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Blue Bee Closes State Street Stores Amid Sting of Economic Downturn

Santa Barbara-based specialty retailer shuts its doors and Web site for good after initiating deep discounts in February

Blue Bee, a Santa Barbara-based high-profile designer and contemporary specialty retailer, has gone out of business, closing its three State Street stores and its Web site.

Co-owners Marty Bebout and John Doucette said in a statement that a tough economy and changing consumer tastes were some of the reasons Blue Bee decided to close its doors.

“John and I have decided to close the Blue Bee stores,” the statement reads. “We are very grateful to the customers that have supported us and for the town of Santa Barbara that has embraced us and made us feel at home. It has been a wonderful experience that we will always hold close to our hearts. There is a lot of sadness as we close this chapter in our lives, but an equal amount of excitement as we continue onto new endeavors.”

The retailer sold designer fashions ranging from gowns, suits, denim and footwear since 2000. What started as one store expanded to five State Street locations by 2007: Blue Bee, Blue Bee Jeans, Blue Bee Men, Blue Beetle and Honeycomb. The company employed more than 60 people before it downsized to three stores by 2009.

Blue Bee’s price points ranged from $40 for a T-shirt to $2,000 for a gown and $3,000 for a suit, often competing against nearby department stores.

Blue Bee started a sale that discounted all products 40 percent on Feb. 28. The sale escalated to 70 percent before Blue Bee posted signs on its stores that read “Closed to clean up after our big sale. We will reopen Thursday.”

“After 10 amazing years Blue Bee has closed its doors,” its Web site reads. “Thank you for your support!”

State Street has undergone many changes during the past year. Forever 21 moved into Anthropologie’s former location last year, Barnes & Noble will be replaced by H&M and Marshalls will move into Borders’ previous space. REI is also slated to hit Lower State Street this fall.

Retail outlets have recently come to State Street because of a drop in occupancy costs, or the rent plus utilities, common area maintenance and taxes, said Jim Haslem, principal at consulting group Huntley, Mullaney, Spargo, & Sullivan Inc.

“What we’ve seen in spades in Santa Barbara is the occupancy costs have proven to be too high,” Haslem said. “When revenue drops that significantly and retailers are on the hook for occupancy costs, the store is now losing money.”

Sales aren’t plateauing at the level they did from 2005 to 2007, and it’s difficult for retailers to recover, he said.

“Around 2006, there was a huge amount of optimism before the bubble burst in real estate, and landlords were opening up locations that in hindsight rents were way too high,” Haslem said.

He said national retailers bid up rents and excluded mom-and-pop businesses from the market. Now that leases have dropped, he added, smaller boutiques and businesses have a chance to move in.

“The days of mom-and-pop businesses aren’t over by any means; it’s just a question of getting an affordable lease,” Haslem said.

Although the future of the Santa Barbara retail sector is uncertain, the loss of Blue Bee doesn’t sit well with some consumers.

“Just went to ... I am devastated. Loved you guys and your stores so much,” a Facebook user wrote on Blue Bee’s page.

Noozhawk staff writer Alex Kacik can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Become a fan of Noozhawk on Facebook.

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