Steve & Barry's LLC (Port Washington, N.Y.) is seeking about $30 million of financing to remain in business. If it is unable to secure backing, reported the Wall Street Journal, it might have to seek protection from creditors sometime in the next month, according to creditors, bankruptcy lawyers and retail experts familiar with the matter. The Journal said the retailer has hired Goldman Sachs Group Inc. to seek out financing and has hired a bankruptcy lawyer to advise it on a restructuring,
Steve & Barry’s had been one of the country's fastest-growing store chains, regarded by many as the future of discount retailing. It boasted of massive expansion plans and touted well-known promoters like actress Sarah Jessica Parker, professional basketball player Stephon Marbury, tennis player Venus Williams and actress Amanda Bynes. It has 270 stores in 40 states and has opened nine stores in the last month alone.
In a 2006 interview with the Journal, co-founder Barry Prevor said the U.S. market could support 5,000 stores. Its founders have dubbed their effort the “Google of retailing.”
The Journal said that some of the forces pushing Steve & Barry's growth were not tied to end-consumer demand but rather to the needs of mall owners in a softening commercial-real-estate market. Much of the company's earnings came in the form of one-time, up-front payments from mall owners. Those payments were designed to lure the retailer to take over vacated sites. Without these payments, the stores are barely profitable, if at all, people familiar with the company's finances told the Journal.