I haven't been more shocked at an article than I was yesterday when I read that one of my favorite retailers Steve & Barry's was reportedly contemplating bankruptcy reorganization.
This was the company that I predicted would sell for $1.2 billion this year.
I saved face on my estimate. Assuming business would keep up, my numbers weren't far off. The Wall Street Journal for the first time revealed details behind the private company, including the fact that its projected 2008 revenue was $1 billion and that private equity firm TA Associates paid $320 million for roughly half the company last year.
The conjecture would be that their small margin model relies on bulk selling and no matter what the price, the mortgage meltdown and high gas prices kept people away from malls, where most of their 270 stores are.
But we really have no idea if it's that or if the company had bigger eyes than it should have in terms of the real estate it took (overexpansion) and the infrastructure it was building to become the power in the retailing world so many had believed they would.
So the joke now is that if you can get things for their $8.98 at Steve & Barry's on an average day, what can you get it for when it's on sale?
Like anything these days, Steve & Barry's isn't in a vacuum. Just look at Cabela's, whose stock is hovering around an all-time low, down almost 50 percent from a year ago. Years ago, we applauded these guys for being absolutely awesome in the niche of hunting, fishing and outdoors. With gas prices being the way they are, you absolutely want to steer away from these markets. I have no idea how a Cabela's could do anything but pray things turn around quickly.
Things should be a bit better for Dick's Sporting Goods, who are also hovering around a two-year low thanks in part to being in the malls that are less frequented, but have a broader appeal. The only good chart I've seen from a sports retailer is Hibbett Sports, which is up 7 percent year to date after the stock was in a tailspin towards the end of 2007. The company has about 700 stores, mostly in small markets in the Southeast and Southwest.
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