Econometrics: When Even the Cheap Clothing Store Cannot Survive

Steve and Barry’s filed for Chapter 11 bankruptcy protection today. It seems that their margins were too slim to survive the retail downturn and they were unable to gain new lines of credit. They are well noted for being a born and bred Long Island company though only 4 out of 276 stores are located on Long Island. Steve and Barry’s were out to change the retail world providing fashionable clothes at inexpensive prices. They claimed to have found the secret to making it happen even signing up sports stars and celebrities to "create" affordable lines of clothing. Clothing was initially sold at $8.98 or less but they planned to add clothing lines priced up to $19.98 as they increased celebrity branding.

It seemed logical to expect that Steve and Barry’s were poised to reap the benefits of selling inexpensive clothes just when everybody needed them though they are not the only ones with the concept. Others such as Century 21 Department Stores and H & M are specialty stores in the discount fashion sector though they do not have a fixed price range or exclusive clothing lines like Steve and Barry’s. I half-expected the tweens and teens to be grudgingly dragged to Steve and Barry's by their overextended mothers who adamantly refused to continue to pay the outrageously inflated prices at Hollister or Abercrombie.

In fact, I visited Steve and Barry’s last week in my quest to find myself some affordable summer clothing. Alas, the clothing was a tad too trendy for this middle aged lady even though they claim to have clothing for the whole family. I did try a few things on then promptly ran out of the dressing room and out of the store realizing that the style and fit of Steve and Barry’s clothes were definitely not going to flatter this body.

The current economy keeps shaking out surprises. Companies that you expect to do well are in the toilet. Many of the stalwarts of the Dow Jones Industrial average are in financial trouble. The Dow can swing up over 100 points on one day and lose over 200 points the next. I don’t care what any of the pundits say, all I know is that this is not how financial markets are supposed to behave. Nevertheless, the future is anyone’s guess for Steve and Barry’s. The rumor mill is spewing speculation ranging from the closing of 100 stores to total and utter liquidation. It is possible that Steve and Barry’s can emerge from Chapter 11 a much smaller enterprise and with their core mission intact but right now it appears that their enterprise may be too broken to glue any of the pieces back together.