Sharp intake of breath!

OMG, I hope they can climb out of the hole...I LOVE this store. Cute, cute stuff and most of it is under $10! (I love SJ Parker's stuff.)

Steve & Barry's files for bankruptcy protection

NEW YORK - Steve & Barry's LLC, once a growing force in low-priced fashion retailing, said Wednesday that it filed for Chapter 11 bankruptcy protection, the latest merchant to succumb to a harsh consumer spending climate.

It also announced that it was considering a plan to sell all or some of its assets to repay outstanding debt, and was eliminating 172 corporate and field staff positions immediately. Wendi Kopsick, a spokeswoman for the company, said no decision had been made about how many stores it would close.

The Port Washington, N.Y.-based chain operates 276 locations in 39 states and made a big splash with merchandising endorsements with actress Sarah Jessica Parker, NBA star Stephon Marbury and other celebrities.

The Steve & Barry's bankruptcy is the latest blow to malls, which are confronting rising vacancies, though at the moment the filings have been limited to smaller retailers.

Steve & Barry's officials blamed a cash crunch as a result of tighter credit markets and sluggish economic conditions. That hurt its plans to open stores and its ability to borrow money.

"It has become increasingly difficult for us to continue operating normally under these circumstances."

"As a result of all of this, our loans have gone into default, and we have had no alternative but to file Chapter 11 to enable continued operations," they said.

The bankruptcy filing marks a hard and fast fall for Steve & Barry's, founded in 1985. Its success was built on selling $10 fashions while keeping costs low by using virtually no advertising, manufacturing its own clothes and selling in large volume.

In fact, its low-price fashion formula should have thrived in this environment as shoppers have been trading down to cheaper stores. But the founders conceded that in this climate, marketing prowess and cheap prices just weren't enough.

From a sales perspective, the company's founders said that the chain performed well, with total sales in the first five months of 2008 rising 70 percent; average store sales rose 25 percent and same-store sales, or sales at stores open at least a year, rose 15 percent. In particular, its exclusive branded lines of merchandise created with Parker and others have performed "exceptionally well." Kopsick noted that the celebrity partnerships are still intact and that Parker and the other stars are working closely with the retailer. She added their support has been "incredible."

Despite what company offical describe as strong sales, that wasn't enough given the overall tightening of credit and harsh economic environment. The company noted that high costs of materials and fuel prices have increased the costs of goods and cost of operating. Company founders also noted that its 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."

Full story here

http://news.yahoo.com/s/ap/20080709/ap_on_bi_ge/steve___barry_s_bankruptcy