Field Report from Steve & Barry's: What a Bankrupt Retailer Looks Like

While I was writing this story, Steve & Barry's filed for reorganization. The Wall Street Journal predicted Steve & Barry's Chapter 11 filing yesterday, saying that rescue financing and takeover talks with Sears Holdings had come to nothing. The filing alludes to potential sale of assets, but says business continues as usual in 39 states.
Blame was assessed to the economy, the credit crunch, and of course the media, in a statement released by co-CEOs Steve Shore and Barry Prevor:

"Our 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. ... The Company invested substantially more in capital expenditures last year than the amounts reimbursed, and unfortunately, the Company has not yet had an opportunity to fully realize the planned returns from these investments. These challenges have impacted operations, caused inventory and fixtures to lie idle while incurring interest and storage costs, and reduced liquidity. Even with our strong growth and sales performance which far outpaced the industry, tough economic times, the credit crisis, and a landscape of other troubled retailers reduced the appraised value of our inventory and our access to funding. Recent rumors and speculation surrounding Steve & Barry's financial situation have become self-fulfilling prophecies. Many suppliers are rightfully nervous and cutting off access to services and supplies. Landlords have stopped remitting contractually-owed payments for construction and store opening work performed by Steve & Barry's. 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."

Dear God, they deserve every pixel of bad press. This bankruptcy is not the product of a poor economy; it's a demonstration of fear, greed, and really poor store execution.

• Brand Statement: Too many clothes, not enough customers. TVs everywhere, blaring away with video loops of Steve & Barry's celebrity endorsers like Stephon Marbury. My 13-year-old daughter's immediate reaction was, "Can we leave now?" When a female teenager is squicked out by a clothing store, something is deeply awry.
• Design: The Sarah Jessica Parker Bitten stuff is cute, but such poor quality it makes Old Navy look like couture. The button on a pair of capris came off as I took them off the hanger. Fabrics are thin to the point of transparency, fastenings cheap.
• Manufacture: Sizing is completely whack. They claim to run up to size 22, but I saw very little beyond 14. Nothing fit me, and I don't mean that in the "Does my butt look big in this?" sense, but in the "Did they use fit models at all?" sense, as if the fabric was cut and sewn randomly.
• Inventory control. Here's where it got deeply weird, Hunter Thompson weird. Unforgivable assortments of stuff: 12 blue Ts, all size XS, 12 pink Ts, all size S, no other sizes in evidence. The place is full to bursting with clothing from every season of the year -- down jackets, fuzzy gray mitten-and-hat sets, and boots are next to short shorts and baby T's. When you're selling everything at a rock-bottom price, I guess there's no point in taking further markdowns, or segregating the off-season stuff on a clearance rack -- or in the back room.
• Merchandising: Up front, the Amanda Bynes and Laird Hamilton summer wear was displayed attractively, but at the back of the store, in the kids' department, holiday signage over racks of sweatshirts and jackets still says "'Tis the season to be nice," with photos of kids in woolly scarves. There was a holiday recently, but it was the Fourth of July.
• Staffing: Some of the dressing room locks were taped open because they don't have the staff to monitor them. Customers ran the risk of being on display en dishabille (that's French for "in their undies"). I saw three employees in the store, which is an enormous former Media Play in a big box center whose anchor, Builders Square, has been vacant since 1999.It's been widely reported that Steve & Barry's has stayed afloat via inflated up-front payments for tenant improvements from landlords desperate to fill empty spaces.

If you ask me, Steve & Barry are bankrupt in more than one sense of the word.