Merry-Go-Round Enterprises Inc., the highflying retailer of apparel for teenagers, yesterday continued its streak of soaring earnings, reporting a 253 percent jump in quarterly profits.
The company, based in Joppa, Md., reported second-quarter earnings of $5.5 million (24 cents a share), compared with $1.5 million (8 cents) for the same period last year. Revenue for the quarter, ended Aug. 4, rose 38 percent, to $124.9 million from $90.3 million last year.
Isaac Kaufman, Merry-Go-Round's chief financial officer, attributed the increase mostly to a simple growth in clothing sales. The addition of new stores and completion of a merchandise distribution center also helped, Kaufman said.
Sales in Merry-Go-Round stores open at least a year increased 33 percent during the first half. Analysts consider that figure, known as "same-store sales," to be a revealing indication of a firm's financial health.
Kaufman said the company has 629 stores in operation, compared with 612 a year ago. Merry-Go-Round opened 16 stores in the first six months of the year and plans to open 52 more in the second half, he said.
For the first six months of the fiscal year, the company said, its earnings rose 276 percent, to $12.1 million (54 cents) from $3.2 million (16 cents) for the same six months a year ago. Sales in the half totaled $245.8 million, up almost 50 percent from $164.2 million last year.
On Wall Street, analysts said the company's earnings exceeded expectations. "They have been doing great for a year and a half now, and they're still doing great," said Fred E. Wintzer, an analyst with Alex. Brown & Sons in Baltimore.
"It's an exceptionally well-run company, and the teenage segment of the apparel market is very hot right now," Wintzer said.
Linda Baker, an analyst with Prudential-Bache Securities in New York, said the company is a good investment. "Merry-Go-Round to date enjoys sales trends that greatly exceed that of its peers," she said.
"Of course," Baker added, "in an uncertain economic environment, we are going to be monitoring Merry-Go-Round very closely, as we will all the other retailers."
Merry-Go-Round Enterprises operates retail stores under the names Merry-Go-Round, DeJaiz, Attivo, Cignal and others. Its stock closed at $16 a share on the New York Stock Exchange yesterday, up 37 1/2 cents.