Eddie Bauer exploring strategic alternatives, including sale: sources

The retail sector has been ravaged by changing consumer taste and a boom in internet shopping.

On Friday, U.S. outdoor gear and outerwear retailer Eddie Bauer LLC, which is trying to struggling to manage its debts, hired investment banks to explore strategic alternatives, including a potential sale, as per sources familiar with the matter at hand.

According to sources, the company has hired Financo LLC and Guggenheim Partners LLC to explore its options.

Eddie Bauer is looking for relief from a $225 million term loan due in 2020 and $200 million revolving credit line that comes due in 2019, however, it is not looking for a debt restructuring solution.

The sources preferred the cover of anonymity since the deliberations are confidential.

Founded almost a century ago, Bellevue, Washington-based Eddie Bauer has 370 stores spread across the United States and Canada. In 2009, it was acquired by Golden Gate Capital, a buyout firm, for $286 million.

In 2014, Jos A. Bank, a men’s apparel retailer, planned on acquiring the company for $825 million so as to stay independent from its peer Men’s Wearhouse Inc. That bid however ended when Men’s Wearhouse acquired Jos A. Bank.

The company had attempted to turn its petering fortunes by opening a flagship store on NY’s Fifth Avenue, near Union Square, two years ago. However changing consumer taste and a boom in internet shopping have taken their toll on the retail sector leaving many company in bankruptcy court, including Rue21 Inc, Gymboree Corp.

Those who have managed to survive, including high-end retailers Neiman Marcus Group Ltd LLC, J. Crew Group Inc, have been advised to slash their debt loads.

As per one of the sources, same-store sales at Eddie Bauer were up by 8% for the holiday period between Black Friday and New Year’s Eve, and are up by 6% on a year-to-date basis.

However, in the financial year 2016-2017, the company has been steadily losing money with a steady decline in gross margins, as per credit ratings agency Moody’s Investors Service Inc.

Both Standard & Poor and Moody’s have downgraded Eddie Bauer’s debt recently, while warning that the brand may have to rely on borrowings to fund working capital needs and interest expenses.

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Categories: Creativity, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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