By Arthur E. Foulkes
The Tribune-Star
TERRE HAUTE
September 05, 2008 09:07 pm
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Discount clothing retailer Steve & Barry’s will keep its doors open in Terre Haute despite closing more than 100 stores nationwide.
Steve and Barry’s, which opened a 25,000-square-foot store in Honey Creek Mall last summer, filed for Chapter 11 bankruptcy protection earlier this year. The company plans to reduce its number of stores nationwide from 276 to 170.
“We’re really happy that they are staying at Honey Creek Mall,” said Monica Schiller, marketing director for the mall. “They have been a great addition to our tenant mix,” she said.
Two of Steve & Barry’s stores in Indiana – in Marion and Kokomo – are closing. Six others, including stores in Terre Haute, Bloomington, Indianapolis, South Bend and Fort Wayne, are remaining open, according to a company spokesman.
A company official would not say how many employees work at Steve & Barry’s in the Honey Creek Mall or if any jobs there would be cut. The official also would not comment on how business at the Terre Haute store has been, but Schiller said the company has targeted its apparel selection well to meet the needs of Wabash Valley shoppers.
According to a company statement issued in July, Steve & Barry’s plans to reduce staff, consolidate offices and take other cost-cutting actions. At that time, the company announced it would be cutting 172 corporate and field staff positions.
Last month, a U.S. court permitted a newly formed affiliate of investment firms Bay Harbour Management and York Capital Management to buy substantially all Steve & Barry’s assets out of bankruptcy for $163 million, according to information provided by Steve & Barry’s.
Until recently, Steve & Barry’s was among the fastest growing apparel retailers in the country. Two years ago, BusinessWeek magazine wrote that Steve & Barry’s “rules the mall,” noting the company had nearly doubled its outlets in the previous year and occupied more square footage than any other mall-based chain. At the same time, one of the company’s founders, Barry Prevor, told BusinessWeek the company wanted to operate 568 stores by 2008.
“We deeply regret that our company has filed for protection under Chapter 11,” wrote Prevor and co-founder Steve Shore in July. “We have commenced this reorganization case only because we have exhausted all alternatives and have no other choice,” they wrote.
Prevor and Shore noted Steve & Barry’s had increased sales in the first half of 2008 compared with 2007, but higher fuel and material costs reduced the company’s profit margins. They also pointed to a tighter credit market, a slowdown in consumer discretionary spending and a reduction in landlord reimbursements for new store openings.
Steve & Barry’s started in 1985 when Prevor and Shore, childhood friends, began selling university-logoed sportswear near the University of Pennsylvania, where Prevor was an undergraduate. Their prices easily undercut the university’s bookstore prices. They soon opened other stores near other universities and eventually in malls.
The company made its mark by selling casual clothing for surprisingly low prices, sometimes less than $8. They kept prices down in part by buying from suppliers in places such as Africa where there are no U.S. import duties or quotas. The company also negotiated attractive rental agreements with mall owners hurting for tenants, BusinessWeek noted.
“Every member of our management team has been devastated by these events,” Prevor and Shore wrote earlier this year. “We have been through 23 years of economic cycles, but we never thought it would be possible for things to change so quickly and dramatically.”
Arthur Foulkes can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.
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