Eddie Bauer explores a possible sale
Just more than a year after emerging from a high profile bankruptcy and only months after launching an aggressive new branding initiative that failed to meet expectations, Eddie Bauer Holdings Inc. is exploring selling the company.
Eddie Bauer, No. 46 in the Internet Retailer Top 500 Guide to Retail Web Sites, says the company is exploring various strategic alternatives to increase shareholder value, including a possible sale. The company has retained Goldman, Sachs & Co. as its financial advisor to evaluate and assist with a possible sale.
Eddie Bauer isn’t saying much about its reasons for a possible sale. It also isn’t saying if the company, which had 2005 total sales of $1.2 billion and web sales of more than $200 million, has any pending offers.
But a possible sale, just a year after emerging from bankruptcy, is surprising many retail analysts. “The timing for this announcement is very unusual,” says Jim Okamura, senior partner at retail consulting firm J.C. Williams Group. “There really hasn’t been time for their new senior management to turn things around.”
After several years of lackluster performance, Eddie Bauer overhauled its multiple shopping channels and brands in time for the 2005 holiday shopping season. In summer 2004 Eddie Bauer hired former J. Crew Group Inc. executive vice president Kathleen Boyer as chief merchandising officer and a new head of design. Going into the 2005 holiday shopping season, Eddie Bauer also substantially redesigned its clothing lines by incorporating a wider range of color, more novelty pieces, and updated products with modified style, fit, premium fabric, trim and hardware, the company says.
But the new merchandising plan isn’t catching on with consumers. “Our results from the Fall/Holiday 2005 rollout as a whole were disappointing and indicate that our customers did not respond positively to some of the changes we made to our product offerings or marketing approach,” the company says in a recent SEC filing.
If the company does pursue a sale, Eddie’s Bauer’s e-commerce operation, which included about 40 million visits to EddieBauer.com and EddieBauerOutlet.com in 2005, will be a key asset in attracting buyers, Okamura says. “Almost 20% of their revenue comes from the web,” Okamura says. “Their web operation will be a big point of interest to potential buyers.”
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