Game over for Steve & Barry's sportswear stores?

[marmar]

from MarketWatch:



Steve & Barry bankruptcy further pressures malls

By Andria Cheng, MarketWatch


NEW YORK (MarketWatch) - U.S. mall owners, already facing declining sales and traffic at anchor department stores, were dealt yet another blow Wednesday with the bankruptcy of once fast-growing retailer Steve & Barry's.

Steve & Barry's, which has 276 stores in 39 states, tossed itself into Chapter 11 bankruptcy protection, the latest victim of a steep downturn in the retail sector and tighter credit markets. Mall owners have delayed reimbursing the discount fashion chain for store-opening expenses, further constricting its cash flow, the company said. See full story.

While Steve & Barry's store count pales against other mall tenants such as Gap Inc., which has more than 10 times as many stores, its bankruptcy and threatened store closings or liquidation drifts another dark cloud over mall operators already dealing with struggling anchor tenants such as Macy's Inc. and Sears Holdings Corp., whose sales are also in a slump.

Operators of malls that include Steve & Barry's stores will have a hard time finding tenants that can replace the retailer and replicate the type of traffic it's been able to drive with its celebrity tie ups such as Sarah Jessica Parker's Bitten line of clothing, analysts said.

"It's devastating," said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York retail consulting and investment banking firm. "The developers who pay them to come are screwed. The mall business is going to get weaker." ......(more)

The complete piece is at: http://www.marketwatch.com/news/story/steve--barrys-bankruptcy-deals/story.aspx?guid=%7B80928604%2DF086%2D4932%2D98F8%2DAED94AFDE460%7D

[elocs]

1. I shopped Steve & Barry's when I was in the Chicago burbs.

You certainly couldn't beat their prices on the clothes they carried. Too bad.

[Pale Blue Dot]

5. There may have been a reason they were so cheap.

They may have been a sophisticated ponzi scheme.

As one of the country's fastest-growing store chains, Steve & Barry's LLC was billed as the future of discount retailing. It boasted of massive expansion plans, built on the back of fire-sale prices of clothes and shoes promoted by the likes of actress Sarah Jessica Parker and professional basketball player Stephon Marbury.

That future now looks bleak.

The closely held retailer is racing to find rescue financing of about $30 million. If it is unable to secure backing, it could seek protection from creditors sometime in the next month, say several creditors, bankruptcy lawyers and retail experts familiar with the matter.

The cash crunch comes even as Steve & Barry's expands across the country.

Co-founder Barry Prevor said the U.S. market could support 5,000 stores. Its founders have dubbed their effort the "Google of retailing."

But some of the forces pushing Steve & Barry's growth were not tied to end-consumer demand, but the needs of mall owners in a softening commercial-real-estate market. Much of the company's earnings came in the form of one-time, up-front payments from mall owners. Those payments were designed to lure the retailer to take over vacated sites, say several people familiar with the company.

Without these payments, the stores are barely profitable, if at all, people familiar with the company's finances say.
http://globaleconomicanalysis.blogspot.com/2008/06/ponzi-scheme-at-steve-barrys.html

[Sen. Walter Sobchak]

7. that isn't much of a scheme

All retailers take advantage of improvement allowances provided by lessors,

Their plan was to become experts on micromanaging back water import quotas to get merchandise cheaper than China, and they are very good at it.

[alfredo]

8. Fuel costs will lessen any advantage offshore suppliers may provide.

It may become too damn expensive to ship that cheap shit we crave. We might have to start making consumer thingies here.

[Sen. Walter Sobchak]

11. not really

90% of the shipping expense is in the last 500 miles by truck, shipping by container ship costs virtually nothing. Made in USA + Shipping will still cost more than China + Shipping since the bulk of the shipping cost will be unchanged either way.

[alfredo]

13. The goods in China have to get to port too. That shipping is more

expensive, so is the costs of fuel and materials for the manufacturer. They will have to raise prices.

[Sen. Walter Sobchak]

15. china

the regions where most goods for export are made in China are developed as highly planned industrial estates directly linked to nearby ports by rail, they aren't running many 18 wheelers across the country to get goods to the docks. This infrastructure is also highly, highly subsudized at only minimal cost to the manufactuer.

China will subsudize transportation on their end to zero before allowing material harm to their exporters.

[alfredo]

16. It will happen sooner or later.

[Pale Blue Dot]

12. They can't be THAT good at it.

They are declaring bankruptcy, after all.

[Danmel]

2. My kids love to shop there

and it is great disposable clothing especially for growing kids and during the short summer season, where they wear something for 3 months and it's too small for the next summer.

The mall nearest to me with a Steve and Barry's will definitely hurt if they close- it is not the most heaviky trafficked mall and they will take a big hit.

[BelleCarolinaPeridot]

3. I just discovered that store.

A pair of jeans for about $9. Time to go on a spree while I can.

[quiet.american]

4. Just recently watched Michael Moore's "Roger & Me" again. We are all Flint, MI now. Thanks, Bush.

This is so DEPRESSING.

[Theres-a]

9. Yes.

Every one of us before long.

[Sen. Walter Sobchak]

6. If it wouldn't get my ass kicked by my girlfriend...

I would probably buy all my clothing there.

[spag68]

10. screw the malls

I hate the malls, always have. I know it sounds goofy, but I actually don't mind paying a little more at a local store. That said I still check for the made in label, and refuse to buy anything from China. I try to get stuff from the Caribbean, and believe it or not many things are still made in the US.

[Greyhound]

19. Thanks, mostly, to the republiks, even the Made in the USA labels are

frequently a lie. Sweat shops using virtual, and sometimes literal, slave labor operate outside our meager laws in our "protectorates" and can use the "Made in the USA" labels.

There was about 2 minutes of publicity about this a couple of years ago.

[three1oh]

14. shame

i loved their stuff... best deals out there and pretty good quality

[pstokely]

17. A lot of their stores are located at dying malls with no traffic

they seem to be a dead mall anchor like Burlington Coat Factory and urban wear stores

[ForrestGump]

18. I thought they made ice cream

Never heard of them. But I generally try to avoid malls. :scared: