month after their arrival.

At Merry-Go-Round's annual meeting last month, a shareholder asked Mr. Crystal about the prospects of more stores closing. He declined to comment.

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