Thursday, July 24, 2008

Steve & Barry's Bankruptcy

Steve & Barry's filed for bankruptcy on July 9th. 172 management positions were cut immediately and the company is considering selling off some or all of its assets to pay off its debt. The company blames it's problems on the economy and, yes, the media, but apparent a bigger problem was the company's reliance on hefty payments from malls to locate there. As the payments from the malls slackened the profits on $6 t-shirts weren't enough to make up the difference. This comment posted by an apparent S&B ex-employee is indicative of the management problems of the company (if true):

The first indication that I had was that the St. Louis area store that I was assigned to train at was a three story, 142,000 square foot space. The ground floor was basically empty with loosely thrown together warehouse space in the corner, and the top floor had been previously used as a sales floor, but the store did not drive enough sales to keep it open. So, of the 142,000 square feet, only about 50,000 were even used.

Secondly, because they had no real way to track inventory, I had to spend a few weeks packging and shipping out truckloads of inventory to other stores, only to have the exact same products show up on our receiving dock the very next day. I was told that this was a weekly occurence, and that I might as well get used to it. You have to sell quite a few t-shirts at $6 each to make up for the $3,000 per truck freight bill.

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