For Merry-Go-Round Enterprises Inc., August brought more tunnel and not much light.
The Joppa-based clothing retailer, struggling to emerge from Chapter 11 bankruptcy protection, extended its long losing streak yesterday with a 13 percent drop in same-store sales during a prime month of the critical back-to-school season.
Total sales slipped 18 percent to $76.3 million compared with $93.5 million in August 1993. The company is operating 1,284 stores, compared with 1,451 last year, after closing "underperforming" locations.
Last month's same-store sales figures barely fulfilled Merry-Go-Round Chairman Leonard "Boogie" Weinglass' prediction that August would be an improvement over July, when the chain posted a 14 percent drop.
Merry-Go-Round stock closed unchanged yesterday at $1.75.
Bob Reiners, director of financial management services, said the company sees its August results as progress. Three of the company's four retail concepts performed up to expectations, he said, with only the Dejaiz stores lagging behind.
Mr. Reiners cited the company's 8 percent decline in its average sales per store as an improvement over its year-to-date trend. Average sales per store for the past 30 weeks were down 24 percent.
But Merry-Go-Round's institutional creditors and shareholders are unlikely to see those numbers as positive, said Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting firm.
"No company can survive dropping double digits from store to store. The company evaporates," he said. "Merry-Go-Round has been saying it's going to stop. It hasn't stopped."
Mr. Davidowitz said the declines indicated that Merry-Go-Round faces a grim back-to-school season, with price markdowns likely to take a toll on earnings in September and October. "The customers voted and they voted no, and that means the quarter's dead because August is the key month," he added.
Some of the company's August woes might reflect a general weakness in back-to-school season among fashion retailers. The Gap, for instance, showed a 5 percent decline in same-store sales, while The Limited's sales were flat.
But Merry-Go-Round's own continuing woes also played a big part, because many shipments were delayed, ensuring that inventories would be depleted.
Alan Millstein, editor and publisher of the Fashion Market Report, said it is too early to judge whether Merry-Go-Round's turnaround efforts are succeeding. "In bankruptcies, you have to give the debtors in possession a lot of time and a lot of rope," he said. Merry-Go-Round filed for Chapter 11 in January.
Mr. Millstein said the company's September and October sales figures will be a much more important gauge of its progress.
"We don't have to yet get out a shroud for Boogie," he said. "But I wouldn't be renting a ski chalet prematurely if I was Mr. Weinglass."