Chic and Cheap and Chapter 11

Even in hard times, Americans have had style.

There was certain look to the Depression (albeit with soft edges provided by Hollywood) and the disco funk of the stagflation 70's. The recession of the early 1990's gave birth to grunge.

But this recession wears no clothes.

Apparel sales have been very weak this year across the board from department stores to discounters to specialty shops. Standard & Poor's last week said that apparel sales in the first quarter fell 9 percent and it expected to be flat or up slightly for the rest of the year.

The latest sign of the economic clothes crunch comes in reports that Steve & Barry's, a once-hot chain of 276 stores, will file for Chapter 11 bankruptcy protection today. Founded in 1985, the chain became famous in recent years for offering affordable fashion with labels tied to celebrities like Sarah Jessica Parker and Venus Williams.

But the private company fell victim to the credit crunch when it could not arrange financing and defaulted on a loan from General Electric.

The company may have also fallen victim to its own hype. "Steve & Barry's is single-handedly changing the retail landscape," the chain says on its web site, by providing "premium apparel at impossibly low prices."

Luxury stores focus on their premium image and have wide margins. Discount shops focus on price and keeping costs down. It's a difficult trick to combine the two even in good times, and the slump in consumer spending may have made it impossible.

"Steve & Barry's mantra seemed to be, 'You can get it here less expensively,' " Steven B. Greenberg, president of The Greenberg Group, a real estate adviser to retailers, told Newsday. "They were overly excessive about that."

Update: Steve & Barry's did file for Chapter 11 protection in the federal bankruptcy court in Manhattan. Its stores are open, and the chain will honor gift cards and returns.

In a statement, the chain's founders and co-C.E.O.'s, Steve Shore and Barry Prevor, said:

"High costs of materials and fuel prices have increased our cost of goods and cost of operating. Our customers are feeling the pain of high food and gas prices and declining home values, and many of them are being forced to shop closer to their homes and cut back on discretionary purchases. The generally poor environment for apparel retailers has reduced funding to our suppliers, landlords, and to our company. It has become increasingly difficult for us to continue operating normally under these circumstances."