The Final days Downfall: Richard P. Crystal arrived in July. In the 208 days that followed, errors did not stop and Merry-Go-Round closed what was left of its once-thriving network of nearly 1,500 stores.

February 18, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Nothing was left to chance on the morning of Monday, Jan. 29, as Chief Executive Officer Richard P. Crystal hunched over his crescent-shaped desk and gave his last instructions before his merchandise buyers left for Las Vegas.

They knew there would be questions. The Vegas trip was more than a vendors' show where retailers bought merchandise. It was a grand spectacle to be seen and to talk shop -- and quell rumors in the case of Merry-Go-Round Enterprises Inc., the national chain of teen-age-apparel shops threatening to collapse.

"Tell vendors it's business as usual," Mr. Crystal said. "Tell them management's working on a deal, that's why they didn't make the trip. Tell them you don't know anything."

What was left unspoken was the unease among the assembled buyers -- John Biemer, Scott Eichler, Buzzy Sklar and Debbie Thacker. But in jest, Mr. Sklar finally asked what everyone else was thinking: "Should we bring our resumes?"

Mr. Crystal just shrugged with an ambiguous smile.

Four days later, on Friday, Feb. 2, as the buyers waded through a sea of vendors in Las Vegas, Merry-Go-Round pulled the trigger. It was all over: The retailer was going out of business.

Mr. Crystal, hired seven months earlier as the savior of the Joppa-based company, ultimately presided over one of the greatest downfalls in retail history. There would be no resurrection for the once-charmed company of nearly 1,500 stores, a multimillion-dollar business that catapulted to fashion stardom from a single Atlanta boutique created by a pony-tailed rebel 28 years ago.

Instead, the final days of Merry-Go-Round -- 208 days under the ** reign of Mr. Crystal -- unfolded as a calamity of errors, blind hope, hubris and betrayal, according to interviews with more than 35 employees from the mailroom to the executive suites.

Until the very end, even as the walls began to cave in, Mr. Sklar recalled, "everyone had that glimmer of hope that that cancer patient would go into remission." But, perhaps the patient was already dead by the time the new CEO arrived. Mr. Crystal declined several requests for an interview, but Mr. Sklar, a close associate, said, "I just think it was so far gone that he couldn't stop the bleeding."

Prospects didn't seem so dire on July 10.

Under the gaze of more than 150 employees, Mr. Crystal was introduced as the retailer's fourth chief executive in two years, a strapping man of 50 with manicured nails, round glasses, a Navy blue suit, a blue and white pinstripe shirt with a solid white starched collar, luxurious black leather shoes and black hair slicked back, impeccably parted just off center.

Mr. Crystal sat at the front table of the "media room," a basement auditorium in Merry-Go-Round's sprawling headquarters, the sum of his parts -- veteran merchant from R. H. Macy & Co., denizen of New York's posh Park Avenue. A striking resemblance to a 1940s gangster, some in the audience thought, instantly nicknaming him "Bugsy."

"Bugsy" was a far cry from "Boogie," Leonard Weinglass, the iconoclastic founder who molded Merry-Go-Round on his own anti-IBM, funky vision of an apparel chain ruled by long-haired merchants wearing frayed jeans and dispensing wild fashions.

But the party was over.

A revolving door of successors -- Michael Sullivan, Tom Shull and Jim Kenney -- had failed to stop Merry-Go-Round's fall. Now, after applying for a division president's job at the chain more than a year earlier, Richard Crystal stood at the helm.

"A great specialty store has to have great focus," he told the gathering.

There was an aggressive edge in his voice -- that distinct New York brogue -- as he spoke of the hard work ahead in turning around a chain that had lost $186.3 million in the past fiscal year, a company that had shed nearly 500 stores since filing for bankruptcy protection in January 1994.

For the shell-shocked troops, Mr. Crystal instilled hope. They wanted to believe. "We were like children being led by their father," said senior planner Cathy Childs.

And no one seemed more confident than Mr. Crystal himself.

Later on his first day on the job, in the "glass bunker," a second-floor conference room adjoining the CEO's office, Mr. Crystal turned to division president Lou Spagna and said, "This place is so bad," snapping his fingers. "We'll fix it right away."

Worries, tensions rise

The task, as it turned out, wouldn't be that simple.

There were the obvious problems: Sales in stores open at least a year, a key gauge of performance, hadn't registered a gain since December 1992. Shareholder equity had plummeted from $191.2 million in fiscal 1994 to an alarming $5.7 million a year later. And lenders were leery.

Even the warehouse workers -- the men and women who packed and unpacked boxes -- were concerned about the merchandise, including a T-shirt with a caricature of a large-busted woman with two dogs.

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