Eddie Bauer: Lost touch with its brand, probably headed for bankruptcy

According to some reports, outdoor outfitter Eddie Bauer may seek bankruptcy protection as early as this week. On the bright side, however, three companies -- Hilco Consumer Capital, CCMP Capital Advisors, and a private-equity firm based in New York -- have expressed interest in buying Bauer's assets.

Admittedly, it's been a tough year for outdoor goods retailers. In 2008, LL Bean, perhaps America's best-known outfitter, had a 7.8 percent drop in sales. While this seems minor in comparison to the miseries suffered by many other American businesses (including Bauer), it's worth noting that Bean's annual revenue has only fallen three times since 1960.

On one level, this trend is odd: Between 2007 and 2008, camping vacations went up by 7.4 percent, driven by consumers who were looking for cheap, fun escapes. Unfortunately, however, many outdoorsmen are apparently buying their supplies from cheaper vendors.

Then again, calling Eddie Bauer a wilderness outfitter is stretching the definition a little bit. While the store originally specialized in serving the needs of outdoorsmen, its line has expanded to the point that it now seems more like a mashup of the Gap, J Crew and Land's End. With an impressive line of oxford shirts, khaki pants, and leather loafers, the brand has, arguably, become unrecognizable.

While the stores' move into business casual attire is bizarre, its parent company -- Eddie Bauer Holdings Inc. (EBHI) -- seems to have gone completely off the deep end. The slightly-more-rugged-than-usual Eddie Bauer baby stroller might have some tenuous link to the company that once outfitted expeditions to K-2 and Antarctica, but the branded "Eddie Bauer Occasional Table" most certainly does not. Similarly, while the Eddie Bauer Ford Expedition may be in line with the famous brand, the Eddie Bauer 400-thread count Egyptian cotton percale sheets border on travesty.

It's not as if bankruptcy is a new experience for the brand. The original Eddie Bauer retired in 1968, and his company was subsequently bought by General Mills and Spiegel. When the latter went bankrupt in 2003, it sold all of its assets except for Bauer and re-emerged under the name "Eddie Bauer Holdings, Inc." Of course, as the brand's subsequent dilution demonstrates, Spiegel seems to have set about re-creating its original business under the Bauer umbrella.

This bankruptcy has been coming for a while. The company has had three years of losses, and carries $188 million in long-term borrowing, against $2.6 million in cash. In fact, two years ago, the company tried to sell out for $285 million, but was thwarted by shareholders. Currently, Bauer's shares are trading for 24 cents, down 54 percent this year.

Here's hoping that Bauer's next owners, whoever they may be, appreciate the brand's key identity, lest the public be subjected to atrocities like Eddie Bauer Expedition Thongs or a return of Eddie Bauer dinnerware!
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