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The operator of roughly 180 Eddie Bauer stores has filed for Chapter 11 bankruptcy protection in the U.S. and will soon make a similar filing in Canada, blaming declining sales and a litany of other industry headwinds.
The bankruptcy filing marks the third time in slightly more than two decades for a brand that began as a Seattle fishing shop, later outfitted the first American to climb Mount Everest and made thousands of newfangled down jackets and sleeping bags for the military during the First World War.
Eddie Bauer LLC said Monday it had entered into a restructuring pact with its secured lenders as it made the filing in the U.S. Bankruptcy Court for the District of New Jersey.
In U.S. court documents, the company says a court proceeding it will soon launch in Canada will aim to protect Eddie Bauer’s assets in the country and ensure any sale agreement will be enforceable on both sides of the border.
Most Eddie Bauer retail and outlet stores in the U.S. and Canada will remain open as the company winds down certain locations. The company has 31 stores in Canada, with about half in Ontario, according to its website. Some started marking down inventory by at least 60 per cent last week.
The company will conduct a court-supervised sales process, and if a sale can’t be executed, it will begin a wind-down of its U.S. and Canadian operations.
“This is not an easy decision,” said Marc Rosen, CEO of Catalyst Brands, which maintains the licence to operate Eddie Bauer stores in the U.S. and Canada.
“However, this restructuring is the best way to optimize value for the retail company’s stakeholders and also ensure Catalyst Brands remains profitable and with strong liquidity and cash flow.”
Eddie Bauer’s stores outside the U.S. and Canada are operated by other licensees, are not included in the Chapter 11 filings and will stay open, according to the release.
Authentic Brands Group continues to own the intellectual property associated with the Eddie Bauer brand and may license the brand to other operators, the company said. The operations of other brands in the Catalyst Brands portfolio are not affected by this filing and will continue in the normal course, according to the company.
Eddie Bauer’s e-commerce and wholesale operations will also not be impacted by the wind-down, as they are operated by a company called Outdoor 5, LLC. That was a transition it made in January and became effective Feb. 2.
Brand’s 2nd bankruptcy filing
Eddie Bauer joins a growing list of U.S. retailers this year that are closing stores, as companies reorganize under bankruptcy protection or pare down operations to focus on the most profitable businesses.
The company’s namesake founder — an avid outdoorsman — started the company in Seattle in 1920 as Bauer’s Sports Shop, according to the brand’s website. In 1945, after making more than 50,000 jackets for the military, it launched a mail-order catalogue.
The company created an American goose-down insulated jacket, known as the “Skyliner,” in 1936, and it became the company’s first patented jacket. It also outfitted the first American to climb Mount Everest — James W. Whittaker — with an Eddie Bauer parka in 1963.
After Bauer retired in 1968 and sold the business to his partner, the outdoor brand shifted more toward casual apparel and was bought by General Mills Inc. in 1971 and then by Spiegel Inc. in 1988. After Spiegel filed for bankruptcy in 2003 and most of its assets were sold, the remainder of the company was reorganized in 2005 as Eddie Bauer Holdings Inc.
In June 2009, Eddie Bauer filed bankruptcy and was acquired by Golden State Capital, the following month. In 2021, it was acquired by Authentic Brands and SPARC Group LLC.
A year ago, Catalyst was formed by the merger of SPARC and JCPenney, which Simon Property Group and fellow mall landlord Brookfield bought out of bankruptcy.
In a ‘challenged situation’
Rosen noted that even prior to the inception of Catalyst Brands last year, Eddie Bauer was in a “challenged situation.”
“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,” he said.
He noted that while Catalyst’s leadership was able to make improvements in product development and marketing, those changes could not be implemented fast enough to fully address the problems created over several years.
In a note published earlier this month, Neil Saunders, managing director of GlobalData Retail, wrote that while the Eddie Bauer name is “well-known,” the brand hasn’t kept pace with rivals like Swedish outdoor brand Fjallraven and Canadian label Arc’teryx.
He also cited issues with quality deteriorating, which, for an outdoor brand measured by the performance of its products, is problematic.
“And for many younger shoppers, the brand is seen as somewhat old-fashioned and a bit irrelevant. “