Jewellery (jewelry)

By Vicki M. Young and Sharon Edelson The retail shakeout continues.

Once high-flying Steve & Barry’s University Sportswear is scrambling to raise $30 million in financing ? and is up against increasingly difficult odds.

Meanwhile, Whitehall Jewelers said Monday that it had filed a voluntary Chapter 11 petition for reorganization in a Delaware bankruptcy court, just a few months after acquiring a bankrupt jewelry chain.

The news at Steve & Barry’s and Whitehall perhaps contributed to a steep fall in retail shares on Wall Street on Monday, even though the overall market stemmed its steep declines of last week. The Standard & Poor’s Retail Index dropped 2.5 percent to 370.37 even as the Dow Jones Industrial Average and the S&P 500 remained relatively steady, ending the day at 11,842.36 and 1,318, respectively.

Rapid expansion, thin margins and a swollen portfolio of licensed brands are exacting a high toll on Steve & Barry’s, which not too long ago was talking a potential initial public offering. With what seemed like ample lines of credit in place, the sudden fall from grace surprised financial and retailing executives on Monday.

One of the few signs of difficulties surfaced about three weeks ago when there was speculation that designers involved in the store’s Sarah Jessica Parker celebrity line Bitten were leaving to seek jobs with other retailers.

According to one retail executive from a higher-priced chain, Steve & Barry’s has had two major flaws in its strategy ? taking on too many leases too quickly, and selling merchandise at prices so low they rival Wal-Mart’s.

“I don’t know how you can sell goods at no markup, at $8 or $9, and expect to make money. The merchandise is [cheap] and they rolled it out and overextended,” the executive said.

The Port Washington, N.Y.-based casual apparel sportswear chain has been one of the fastest-growing U.S. retailers, with more than 250 stores in operation in 40 states, but even with its celebrity-studded brand portfolio, its popularity among fashion-conscious shoppers with thrift on their minds isn’t getting it too far in its search for financing. Pointing to the aftermath of the subprime mortgage debacle, one financial source noted, “Everyone is still cautious, to the point of making fewer loans because they’d rather err on the side of caution than risk more bad loans on the books.