The retail operator of Eddie Bauer filed for chapter 11 bankruptcy on Monday, leaving the outdoor brand’s nearly 250 North American stores — including 15 in Ontario — in limbo as the retailer searches for a potential buyer.
The move comes amid declining sales, supply chain issues and other problems that left the company in a challenging situation, according to Catalyst Brands CEO Marc Rosen, the retail holding company responsible for Eddie Bauer’s North American stores.
“Over the past year, these challenges have been exacerbated by various headwinds, including increased costs of doing business due to inflation, ongoing tariff uncertainty, and other factors,” Rosen said in a media release.
“While the leadership team at Catalyst was able to make significant strides in the brand, including rapid improvements in product development and marketing, those changes could not be implemented fast enough to fully address the challenges created over several years.”
Eddie Bauer LLC, the retail operator of Eddie Bauer, has come up with a restructuring support agreement with its lenders to reorganize its debts so the company can continue business operations. Through the agreement, Eddie Bauer’s brick-and-mortar stores will remain open and begin liquidation sales as the company winds down the operations of certain locations.
Eddie Bauer stores outside the United States and Canada are not affected by the bankruptcy filings since they are operated by other licensees, spokesperson Hugh Burns said.
Burns added Canadian stores continue to be open to serve customers, pending the outcome of the “going-concern sale process.” It is unclear how many stores in Canada, if any, will remain open.
The Star reached out to Eddie Bauer LLC’s attorney but did not receive a response in time for publication.
The company is also chasing a sales process in hopes of securing an “expeditious, value-maximizing going-concern sale” for all or part of its store operations, the release said. If a sale were to be made, the company would stop the wind-down and switch its focus on facilitating a transaction to maximize value for shareholders.
The retailer’s e-commerce and wholesale operations won’t be affected by the bankruptcy after the Eddie Bauer global brand owner, Authentic Brands Group, completed transition of the licences for the company’s manufacturing, e-commerce and wholesale operations in the U.S. and Canada to Outdoor 5 on Feb. 2.
“This next chapter aligns Eddie Bauer with a partner with expertise in the outdoor space, while allowing Catalyst to focus on its successful lifestyle portfolio. Together, we’re setting the brand up for long-term, sustainable growth,” Authentic global president, sports & lifestyle Jarrod Weber said in a Jan. 8 media release.
Eddie Bauer has filed motions with a New Jersey court to seek “first-day” relief, which would include using cash collateral to pay employee wages and benefits.
“This is not an easy decision, and we are grateful to the Retail Company’s associates and customers for their loyalty and trust. We are working to minimize the impact on the Retail Company’s employees, vendors, customers and other stakeholders,” said Rosen.
Eddie Bauer LLC had racked up millions of dollars in trade debt to creditors, including suppliers, according to court documents reviewed by the Star. The company’s liabilities hovered in the $1 billion to $10 billion range while it’s assets were valued between $100 million and $500 million.
Eddie Bauer has a history of financial struggles and had filed for creditor protection in 2005 and 2009. When the company filed for bankruptcy in 2009, it was auctioned off to Golden Gate Capital for a $286 million (U.S.) cash bid.
In 2014, Eddie Bauer’s parent company was sold to Jos. A. Bank Clothiers Inc. in a cash-and-stock deal valued at $825 million (U.S.).
David Soberman, a marketing professor at the Rotman School of Management, says the company may have had trouble staying modern with consumers and competing with other outdoor apparel brands.
“Eddie Bauer traditionally relied more on its major distributors and it distributed through places like Holt Renfrew, for example,” Soberman said. “The reality is the only way you can have a business model like that, that continues to thrive, is to have a very strong and effective web-based business.”
He added that Eddie Bauer likely “got lost” in malls, especially considering the number of other outdoor brands.
Lisa Hutcheson, a Toronto-based retail strategist, also said Eddie Bauer may have lost its relevancy and couldn’t keep up with competitors like L.L. Bean or Aritzia.
“They were just very average stores, where the brands that are winning with their physical stores are more experiential,” she said.
She added that Eddie Bauer has been slowly closing stores for years without replacing them, pointing to a slow-burning economic strain.
“It’s a classic midmarket squeeze. When you don’t sort of stand out for anything, the customer finds something else.”
