Home»»
After burning through $30 or so million, lack of additional funding derailed eco-friendly, apparel retailer Nau. The firm declared bankruptcy; then was bought by the Horny Toad apparel brand. An unmet need for financing is also sinking Steve & Barry’s--now in the midst of a bankruptcy filing.
Nau was a recent start-up, dedicated to green values and actually doing fairly well, up until the economy turned sour. The company’s problem then became that no one would give it that
$30 million in financing required to move forward. Nau simply ran out of dollars. Steve & Barry’s was a “hot property” apparel chain, with 275 stores--some of them with more than 100,000 sq. ft., and with around 17,000 employees. The retailer was known as the “fastest growing retail chain” in the country--opening new stores at a torrid rate for the past few years. Mall developers were in love with Steve & Barry’s, who often leased less desirable, vacant spaces in malls--and malls gave the retailer generous financial perks to do so, which helped it thrive.
With its low prices [many items cost $10 or less], Steve & Barry’s was well stanced to take advantage of shoppers on the lookout for cheaper goods to help compensate for higher gasoline and food prices. (Price-conscious retailers Wal-Mart and Costco have gained audience in these tighter economic times.) But the lack of financing proved to be Steve & Barry’s undoing. Sears Holdings Corp. is said to be considering a bailout or partial purchase of the company.
In the current risk-adverse economic climate, sources of financing are, quite simply, drying up. Other retailers with precarious numbers or slim margins and a dependency on continuing financing may be headed for trouble. Perhaps the cautionary tale is: watch out for $30 million--that seems to be the flash point! It sounds like a lot of money...but maybe that was in yesterday’s dollars. A dollar doesn’t buy you much these days--in the United States or abroad.
--Diva
Comments