TOUGH COOKIES?
By STEPHEN MADDEN

(FORTUNE Magazine) – Are Mrs. Fields' cookies going stale? The company that became as famous for its chewy chippy goodies as for the go-go enthusiasm of founder Debbi Fields hit hard times in 1988. Security analysts estimate that Mrs. Fields lost $10 million, mostly due to the costs of closing 65 of its 451 stores and efforts to diversify its product line. Says CEO Debbi: ''We're undergoing a change like Honda did when it went from making motorcycles to cars.'' The troubles started with Mrs. Fields' 1986 initial public offering on London's Unlisted Securities Market. Randall Fields, Debbi's husband and the company's chairman, says the Utah-based company chose Britain for its IPO to lend credibility to its ambitious overseas growth plans. (The fact that disclosure requirements are less stringent in that London market than in the U.S. markets was probably an added inducement.) Dubious British investors bought only 16% of the 30 million shares. Then last spring Mrs. Fields announced a major strategic change away from single-product cookie stores toward full-service bakeries. The move was intended to integrate the cookie business with La Petite Boulangerie, the 120- store bakery chain that Mrs. Fields' private parent company, MF Holdings, bought for $15 million from PepsiCo in 1987. After the public company announced it had set up a $15 million reserve to pay for store closings, its stock plummeted to the equivalent of 44 cents a share, a fraction of the $2.46 offering price. The stock has since climbed to 66 cents, but a share of Mrs. Fields still costs less than a chocolate chip cookie (88 cents in New York City). Both Fieldses admit to ''communication problems'' with English investors. ''We've been very ineffective at telling the British what we're trying to do,'' Randall Fields says. The British see it another way. ''Here we have a company that bills itself as a cookie company, and then it suddenly changes direction,'' says Andrew Holland, a retail food analyst at London's Barclays de Zoete Wedd. ''Investors felt misled.'' Better times may lie ahead. Eight cookie-bakery stores the Fieldses have opened in the U.S. are doing well, and analysts expect the company to be profitable again in 1989. Says British analyst John Richards: ''Last year must be viewed as one of transition for Mrs. Fields.''