Did $8.98 Dresses Do Steve & Barry's In?

Yesterday, the Wall Street Journal and NY Times reported that discount retailer Steve & Barry's was facing bankruptcy. The chain had boasted how it took undesirable real estate and survived on very small margins to offer good quality, trendy clothing at low prices. Sarah Jessica Parker's lawyer said his client, who created a line of clothing for the company, was "surprised and disappointed" given how strong S&B's accounting statements were, but the WSJ noted this: "People close to the company’s finances say most of the retailer’s earnings came in the form of one-time so-called tenant improvement payments from landlords of $2 million to $7 million per new store."

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By Jen Chung in News on July 9, 2008 4:02 PM

Comments [rss]

JRod5417

Wait, $9 dollar dresses are not profitable? What is this world coming to?!!

NannyState

Sears Holdings is running the same "scam". Since the value of their real estate holdings, including K-Marts, is far greater than the value of their retail business, they have leveraged those values to support their stock price while maintaining their stores as a defensive hedge against a lousy commercial real estate market. It's an equity play and investors are bidding on chips that can be called in, not sales of bras and duct tape.

babyhitler

So selling clothing was basically a sham so they could collect the tenant improvement payments? this is the equivalent of taking in orphans so they can get the government check.