Cost-cutting is under way, with 172 corporate and field staff positions being terminated. Potential store closings have not been determined, said a company spokeswoman.
"The company is carefully reviewing its operations, including its store base," the spokeswoman said. "But no decisions have been made."
Sales seem not to have been the problem, with the chain reporting a sales increase of 70% for the first five months of 2008 over the previous year, and comp-store growth of 15%. Instead, the company cited a combination of factors, including general economic conditions and a liquidity shortfall resulting from volatile credit markets affecting its store opening plans and borrowing capacity.
"High costs of materials and fuel prices have increased our cost of goods and cost of operating," said founders and co-CEOs Steve Shore and Barry Prevor in the press release announcing the filing. "Our customers are feeling the pain of high food and gas prices and declining home values, and many of them are being forced to shop closer to their homes and cut back on discretionary purchases."
In addition, postponements in store openings resulted in delays in landlord reimbursements for grand opening expenses. Rumors of financial problems led suppliers to cut off services and goods, and landlords to cut off payments for construction and store opening work. Loans are now in default.
"Every member of our management team has been devastated by these events," Shore and Prevor said. "We have been through 23 years of economic cycles, but we never thought it would be possible for things to change so quickly and dramatically. We brought on the best advisors and experts in the industry, but we were not able to find a solution without filing for Chapter 11 protection. We are in discussions with potential strategic and financial partners and working on solutions for a stronger Steve & Barry's to emerge from this process. We will continue to do everything possible to achieve the best outcome under the circumstances."
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