Taking the first steps in trimming its national chain of 1,450 stores, Merry-Go-Round Enterprises Inc. has closed its Boogie's Diner in New York and is holding a going-out-of-business sale at its counterpart in Washington.
The Joppa-based retail chain, which entered Chapter 11 bankruptcy protection in January, has also asked the bankruptcy court for extension of time to decide what stores it will keep and which it will shutter.
"Every store is being reviewed and every lease is being reviewed," said Michael W. Kempner, a spokesman for Merry-Go-Round.
While in Chapter 11, companies can terminate leases without paying heavy penalties.
Analysts have speculated that the company may have to close as many as a third of its stores, which operate under the names Merry-Go-Round, Attivo, Chess King, Cignal, Dejaiz, Silverman's and Hollywood Store, as well as Boogie's Diner. But Merry-Go-Round officials have maintained that the number will be far smaller.
The first to go are the two Boogie's Diners, which bear the nickname of the company's co-founder and chairman and chief executive officer, Leonard Weinglass. Launched in 1989, the outlets are combination diner and clothing store, with the motto "Eat heavy, dress cool."
The closings will leave four Boogie's Diners, in Chicago; Las Vegas, Nev.; Minneapolis and Aspen, Colo.
Mr. Kempner said that the stores were marked for elimination because of poor sales at those locations, on Lexington Avenue in Manhattan and Wisconsin Avenue in the Georgetown section of Washington. "They are not closing because of the concept but because of the locations," he said.
In fact, the company is considering replacing the stores with operations in new locations, Mr. Kempner said.
The New York location was closed on Feb. 7, according to a bankruptcy filing. The dining portion of the Washington store closed on Feb. 13, according to John E. Cook, the supervisor of retail operations for all of Boogie's Diners. A clearance sale that will be completed between April 1 and July 1 is under way at the clothing store section, Mr. Cook said.
The Washington building, at 1229 Wisconsin Ave., is the only structure that Merry-Go-Round owns besides its headquarters and distribution center in Joppa. The building had been used to secure $5 million worth of the company's $265.2 million debt.
If the bankruptcy court grants Merry-Go-Round's request for an extension, it will be able to terminate leases between now and when the court gives its approval to the company's reorganization plan -- which could be many months, if not years, from now.