Retailer Steve & Barry's Joins Other Gaffes At Retailers Boston Market And Krispy Kreme

It seems every so often the world becomes enamored with a new retailing concept. The most recent was Steve & Barry's. Enthusiasm for Steve & Barry's was overly optimistic as much of the profits weren't coming from operations but instead were coming from payments made by real estate owners enthusiastic to lure the discount fashion chain. Do we ever learn? Might a real estate owner actually wish to see an income statement before paying someone to sign a lease? Paying someone to sign a lease in this environment? Steve & Barry's has declared bankruptcy. This reminds me of the same sort of foolishness that duped investors in the retailers Boston Market and Krispy Kreme. Both chains made more money generating fees associated with opening new stores than they did from selling goods.

I really don't think we can classify this as an economic calamity. To the contrary, discount apparel and fashion should be doing well comparatively in this environment. I suspect they have a sustainable business model on some level given the chain has been around for over twenty years. Discount retailing is a business for only the most prudent as margins are incredibly thin. Management likely took their eye off of the ball. It's time to hire someone that actually knows how to manage cash flow.