Steve & Barry's

Infobox Company
company_name = Steve & Barry's
company_
company_type = Private equity
foundation = 1985 Philadelphia, Pennsylvania
location = Port Washington, New York
key_people = Steven Shore, Founder & co-CEO Barry Prevor, Founder & co-CEO
industry = Retail
products = Apparel
revenue = $656 million (2008) reported
operating_income =
net_income =
num_employees =
homepage = [http://www.steveandbarrys.com/ www.steveandbarrys.com]

Steve & Barry's is an American retail clothing chain, featuring casual apparel.

As of 2007, it operates 276 stores in 39 states. The company has its headquarters in Port Washington, New York.

The chain's origins are based on various college campuses across the United States. Until 2007, it was called "Steve & Barry's University Sportswear", and the chain specialized in college-related apparel and private-label casual clothing. The chain dropped the "University Sportswear" tagline after securing licensing agreements with several celebrities to develop and distribute private-label lines of clothing designed or inspired by each of them, in an attempt to expand the chain's customer base.

History

Founded by Steven Shore and Barry Prevor at the University of Pennsylvania in 1985, while Prevor was an undergraduate student, Steve & Barry's became a local popular destination due to its low prices compared to other university bookstores and gift stores. The success of the original store led to the opening of locations on several Big Ten campuses, including Michigan State University, the University of Michigan, the University of Illinois, the University of Wisconsin, Indiana University, and Purdue University (the Purdue location has since closed due to a disagreement between store owners and university administrators [ [http://www.purdueexponent.org/interface/bebop/showstory.php?date=2005/03/01&section=campus The Exponent - campus ] ] ).

In 1998, Steve & Barry's opened a large mall-based store at Great Lakes Crossing in Auburn Hills, Michigan and began to offer private label apparel targeted to the whole family, as opposed to their original customer base of mostly university students. The new line of products included denim, business casual, active wear, outerwear, and T-shirts. In addition, the company began marketing "All-American" brands such as Hershey's, Marvel Comics, Ford, WWE, and General Mills cereal, amongst others."Business Week" article on Steve & Barry's. Available online at: http://www.businessweek.com/magazine/content/06_15/b3979091.htm] However, the Great Lakes Crossing store has since closed.

In 2005, Steve & Barry's leased over convert|3500000|sqft|m2 of space in shopping centers throughout the United States, the most of any mall-based chain in the country. The result was 62 brand new supermarket-sized stores, which doubled its outlets.

In 2006, TA Associates, a $10 billion private equity firm, closed a minority investment in the company for an undisclosed amount.

In March 2008, General Electric Holdings lent Steve & Barry's $197 MM dollars which the company has now defaulted on. http://www.wwd.com/notavailable/dotcom?target=/search/article/126392&articleId=126392&articleType=A&industryKw=search&industryKw2=searcharticle] The company is currently Chapter 11 and has laid off 172 employees in the corporate office.

Celebrity lines

In 2006, the chain announced its partnership with New York Knicks' point guard Stephon Marbury, a joint venture in which the chain would produce Marbury's Starbury Collection, a 50-item line of discount clothing, athletic apparel, and sneakers. The centerpiece of the line is the Starbury One, a basketball sneaker that retails for $14.98. Marbury, who developed and endorsed the line, wore the sneakers during the entire 2006-2007 NBA season to prove their quality. [Starbury Website, Available online at: http://www.starbury.com/] In March 2007 the company announced that then Chicago Bulls center, and 4-time NBA Defensive Player of the Year, Ben Wallace, will endorse the Starbury brand, wearing Starburys during all his games and debuting his own Big Ben Starbury sneaker in the 2007-08 NBA season. Wallace now plays for the Cleveland Cavaliers

Similarly, Sarah Jessica Parker introduced her own clothing line, BITTEN, on June 7, 2007. The brand was originally leaked to the press during an early fashion show in March 2007. The Bitten name came from the phrase that one who becomes an actor has been "Bitten" by the acting bug. After an appearance on "The Oprah Winfrey Show", the brand launched in early June, with roughly 400 pieces of apparel that is reported to grow to 500 or more by the fall.

Announced during the summer of 2007, former Nickelodeon star Amanda Bynes also debuted a clothing line, Dear, on August 16, 2007. Similar to the Bitten line, Dear is a women's brand that appeals mostly to younger women.

