Eddie Bauer reportedly sold to San Francisco firm

Bellevue-based Eddie Bauer has reportedly been sold to Golden Gate Capital, an equity firm in San Francisco.

July 17, 2009 12:41 pm
Shoppers visit the Bellevue Square location as Bellevue-based clothing retailer Eddie Bauer filed for bankruptcy on Wednesday.
Shoppers visit the Bellevue Square location as Bellevue-based clothing retailer Eddie Bauer filed for bankruptcy on Wednesday.

Bellevue-based Eddie Bauer could have a new owner today. According to reports by Bloomberg News, Golden Gate Capital, a San Francisco-based leading private equity firm with $9 billion in capital under management, has offered $286 million for the company.

Reports say Golden Gate plans to keep 300 of Eddie Bauer’s 370 stores open. Eddie Bauer has a store at Bellevue Square. Golden Gate officials haven’t released details of which stores will remain open.

Eddie Bauer filed for bankruptcy last month. Golden Gate’s offer to take over the company will be presented for court approval July 22, the retailer said.

This is the second attempt by Golden Gate to acquire Eddie Bauer. Approximately three years ago, Golden Gate offered $285 million for the company, but it failed to get approval from the majority of Eddie Bauer’s shareholders.

That 2007 offer included the assumption of $328 million in Eddie Bauer debt. This go-round, Golden Gate won’t assume any of Eddie Bauer’s debt, according to David Pollack, a bankruptcy attorney with Ballard Spahr Andrews & Ingersoll LLP in Philadelphia whose clients hold leases on about 100 Eddie Bauer stores. Golden Gate reportedly will take on some of the company’s liabilities, such as the company’s leases.

“Creditors in general and landlords in particular should be happy,” Pollack said in a Bloomberg story.

According to court documents, Eddie Bauer had 7,700 U.S. employees and another 933 workers in Canada, as of June. The company targets customers from 30 years old to 54 years old with an average income of $77,000, according to court papers.

Eddie Bauer was bought by catalog retailer Spiegel Inc. in 1988, which expanded the retail outlets, according to court records. By 2002, the company had grown to 501 retail and outlet stores from 61.

In 2003, the company’s predecessor Eddie Bauer Inc. filed for bankruptcy along with Speigel. After leaving court protection in 2005, Eddie Bauer twice failed to sell itself.

Eddie Bauer hasn’t made an annual profit in three years and reported a $44.5 million loss in the first quarter on sales of $180 million.

Nevertheless, retail consultants say there still is value in the Eddie Bauer brand.

“There’s some real value in the stores and in the brand,” George Whalin, president of Retail Management Consultants in Carlsbad, Calif., said.

Eddie Bauer’s current bankruptcy was caused mainly by the high debt taken on during the previous bankruptcy case, according to court papers.