Crystal named CEO of Lerner chain He presided over death of Merry-Go-Round

March 21, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Richard P. Crystal, the chief executive officer who presided over the recent demise of Merry-Go-Round Enterprises Inc., rebounded without much ado yesterday as the president and chief executive officer of another apparel chain, Lerner New York.

The Feb. 2 collapse of Joppa-based Merry-Go-Round did not appear to be a factor when Mr. Crystal was selected to oversee Lerner, a division of Limited Inc., with $1 billion in annual sales and 835 stores geared toward working women.

"What he brings to the table is that he's an accomplished merchant and leader, and I think he will give clear direction to the business," said Alfred S. Dietzel, Limited's vice president of financial and public relations.

Reaction was less charitable among retail analysts, former employees and others.

"He has to have the best headhunter probably in the United States he presided over the demise of [what was once] the second-largest specialty chain in men's and women's apparel," said Alan G. Millstein, editor and publisher of the Fashion Network Report in New York.

"If I was a creditor, I would be outraged. What did he do for them other than dissipate the assets? I guess it's the old story: You call in the doctor, and if he saves you, he's a miracle worker; if he doesn't, it's terminal."

Mr. Crystal has found a new job just as attorneys are beginning to look into his performance at his previous employer.

The court-appointed interim trustee now overseeing Merry-Go-Round's liquidation recently said that Mr. Crystal mismanaged the business in its final days, costing the retailer millions of dollars by making unrealistic projections, failing to prepare for the sale of assets and leaving the company in disarray.

U.S. Bankruptcy Court Judge E. Stephen Derby has issued two temporary restraining orders blocking Mr. Crystal from drawing on nearly $2 million under his Merry-Go-Round contract to give the trustee more time to look into the matter. A hearing on Mr. Crystal's compensation is scheduled today in U.S. Bankruptcy Court. The trustee, Deborah Hunt Devan, has asked the court to reconsider Mr. Crystal's compensation. Yesterday, she was uncertain how his new job would change her request. "I'm still assessing the impact it may have on our litigation," Ms. Devan said.

Mr. Crystal could not be reached for comment yesterday at his residence in New York. Mr. Dietzel declined to disclose Mr. Crystal's compensation or to say whether Limited considered his tenure at Merry-Go-Round.

Mr. Crystal, a veteran merchant from R. H. Macy & Co., arrived at Merry-Go-Round in July amid high hopes of pumping new life into the apparel chain aimed at teen-agers. But less than seven months later, when the company announced it was going out of business, he was vilified by dozens of Merry-Go-Round employees who accused him of misleading them about the company's dire conditions and breaking promises about their severance packages.

"It's outrageous that he can get [the Lerner position] in the face of what he just did be at the reins while Merry-Go-Round went under," said a former employee.

Yet analysts said Limited may have viewed Mr. Crystal's brief run at Merry-Go-Round as an aberration in a successful career, including jobs as chairman and chief executive of Macy's Specialty Stores and Macy's product development.

What's more, observers said, Mr. Crystal may have arrived at Merry-Go-Round after it was too late to save the once-vaunted chain.

At Lerner, where he is expected to begin in mid-April, he should have more time. Mr. Crystal will be charged with bringing new life to Lerner, a chain of moderately priced clothing that has lagged in performance.

Pub Date: 3/21/96

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