Byline: Arnold J. Karr

NEW YORK — Shares of Paul Harris Stores went into a freefall Friday, losing nearly two-thirds of their value in a single session, as a continuing liquidity crisis and dismal September same-store sales cast further doubt on the Indianapolis-based specialty store chain’s future.
However, officials at the store told WWD Friday that the phase-in of a new credit facility, strong sell-throughs on recently received merchandise, an 80 percent reduction in old inventory and possible news about its efforts to sell its J. Peterman subsidiary as early as this week stood to reverse its fortunes.
More immediately, however, Paul Harris shares hit a new 52-week low, losing 72 cents, or 65.7 percent, to close at 38 cents on the Nasdaq Friday. Trading was 14 times its average volume. On Thursday, the company reported that comparable-store sales decreased 14 percent while overall revenue declined 13.3 percent to $22.2 million.
In a statement Thursday, Glenn Lyon, president and chief executive, called September’s results “extremely disappointing. While we have had success in certain categories, such as sweaters and intimate apparel, sales in other categories have lagged far behind last year and plan. Our merchandise sell-through for September improved by 15 percent over the prior year, but total sales were negatively impacted by slow receipt of new inventory.”
Interviewed by phone on Friday just after the close of the market, Lyon told WWD that the period in between its Aug. 18 agreement with LaSalle Bank, which increased its credit line by $8 million to $45 million, and the early part of September was “the most difficult we’ve faced. We’re forecasting that our October results will be better than September’s but still not as good as industry standard.”
He went beyond the company’s statement about same-store sales to say that sell-throughs of recently received merchandise “have consistently been 15 percent better than they were last year, and in the last few weeks they’ve been in excess of 20 percent better.”
Although doing so pushed margins downward, the company did succeed at working down its dated inventory significantly in September. Ownership of “old season goods” stands at $4.5 million at retail, less than one-fifth the $23.2 million position of one year ago.
The faster turnover of new goods was accompanied by an increase in the value of the average transaction at Paul Harris, its ceo said. “Our core customer is the 25- to 45-year-old, grown-up woman who isn’t looking for a product that’s overly trendy but instead new and exciting in color, fabric and style,” Lyon said. “The better sell-throughs and higher average transactions tell us that customer is hanging in there with us.”
Lyon, who joined the company as president and general merchandise manager in March from Charming Shoppes’ Modern Woman division and assumed the mantle of ceo in August, said Paul Harris was working to provide a better assortment of business-casual apparel to its customers since previous assortments had been more heavily weighted towards dressy business attire.
Shares closed up slightly on Monday.

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