BANKRUPTCY CREDITORS' SERVICE, INC.
Motion for pre-petition claims rescheduled to February 10
WAYNE, N.J. -- Jan. 31, 1995 -- The Grand Union Company
announced today that its motion before the U.S. Bankruptcy Court for the
District of Delaware for authority to pay pre-petition claims of certain trade
creditors has been rescheduled for hearing on February 10.
The hearing had originally been scheduled for February 2. The continuance
of the hearing is supported by representatives of Grand Union's major trade
creditors in order to provide an opportunity to continue discussions designed
to resolve the motion without litigation.
CONTACT: The Grand Union Company
Donald C. Vaillancourt, Corporate Vice President
Kendall Square Research delisted from NASDAQ SmallCap Market
WALTHAM, Mass. -- Jan. 31, 1995 -- Kendall Square Research
Corp. (formerly NASDAQ SmallCap: KSRCC) today announced that its stock has
been delisted by NASDAQ from the SmallCap Market because the company no longer
satisfies NASD capital and surplus, and bid-price requirements.
Kendall Square has filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in United States Bankruptcy Court, Eastern District for
CONTACT: Kendall Square Research
Dennis Byron, 617/895-9400
MERRY-GO-ROUND ENTERPRISES UNVEILS THREE-YEAR BUSINESS PLAN AIMED AT
RESTORING PROFITABILITY AND MARKET LEADERSHIP
Plan focuses on customer-driven merchandising, operational "basics"
and leaner organizational design
JOPPA, Md., Jan. 31, 1995 -- Merry-Go-Round Enterprises, Inc. (NYSE:
MGR) today unveiled its three-year business plan to Chapter 11 stakeholders
and the public. The business plan focused on twenty key strategic and
operational initiatives aimed at restoring MGRE to a leadership role in youth
apparel retailing. The plan also contained management's detailed financial
projections reflecting positive EBITDA expectations growing from $31 million
in fiscal year 1996 to $68 million in 1998.
Thomas C. Shull, MGRE's Chairman and CEO, said, "After two months of
extensive research and analysis, we are excited to have a plan in place which
we believe will restore the company to profitability and allow us to emerge
from Chapter 11 as early as this summer." Shull and James Kenney, president
and COO of MGRE, were hired in November to focus the company's turnaround
plans. Both are partners in Meridian Ventures, a turnaround consulting firm,
and former R.H. Macy senior executives who played lead roles in developing
Macy's five-year business plan and plan of reorganization. They were also
responsible for Macy's merger negotiations with Federated Department Stores.
Shull elaborated further, "Subject to further review by our Chapter 11
stakeholders, we believe that this business plan is supportive of the terms of
reorganization which the stakeholders have proposed to MGRE's board. As such,
the plan serves as a critical component in our efforts to file a timely and
workable plan of reorganization.
"Our business plan and efforts to date have been twofold. First, we have
outlined specific measures for eliminating unprofitable store locations and
sharply reducing overhead. This will bring our cost- structure in line with a
smaller revenue base to eliminate short-term losses. Second, we have
developed a new corporate strategy and mission consistent with today's
competitive realities in the specialty retail industry, as well as specific
priority directives for maximizing revenues and margins under this new
MGRE's new mission statement, as stated in the plan, calls for the company
to "Achieve profitable sales growth by being first to market in selected trend
fashions for the customer with a young attitude".
"Our plan is based on leveraging our true strengths at MGRE. We have a
loyal and growing core customer base in the fashion-forward teen and young
adult markets, a valuable, high cash flow real estate portfolio, extremely
strong chain store franchises and a vast untapped opportunity for capturing
additional sales in most of our locations," Shull added. "We have now
completed the majority of our store and personnel cut-backs. The challenge
now is really very simple: we need to be more customer-driven in our
merchandising and marketing approach and we need to do the basic 'blocking and
tackling' of retail operations in order to achieve our potential."
The company's plan detailed recent market research results which revealed
that while MGRE's stores are successful in converting roughly 50% of all store
visits to sales, its stores on average failed to convert 36% of customer
visits to purchases due to lack of merchandise availability and poor in-store
operations. To improve the company's sales conversion rate, its business plan
outlines priority buying and selling directives which are geared towards
narrow and deep merchandise assortments, selective vendor partnering, stronger
commitments to key fashion trends, improved inventory management, and
effective customer- driven selling and service.
