Steve & Barry stores and its parent company have abandoned plans to keep stores open during bankruptcy protection and will liquidate them over the next few months. The chain has five stores in Washington — in Everett, Auburn, Olympia, Spokane and Vancouver.
NEW YORK — Steve & Barry stores and its parent company have abandoned plans to keep stores open during bankruptcy protection and will liquidate them over the next few months, according to a bankruptcy court filing.
The chain has five stores in Washington — in Everett, Auburn, Olympia, Spokane and Vancouver — according to its Web site. The Olympia store, which the retailer announced in September would be shutting down, closes today.
Steve & Barry filed for Chapter 11 bankruptcy protection in July after its growth plans were hurt as consumers cut back on spending. The investment firms that bought Steve & Barry in August said they planned to close some stores and keep operating with a smaller base.
But the retailer and its owner, affiliates of Bay Harbour Management and York Capital Management, said in the filing today that they have joined with liquidator Great American Group to liquidate all inventory in remaining stores by the end of this year or early next year.
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“For various reasons, including the general health of the American economy and the state of the retail market in particular, sales at all stores have been disappointing,” the documents filed with the Bankruptcy Court in the Southern District of New York stated.
Steve & Barry’s legal counsel Christopher Fugarino said the company had no immediate comment.
The company is the latest casualty of the weak retail sector, as consumers cut discretionary spending amid a shaky job market, tight credit and prolonged housing slump.
While some stores that have declared bankruptcy, such as electronics retailer Circuit City still plan to keep stores open, others, including specialty retailer Linens ‘N Things and department-store chain Mervyns, have begun to liquidate all of their stores.
Steve & Barry’s, based in Port Washington, N.Y., had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. The company also named a new chief executive, Harold Kahn, last month. But the drop-off in consumer spending made that impossible, according to the filing.
The company is not in compliance with some of its loan agreements and has no prospects for continued financing, according to the filing.
“The appropriate course of action to maximize value for the benefit of all of their stakeholders is an orderly liquidation in Chapter 11,” the filing said.
The company, which was bought out of bankruptcy in August, laid off many of its corporate staff Monday, including CEO Kahn, sources said. Only a skeleton crew of about 30 remains.
The layoffs came as a surprise, and no reasons were given, the source said. The chain has more than 5,000 employees.
Even as the greater economy appeared to be crumbling in October, Steve & Barry’s seemed to be pushing forward, announcing Kahn’s hiring and preparing for a new Manhattan store opening that had been planned months earlier.
But in reality, the company was not generating enough sales, according to a source. Gun-shy vendors were demanding upfront payment for spring inventory and the cash infusion the company needed grew far beyond original expectations, the source said.
When Khan stepped into his new position, he said in an interview that he would focus on pricing strategies and branding a new image in 2009 because the inventory had already been purchased through the holiday season.
Steve Shore and Barry Prevor, who remained minority investors in the new company, founded the company in 1985, selling college-licensed apparel. Over the past several years, the company expanded rapidly, opening locations across the country. Steve & Barry’s gained popularity selling celebrity-endorsed clothing lines — including Sarah Jessica Parker’s Bitten, Venus Williams’ sportswear and Knicks point guard Stephon Marbury’s sneakers — for less than $20.
The company worked under extremely slim margins, and former executives Shore and Prevor pointed to high gas prices, a decrease in consumer spending and restricted credit as factors leading to the company’s July bankruptcy filing.
When Steve & Barry’s was purchased out of bankruptcy almost three months ago, Douglas Teitelbaum, a managing principal at Bay Harbour, said that the chain had developed as a unique destination for consumers, particularly during tough economic times.
Material from The Associated Press and McClatchy-Tribune Information Services used in this report