Case Number: 5-309-501, Year Published: 2009, Revision Date: August 02, 2010
HBS Number: KEL446
Strategy, Retail, Product Differentiation, Growth and Change, Bankruptcy, Private Equity
Steve & Barry’s grew rapidly in the mid-2000s, transitioning from a chain of small stores selling inexpensive collegiate-branded merchandise near university campuses into a $1 billion mall-based giant selling a wide variety of low-priced, celebrity-endorsed apparel. While the company had a wide following, elements of its growth strategy—potentially exacerbated by economic conditions—contributed to its quick downfall. By 2008 Steve & Barry’s had declared bankruptcy, and various private equity firms were investigating whether some or all of the company should be saved. This requires analyzing the underlying business strategy pursued by Steve & Barry’s before and after its growth phase and specifically diagnosing the explanations for its failure.
This case presents an initially successful firm whose product positioning, marketing, financial, organizational, and operations strategies are highly complementary. In analyzing the case, students will identify how the complementarities broke down during the firm’s growth phase, ultimately precipitating its downfall. The diagnosis may reveal elements of the firm’s strategy that are worth saving, or suggest related opportunities for profitability using a similar business model and approach.
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