Thursday, November 20, 2008
The retailer laid off much of its corporate staff.
Newsday
MELVILLE, N.Y. — Retailer Steve & Barry’s is expected to file for bankruptcy protection and announce that it is going out of business this week, according to a source with knowledge of the situation.
The company, which was bought out of bankruptcy in August, laid off many of its corporate staff Monday, including its newly appointed chief executive, Harold 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.
Investment firms Bay Harbour Management and York Capital Management bought the ailing clothing retailer out of bankruptcy at the end of August as the economy and the retail sector continued to slide. 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.
Calls to Bay Harbour Management and York Capital Management were not immediately returned Tuesday.
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.