The profit from selling Michigan T-shirts for under $10 apparently isn't enough to keep Steve & Barry's, retailer of collegiate apparel, in business.

The famously low-priced clothing supplier, long an icon on State Street and in malls across the country, may be facing bankruptcy.

The Wall Street Journal reported last week that Steve & Barry's is considering closing more than 100 stores across the country and has fallen behind in payments to builders, suppliers and advertisers. The chain is seeking $40 million in private financing to avoid filing for bankruptcy.

Dave Smaby, the store's manager, refused to comment about the future of the State Street location. E-mail messages to Steve & Barry's media relations department for this story, the first sent June 26, received only an automated reply promising a quick response.

Aside from its bankruptcy troubles, the retailer took a hit when the University chose not to renew its licensing contract with 4004 Inc., the apparel company that supplies Steve & Barry's. Kristen Ablauf, the University's director of licensing, said the decision was made because of "concerns with their ability to fulfill their requirements of their license agreements."

Ablauf said 4004 Inc. had consistently been one of the University's top three licensees, generating between about $500,000 and $1.3 million a year in royalties. For the last three years, when the University earned between $4 million and $5 million a year from royalties, 4004 Inc. was the University's largest licensee.

Without University apparel and souvenirs to sell, the store on State Street may suffer the same fate as the Steve & Barry's near Purdue University, which closed in 2005. Purdue administrators told the Purdue Exponent, the school's student paper, that they decided not to renew 4004 Inc.'s license because it "persistently violated the terms of its contract."

Though Steve & Barry's financial situation has caused trouble for many businesses, a few may benefit. Robert Duerkersen, manager of Great Lakes Team Apparel next door to Steve & Barry's, said he will look forward to an increase in sales if the Ann Arbor store closes its doors.

"They create a lot of traffic," he said, noting that Steve & Barry's has about six times the square footage Team Apparel does. "I think we're going to get some of it, but not all of it."

- Steve and Barry's LLC currently owes The Michigan Daily $20,326 for advertisements. The Daily's editorial decisions are not affiliated with its business decisions, and business staff members played no role in the writing or editing of this story.