Steve & Barry’s files for bankruptcy

July 10, 2008 12:34 am

— Low-priced clothing chain Steve & Barry’s has filed for Chapter 11 bankruptcy protection, the latest merchant to succumb to a harsh consumer spending climate.
The Port Washington, N.Y.-based chain said Wednes-day it filed the petition in U.S. bankruptcy court for the Southern District of New York. It operates at 276 locations, including one in Oklahoma City and another in Enid at Oakwood Mall.
Company officials have made no announcement about the future status of any their stores, although a news release issued by the company said they are exploring a potential sale of the company or its assets to repay outstanding debt. They blame a liquidity shortfall as a result of the credit crunch and general sluggish economic conditions. That hurt store opening plans and its borrowing capacity.
All stores were open Wednesday, and company gift cards and store credits will continue to be honored as always, and its return policies will remain in place, company officials said.
As part of the Chapter 11 process, Steve & Barry’s officials are moving forward with operational improvements that include taking steps to reduce expenses through staff reductions, office consolidations and other actions. Steve & Barry’s on Wednesday cut 172 corporate and field staff positions.
“We deeply regret that our company has filed for protection under Chapter 11 of the U.S. Bankruptcy Code and the effect it has on so many dedicated people and organizations,” co-founders and co-CEO Steve Shore and Barry Prevor said in a news release. “Steve & Barry’s opened its first store 23 years ago with the mission of providing affordable quality clothing to everyone. This mission has grown beyond our wildest dreams, providing our customers with 80 million units of affordable clothing and accessories during the past year alone. We have commenced this reorganization case only because we have exhausted all alternatives and have no other choice.”
According to the news release, the company’s total sales in the first five months of 2008 were up 70 percent, average store sales were up 25 percent and comparable store sales were up 15 percent.
The company also filed customary “First Day” motions to support its employees, customers and suppliers. Corporate and field associates will continue to be paid in the usual manner, as will medical, dental, life insurance, disability and other benefits. Suppliers will be paid under normal terms for goods and services provided after the filing date.
“High costs of materials and fuel prices have increased our cost of goods and cost of operating,” Shore and Prevor said in the news release. “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. The generally poor environment for apparel retailers has reduced funding to our suppliers, landlords and to our company. It has become increasingly difficult for us to continue operating normally under these circumstances.”