3rd possible buyer on ebhi:Eddie Bauer Said to Be in Talks With Potential Buyers (Update3)
By Lauren Coleman-Lochner and Jonathan Keehner
May 6 (Bloomberg) -- Eddie Bauer Holdings Inc., the U.S. outdoor-clothing chain, is in talks with potential buyers including Gordon Brothers Group and Hilco Consumer Capital LLC, according to people with knowledge of the discussions.
Hudson Capital Partners LLC also may consider a bid, according to two of the people, who declined to be identified because the talks aren’t public. Bellevue, Washington-based Eddie Bauer operates about 370 stores in the U.S. and Canada.
Eddie Bauer, which opened its first sporting goods store in Seattle in 1920, has reported annual losses for the past three years. The stock has dropped more than 80 percent on the Nasdaq during the past 12 months, giving the company a market value of about $23 million.
Hudson Capital declined to comment, said Stacy Berns, a spokeswoman. Karine Joret, a spokeswoman for Hilco, and Mark Schwartz, head of Gordon’s private-equity unit, also declined to comment. A message left at the office of Eddie Bauer Chief Financial Officer Marv Toland wasn’t returned.
Eddie Bauer rose 24 cents, or 47 percent, to 75 cents at 4 p.m. in Nasdaq Stock Market composite trading. The shares were unchanged this year before today.
Eddie Bauer Chief Executive Officer Neil Fiske said in March that he expected a “challenging, difficult year.” The company reached an accord that month to amend credit agreements, raising its borrowing costs.
Stores, Catalog Business
A potential buyer may shut down some Eddie Bauer stores, or close all locations and continue to operate the company’s catalog business, one of the people said. Peter J. Solomon Co. is advising Eddie Bauer.
Eddie Bauer emerged as an independent company in 2005, two years after parent Spiegel Inc. filed for bankruptcy protection. General Mills Inc. owned the company from 1971 until 1988.
Shareholders rejected the clothing maker’s efforts to sell the company in 2007, thwarting its planned $285 million sale to two buyout firms.
Like other retailers, Eddie Bauer has posted declining sales at stores open at least a year, with a 9 percent decrease in the fourth quarter that ended Jan. 3.
Because of its debt level, the retailer struggled when consumer spending contracted, according to Mimi Bartow, an analyst with Telsey Advisory Group in New York.
The company’s leaders have managed the downturn well, she said, doing a “phenomenal job” of cost-cutting last year.
Restoring Brand
Fiske is also “getting the brand back to where it needs to be” by returning the company’s focus to its outdoor roots after it expanded more into casual clothing and encountered competition from other specialty retailers, Bartow said.
In the past year, Hilco Consumer Capital, which is based in Toronto, and Boston’s Gordon Brothers have purchased defunct retailers such as Sharper Image Corp., Linens ‘n Things Inc. and Bombay Co.
Gordon Brothers and Hilco teamed up last month in a successful $88 million bid for Polaroid Corp., the bankrupt Minnetonka, Minnesota-based company that introduced instant photography.
