By Sue Loughlin
TERRE HAUTE — Steve and Barry’s at Honey Creek Mall may be closing, after all.
The Wall Street Journal is reporting that the discount clothing retailer will announce this week that it is going out of business.
That’s less than three months after investment firms acquired the discount clothing chain out of bankruptcy for $168 million, the Journal reported Tuesday.
Now, Bay Harbour Management LC, which acquired 175 Steve and Barry’s stores, has hired a liquidation firm to handle the going-out-of-business sale for the chain, the Journal reported. About 5,000 employees nationally would be let go, the article said.
Representatives of Steve and Barry’s, based in Port Washington, N.Y. could not be reached for comment Wednesday by telephone or e-mail.
Monica Schiller, marketing director for Honey Creek Mall, said mall management hadn’t been notified about any imminent announcement that the chain is going out of business.
Jay Stout, a representative of Bay Harbour Management based in New York, said, “We have a policy of not commenting on our investments to the press.”
Meanwhile, the Steve and Barry’s outlet in Honey Creek Mall remained open for business Wednesday, with no indication that any closing is imminent.
Steve and Barry’s gained national prominence with fashion lines by celebrities such as Sarah Jessica Parker and surfer Laird Hamilton, the Journal reported.
Steve and Barry’s opened a 25,000-square-foot store in Honey Creek Mall in the summer of 2007.
Earlier this year, the chain filed for Chapter 11 bankruptcy protection and planned to reduce its number of stores nationwide from 276 to around 170.
At that time, it was anticipated the Terre Haute store would remain open.
Bob Guell, an Indiana State University professor of economics, said the store “sells things that are cute that people demonstrably don’t need. Things that are neat but not needed don’t tend to survive well in hard economic times.”
The stores also tend to locate in high rent spaces, such as malls, which again paves the way for problems in a recession, Guell said.
Other business chains selling things that people want, but don’t need, also are having a difficult time, including Circuit City and Starbucks, he said.
Serious recessions “tend to do a great culling job on the retail industry,” Guell said.
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.
Prevor and co-founder Steve 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.
Sue Loughlin can be reached at (812) 231-4235 or sue.loughlin@tribstar.com.
