The Steve & Barry’s business model officially collapsed on Wednesday, the victim of razor-thin margins squeezed even more by tight credit and the reluctance of shoppers to either drive or spend.
The troubled retailer of low-priced chic apparel and footwear and 63 of its affiliates filed a voluntary Chapter 11 petition in Manhattan bankruptcy court after a cash crisis highlighted by its default on a $197 million asset-backed loan from GE Commercial Finance Corporate Lending. A feverish search for $30 million in needed financing ensued and apparently failed, despite talks with potential buyers and investors, among them Sears Holdings Corp. financing ensued and apparently failed, despite talks with potential buyers and investors, among them Sears Holdings Corp.
Even if the company can emerge from bankruptcy in some fashion, it will likely bear little resemblance to the way the firm has operated since it was founded 23 years ago.
In their first public statement about the chain’s difficulties, the founders and co-chief executive officers, Steve Shore and Barry Prevor, said, “High costs of materials and fuel prices have increased our cost of goods and cost of operating. At the same time, our customers are not in a position to pay higher prices, impacting our operating margins.
“Our customers are feeling the pain of high food and gas prices and declining home values, and many of them are being forced to shop closer to their homes and cut back on discretionary purchases,” their statement continued.
Yet, even with these challenges, the pair said their 276 stores in 39 states had registered a 70 percent increase in total sales this year through the end of May, along with a 15 percent increase in same-store sales and a 25 percent increase in average store sales.
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