AUBURN – Steve & Barry’s, the trendy discount clothing store that is one of the Auburn Mall anchors, is closing as a result of the retailer’s bankruptcy and reorganization.

BH S&B Holdings, a newly formed affiliate of two investment firms that took control of the retailer’s assets, made the announcement Tuesday, although the Auburn store began its “Store Closing Sale” last weekend.

“We first learned about it when we saw the big signs go up Friday,” said David Lee, mall manager. “We were a little disappointed at the communication.”

Steve & Barry’s opened in late December, occupying space formerly held by Porteous. The 60,000-square-foot store was the first Steve & Barry’s in northern New England, selling stylish, celebrity-inspired clothes and accessories for less than $10. The store’s entire inventory is priced at $8.98 – the same price as when the store opened last winter. A closing date was not announced.

“To better position Steve & Barry’s to reach its profitability goals, BH S&B Holdings is going to run the chain as a smaller base of stores of approximately 170 stores (vs. 276 pre-bankruptcy),” according to a company statement.

The retailer filed for bankruptcy protection in early July, citing a “generally poor environment for apparel retailers” that reduced funding to itself, suppliers and landlords. Steve & Barry’s, which started in 1985, made a name for itself by adopting maverick business practices like buying direct from factories in Africa, rather than China, where there are fewer U.S. duties and quotas. It describes itself as “maniacal” about cost controls, leveraging very favorable lease rates from middle-market malls in exchange for drawing hordes of young shoppers.

Lee declined to reveal details about Steve & Barry’s lease with the mall, but said there were no red flags about the Auburn store, that it seemed to be performing well. It is the second-biggest store after J.C. Penney’s, which occupies almost 100,000 square feet.

“Operationally, we saw a lot of Steve & Barry’s bags up and down the mall,” he said.

He and mall owner George Schott will be marketing the space “very aggressively” said Lee, as soon as it becomes available.

“It’s obviously in good shape, with a new roof, new floor, new lighting,” he said, referencing a wholesale renovation of the space which had been vacant since Porteous closed in 2002. “Hopefully we’ll get someone pretty soon, but it’s fair to say we expect it will take a while.”

He said they intend to approach retailers that are already in malls in Augusta, South Portland and Bangor, whether national or regional retailers. But they are prepared to be patient.

“Leasing in general … is going to be a little bit off this year and the beginning of next,” said Lee. “We would love to get another single retailer in there, but if we can’t … the backup plan is to get a couple of folks in there.

“We’ll be talking to everybody.”

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