The mind-bogglingly swift demise of privately held retailer Steve & Barry's brings to mind lessons investors have learned over the years about other retail wrong turns. The biggest takeaway is probably: "Buyer beware" -- in more ways than one.
Steve & Barry's claim to fame was peddling inexpensive apparel. It marketed itself as having a cheap-chic sensibility like Target
The Wall Street Journal has done an in-depth article on its downfall, which I recommend for the blow-by-blow account of the painful stumble. For example, a lot of the money that poured into its overheated expansion wasn't actually from sales. Rather, Steve & Barry's apparently raked in the dough because some desperate mall operators provided large upfront payments ("inducements" such as tenant-improvement allowances) to lure it into empty anchor spaces, which are viewed as key in generating mall foot traffic.
Long story short, things have not gone well as a perfect set of economic variables have clustered, some related to the economy at large, others simply inevitable given the company's strange and unsustainable means of expansion. It has also defaulted on its credit facility with major lender General Electric
The WSJ named two retailers that are said to be interested in buying Steve & Barry's (or at least some of its brands), so this is where I gasp, "Oh no, please, stop, say it isn't so." One is Gap
We'll see, but the current climate is so difficult, I don't see how a retailer that apparently never really proved its actual business model sounds like a swift acquisition idea (and that's just the tip of the iceberg with this company's difficulties). Perhaps Steve & Barry's is simply ready for retirement.