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PORT WASHINGTON, NY-What began in 1985 as an on-campus retailer of licensed collegiate apparel at discount prices, Steve & Barry’s University Sportswear is on an advanced curriculum. The off-price merchant of a vastly expanded mix of basic apparel is moving into larger and larger anchor units at malls nationwide offering extreme discounts to a broad market base.

The privately held company has almost 50 stores in 16 states and plans to have at least 65 by the end of this year with another 50 on the drawing board for 2005. The reach is nationwide. The eight stores opening this month span from the Silver City Galleria in Taunton, MA to Regency Mall in Racine, WI and The Block @ Orange in Anaheim, CA. In size, the retailer’s units have expanded from an earlier average of about 50,000 sf to more than 100,000 sf, primarily at malls and power centers in spaces formerly occupied by bankrupt or contracting department stores.

Steve & Barry’s turns them into trendy destinations where banks of televisions broadcast football games and other live sports events. Despite the deep discounts, these stores have such upscale amenities as hardwood floors, hip graphics, lively logos and wooden hangers.

By contrast, price tags storewide are $8.98 and below for a range of merchandise from quality down jackets to jeans, running shoes, and wool jackets bearing the letters and colors of hometown teams. Stores in all locations carry licensed merchandise of local collegiate teams.

That no longer accounts for the majority of merchandise, however. Now there are huge selections of jeans, sweats, khakis, T-shirts and other apparel in basic styles, but in current fashion cuts, fabrics and colors. Originally targeted overwhelmingly to men, Steve & Barry’s has added selections for women and children.

As stores have proliferated, the retailer is attracting customers of all ages and income levels in cities and suburbs. During the back-to-school season, Steve & Barry’s opened at Colonial Mall Staunton, Colonial Properties Trust’s 423,000-sf mall in Staunton, VA. “Since Steven & Barry’s opening, Colonial Mall Staunton has experienced an increase in mall traffic generating increased sales for retailers throughout the mall,” says Charles Light, EVP of Colonial’s retail division.

The retailer relies on word-of-mouth advertising, and, according to the general manager of Northtown Mall, a Glimcher Realty Trust property in Blaine, MN, it works. She reports that customers in the store ring up friends on their cell phones to tout the prices and then actually take friends’ orders for merchandise.

“I’m very impressed with their product mix and the value they offer,” Howard Davidowitz tells GSR. He is chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking company based in New York, and points out, “because they’re a private company, no one knows their numbers. They are getting great real estate,” he adds, “because they’re taking up space that has been abandoned.”

Of the extreme-discount concept and rapidfire expansion, Davidowitz says, “no one has ever done this before. They are growing like crazy, and they are strong, but is it sustainable? The book is still out.” On the surface, Davidowitz says, “it looks like they are running up the value of the company, aiming for either an IPO or a sale. I don’t know that, but that’s the appearance of things,” he adds.

While it maintains a high profile among customers and mall owners, the company currently enjoys the luxury of private ownership. Alan Karo, Steve & Barry’s chief marketing executive, would not return phone calls for this article.

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