Deja vu: Steve & Barry's rumored to be closing

Just three months ago, it looked like Steve & Barry's had dodged a bullet and would be continuing operations, slightly downsized. But now there are new reports that the chain will be closing.

The company, which was bought out of bankruptcy in August, laid off many of its corporate staff Monday, including its newly appointed chief executive, Harold Kahn, sources said. Only a skeleton crew of about 30 remains.

The layoffs came as a surprise, and no reasons were given, the source said. The chain has four Long Island locations and more than 5,000 employees.

Investment firms Bay Harbour Management and York Capital Management bought the ailing clothing retailer out of bankruptcy at the end of August as the economy and the retail sector continued to slide. Even as the greater economy appeared to be crumbling in October, Steve & Barry's seemed to be pushing forward, announcing Kahn's hiring and preparing for a new Manhattan store opening that had been planned months earlier.

But in reality, the company was not generating enough sales, according to a source. Gun-shy vendors were demanding upfront payment for spring inventory and the cash infusion needed grew far beyond original expectations, the source said.

If the reports are true, I'll be sorry, since I really like S&B's clothes, the stores' ambience, and (of course) the prices. The chain enjoyed sufficient success, combined with some obvious errors, that I imagine someone will try a similar plan soon.

Update, Thursday 20 Nov: The rumor has been confirmed.