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Carter Hawley Stock Falls 20%, Nears All-Time Low

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TIMES STAFF WRITER

Shares of Carter Hawley Hale Stores on Monday posted the biggest percentage loss on the New York Stock Exchange. They fell 62.5 cents, or 20%, to $2.50 on a day that the Dow Jones industrial average climbed 41.59 points.

Analysts said investors have grown worried about Carter Hawley’s ability to pay the $23.3 million in interest due on its junk bond debt on Feb. 15. The Los Angeles-based company, parent of the Broadway-Southern California, reported weak sales over the crucial Christmas shopping season and lost $26 million in its past fiscal year.

The price of its junk bonds also fell. On the NYSE, Carter Hawley’s 12.25% bonds maturing in 1996 fell $52.50 to $380 per $1,000 face amount, and its 12.5% bonds due in the year 2002 fell $20 to $345.

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The decline in Carter Hawley’s stock brought the shares to their lowest closing price since Nov. 5 and near the stock’s all-time low of $1.875. In the summer of 1989, the shares traded around $14.

Until fresh concerns arose in recent days about Carter Hawley’s financial health, analysts had hailed the latest moves by the company to reduce its burdensome debt. In December, Carter Hawley sold its Richmond, Va.,-based Thalhimers chain for $317 million to May Department Stores. Last month, it reached a tentative agreement to sell its credit card operation to General Electric Capital Corp. for $50 million.

Together, the moves would reduce Carter Hawley’s debt to about $700 million from $1.6 billion.

To reduce expenses, the company recently also has cut its work force, eliminating roughly 1,000 workers through dismissals and attrition. In addition, Carter Hawley last month announced several changes in its management ranks, including the naming of H. Michael Hecht, 51, as president, the company’s No. 2 executive. Hecht had been chairman of the Broadway-Southern California, the biggest of Carter Hawley’s four chains.

Along with investors, suppliers to Carter Hawley stores have raised concerns about the company’s finances. Some suppliers and credit advisory agencies have complained that the company is paying bills slowly, prompting manufacturers to hold back shipments to the stores.

The firm, citing company policy, declined to comment on the stock price or about any changes in its finances. Carter Hawley also owns Phoenix-based Broadway-Southwest, the Bay Area’s Emporium chain and Weinstocks in the Sacramento area.

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