Steve & Barry's signed tennis star Venus Williams to market her own clothing and sneakers line called EleVen. [ [http://www.time.com/time/magazine/article/0,9171,1680154,00.html Sneaker Cents - TIME ] ]

American golfer Bubba Watson has his own clothing line called "Bubba Golf".

On May 15, 2008 the company debuted Laird Hamilton's "Wonderwall" collection. The collection features men's clothing for surfing and skating.

Business model

The company claims that its prices undercut all competitors, including national chains like Wal-Mart and Target, with most items within the store priced around $8.98. Shore and Prevor have discussed their methods for keeping prices down. ["Business Week" article on Steve and Barry's. Available online at: http://www.businessweek.com/magazine/content/06_15/b3979091.htm] ["NY Times article on low-cost clothing at Steve & Barry's. Available online at: http://www.nytimes.com/2008/05/01/fashion/01STEVE.html?scp=9&sq=retail+midtown&st=nyt]

Steve & Barry's business model is to keep prices low by not advertising through traditional streams, relying on publicity and viral marketing to get the word out, running its company and stores very efficiently, selling in large volumes, and making modest profits on each item. It also sources apparel progressively, meaning it purchases product from a wide variety of manufacturers at different times throughout the year. The bidding between manufacturers allows the buyer to purchase at a lower per unit cost than larger retailers who frequently have standing contracts with suppliers.

With fiscal problems mounting at the company, many reports have surfaced claiming that the only real profit at the company came from the $2 to $3 million payments that the company received from landlords when it would open a new store (most of the time in distressed or hard-to-lease locations) The company made little, if any profit on its actual apparel sales and while new stores would be very profitable for the first few months, sales would decline sharply after the store had been open for a few quarters."Wall Street Journal article on Steve & Barry's Bankruptcy: http://online.wsj.com/article/SB121486920976317689.html]

Financial problems and bankruptcy plan

As of June 21, 2008, the retailer has been seeking at least $30 million to fund operations through 2008. They are freezing all assets and have hired a bankruptcy lawyer to advise on filing for Chapter 11. The company is deficient in paying back a $200 million credit loan from General Electric Commercial-lending unit. [ [http://online.wsj.com/article/SB121401142593693967.html?mod=rss_whats_news_us Free Preview - WSJ.com ] ] On July 1, 2008, The Wall Street Journal reported that the struggling company may close approximately 100 of its 245 stores as a prelude to the liquidation of the entire chain. The company does not have enough capital to take it through the end of the year and is actively trying to secure financing to take it through the holiday season.

The firm filed for bankruptcy protection under Chapter 11 on July 9, 2008 according to The Wall Street Journal. As of yet, all stores will remain to be open with the store's return policy, store credit and gift cards unchanged. Founders and co-Chief Executives Steve Shore and Barry Prevor stated that liquidity concerns and the generally harsh conditions for retailers in recent months. [ [http://online.wsj.com/article/SB121562423538939709.html?mod=hps_us_whats_news] ]

The AP reported that Steve & Barry's is considering a plan to sell all or some of its assets to repay its outstanding debt. [ [http://ap.google.com/article/ALeqM5ixN0-pexPAYFtQSNqmRQ-1z0rMawD91QN5JO0] Dead link|date=August 2008] Steve & Barry's is also in talks with Sears Holdings Corporation for a possible bailout. It's reported that Sears may be interested in buying some or all of Steve & Barry's brands. [ [http://www.chicagobusiness.com/cgi-bin/news.pl?id=30131 Sears Holdings Corp. News | Chicago Business News, Analysis & Articles | Sears talks of Steve & Barry's bailout: reports | Crain's ] ]

On August 21, 2008 Steve & Barry's announced that BH S&B Holdings LLC, a newly formed affiliate of investment firm Bay Harbour Management L .C, agreed to acquire certain assets of Steve & Barry's. In addition to acquiring merchandise inventories and transfer rights to Steve & Barry's store leases, BH S&B Holdings will acquire all Steve & Barry's intellectual property rights, including its celebrity and brand licenses, and the company's key facilities, including its Port Washington, New York headquarters, Columbus, Ohio distribution center, and certain overseas offices.The acquisition is expected to be completed Monday, August 25th. Bay Harbour plans to keep open about 150 of the chain's 276 stores. [http://online.wsj.com/article/SB121928724578959315.html?mod=googlenews_wsj]

Bankruptcy documents reveal annual sales of $656.6 million dollars.

References

External links

* [http://www.steveandbarrys.com/ Official Web site]
* [http://company.monster.com/stebar/ Monster.com description of Steve & Barry's]