Steve & Barry's seeks bankruptcy protection

Discount chain Steve & Barry's is the latest retailer to file for bankruptcy as consumers cut spending. (Mark Lennihan/Associated Press/File 2008)

WILMINGTON, Del. - Steve & Barry's LLC, the discount seller of clothing lines by celebrities including Sarah Jessica Parker, sought protection from creditors, joining at least 10 US retailers in bankruptcy this year as consumers cut spending.

The company, based in Port Washington, N.Y., listed $693.5 million in assets and $638 million in debt as of May 31 in documents filed yesterday in US Bankruptcy Court in Manhattan. The company said in a statement it eliminated 172 jobs yesterday and plans to consolidate offices while seeking a sale to repay debt.

"The generally poor environment for apparel retailers has reduced funding to our suppliers, landlords, and to our company," Steve Shore and Barry Prevor, the founders and cochief executives, said in the statement.

The childhood friends, who made silk-screened T-shirts and sold them for $1 each as teenagers in suburban New York, founded Steve & Barry's in 1985, when they opened a clothing store at the University of Pennsylvania, according to the company's website. The chain now sells lines including Parker's Bitten.

Stores are open, accepting gift cards and returns, Steve & Barry's said. The company, with 275 stores in 40 states, opened 10 stores this year and had plans for at least 10 more, according to its website.

Sales rose 70 percent in the first five months of 2008 from a year earlier, Steve & Barry's said, not enough to make up for surging fuel and material costs and tighter budgets for shoppers.

Suppliers recently cut access to products and services, and landlords stopped making payments for construction work, forcing the company to default on loans, Shore and Prevor said. The Wall Street Journal reported last week that the company might be forced to liquidate.

Linens 'n Things, Sharper Image Corp., Bombay Co., and Goody's Family Clothing also sought bankruptcy protection this year as credit becomes harder to obtain and consumers struggling with higher gasoline costs cut back on nonessential purchases.