"We have been leaving an extraordinary amount of sales on the table by
ignoring the basics of retailing and straying from the needs of our customers.
This business plan is about remedying that situation," said Shull.
Sales and marketing efforts will also be focused on meeting customer needs
with the implementation of customer-driven selling techniques and incentive
compensation, labor scheduling more closely linked to customer traffic
patterns and better in-store execution of merchandise plans.
The company also outlined the numerous actions that the management has taken
to reduce operating costs and improve margins. MGRE has now closed 416
underperforming stores and discontinued its Club International and Hollywood
store concepts (comprised of an additional 22 stores), substantially reduced
its workforce at its headquarters and in the field management ranks. In
total, the company's workforce has been reduced to roughly 13,000 from a level
of 17,000 twelve months ago.
"Most of our cutbacks will be completed by mid-February, but we will
continue to put pressure on streamlining operations and keeping this company
lean. Our business plan directives also dictate that MGRE will continue to
develop a performance-based culture with specific cost reduction goals,
investment standards, and outsourcing policies. While we still intend to
chart a path for future growth, we will look to do so in a disciplined
fashion, by harnessing the creative talents we have here in a
professionally-managed environment. We think that this will allow us to grow
profitably and selectively to the billion dollar sales mark by the end of the
decade," Kenney explained.
The company's business plan set forth revenue and earnings projections based
on implementation of the plan's directives. These projections call for a 15%
reduction of revenues in its 1996 fiscal year to $662 million, primarily as a
result of store closures, with positive EBITDA (earnings before interest,
taxes, depreciation and amortization) of $31 million. Projected fiscal year
1998 revenues are $727 million, with a projected EBITDA figure of $68 million.
Shull concluded, "Clearly, our most important objective is to see that the
company is returned to profitability as quickly as possible, but we should
never lose sight of our obligation to provide stability and opportunity to the
thousands of loyal employees on the MGRE team. While many of the cuts we have
made have been difficult, we believe that implementation of this business plan
accomplishes both objectives."
Merry-Go-Round Enterprises, Inc. is a specialty apparel chain selling
contemporary fashions for young men and women. The company's four primary
chain concepts are Merry-Go-Round, Cignal, Chess King and Dejaiz/Attivo
MERRY-GO-ROUND ENTERPRISES, INC.
Summary Financial Projections (Consolidated)
Actual Estimated Projections
FY 1994 FY 1995 FY 1996 FY 1997 FY 1998
Total Sales $960 $784 $662 $691 $727
% Change (Total Sales) 9.4% (18.3%) (15.5%) 4.3% 5.2%
% Change (Comp Sales) (12.6%) (17.7%) 10.5% 4.3% 5.2%
Gross Margin $180 $133 $150 $174 $195
% of Sales 18.7% 17.0% 22.7% 25.2% 26.8%
Operating Expenses $231 $214 $144 $146 $153
% of Sales 24.0% 27.3% 21.7% 21.2% 21.0%
Inventory Turnover 2.4 2.9 3.2 3.5 3.5
EBITDA $36 ($47) $31 $52 $68
% of Sales 3.8% (6.0%) 4.7% 7.5% 9.3%
Number of Stores 1,427 1,230 991 991 991
***Note: Merry-Go-Round Enterprises, Inc. cautions that no
representations can be made as to the accuracy of the
forecasted financial information or the ability to achieve
the forecasted results. Many of the assumptions upon which
this forecasted financial information is based are subject
to major uncertainties, some assumptions inevitably will
not materialize, unanticipated events and circumstances may
occur and, accordingly, the actual results achieved
throughout the forecast period will vary from the
forecasted results and the variations may be material.
Although MGRE believes that the assumptions underlying the
forecasted financial information for the forecast period,
when considered on an overall basis, are reasonable in
light of the current circumstances, no assurances can be
given that the forecasted results will be realized.
/CONTACT: Michael W. Kempner or Michael T. Lennon of MWW/Strategic
Communications, Inc., Public Relations, 201-507-9500; or Isaac Kaufman of
Merry-Go-Round Enterprises, Inc., 410-538-1000/