One of downtown Silver Spring’s more recent arrivals could be its latest departure. The Steve and Barry’s fashion chain has filed for bankruptcy, according to several sources.
“The generally poor environment for apparel retailers has reduced funding to our suppliers, landlords, and to our company,” the Washington Business Journal ripped from a company press statement. “It has become increasingly difficult for us to continue operating normally under these circumstances.”
For now, the store inside downtown’s City Place mall remains open for business and will honor gift cards and store credits as usual, the company said. That store opened in the basement food court in December without fanfare or advertising.
Steve and Barry’s managed to keep its prices low by negotiating cut-rate leases with landlords, BusinessWeek wrote last year. Most stores are in middle-market malls, which have been losing tenants to department-store consolidation and out-of-mall retailers.
“Some of these [mall owners] are desperate,” Deutsche Bank real estate analyst Louis Taylor told BusinessWeek.
It’s unclear whether City Place offered any financial incentives for the company to set up shop. But Aurelia Martin, spokesperson for the mall’s management, admitted in October that the shopping center had been in “a long, downhill beat.”
As it turns out, financial incentives may have been Steve and Barry’s only source of income, The Washington Times wrote. Translation: They didn’t make dime one through merchandise sales, bankruptcy attorney Stuart Hirshfield explained to The Times.
“Mall owners need to think about how they are going to protect themselves” instead of reeling in unprofitable retailers with the lure of cash money, Hirshfield told The Times.
As part of the game plan, the company will cut 172 corporate and field-staff jobs, the Biz Journal reported. The company also could be sold to pay off its debts.
It’s unclear whether the City Place store will close, or if construction on the Wheaton Plaza site will continue.
Thanks to Penguin reader Johnny Blaze for the tip.
Lead photo by Ron Pace/SSP. Embedded image courtesy of the Celebrate Silver Spring Foundation.
August 21, 2008
3 Comments at "Steve and Barry go broke"
Way to jump on the story, Jen.
I guarantee City Place’s management paid Steve & Barry’s a hefty “incentive” to move in.
This story says a lot about City Place itself. The only new, major retailer to locate there in years had to be, um… PAID OFF. Yikes. What that means, to me, is that City Place’s owners aren’t in a good bargaining position when it comes to attracting retailers. So, there’s little chance we’ll see a “big-box” anchor store there anytime soon—even if the economy improves. Sad.
Wait a minute! S & B’s business plan was to cover overhead and make a profit through kickbacksI mean cash incentives? Come on, who approved that idea?
Darn, I love my Bitten shorts and tops, too. But I knew it was too good to be true. There was a surreal vibe in the store. Like the people working there were kind of faking it. Maybe they weren’t really employees at all, just got a kickback, um, incentive in free merchandise.
I went to the Steve and Barry’s store this weekend. It’s down on the bottom level, off the old food court. It’s actually very nice, much nice than the Steve and Barry’s store I was in near Detroit. There’s a good range of clothes, shoes, and jewelery in lines bearing the names of various stars (Ben Wallace, Sarah Jessica Parker, Serena Williams, Marbury, some vaguely Hawaiian surf line, etc. I was pleasantly surprised. They were doing good business, too.
Holler back.