Will Golden Gate Deal Save Eddie Bauer?

Now that Golden Gate Capital’s acquisition of Eddie Bauer is a done deal as of last week, the big question remains: Does the outdoor apparel cataloger/retailer have enough left to make a resurgence?

Eddie Bauer, which had filed for Chapter 11 bankruptcy protection in June, was bought by the private equity firm for $286 million in a deal finalized Aug. 4. Some industry experts weighed in with their thoughts on Eddie Bauer’s future.

Lee Helman, managing director with investment firm Financo, says there “absolutely” is still a place for Eddie Bauer. The retailer has made “some very promising merchandising moves in the last year.”

What’s more, Helman says, Eddie Bauer earns $50 million of EBITDA per year. The merchant had a bad balance sheet before, with too much debt, he says. “But that now should be much cleaner in theory, and that the worst-performing stores will be gone should only enhance the EBITDA.”

Stuart Rose, managing director for investment firm Tully & Holland, agrees that it’s not late for Eddie Bauer. “It still has a strong brand, good locations, and an experienced owner,” Rose says. “Diligence, perseverance and clear, consistent and concise positioning will be the key to success.”

Eddie Bauer’s merchandise theme will have to be clear and focused going forward, says Craig Battle, managing director of investment bank Tucker Alexander. “This brand lost its way a long time ago and with it its customer.”

Golden Gate certainly has the resources to reposition Eddie Bauer, but it’s not a sure thing, Battle says. The company “still has solid brand recognition in terms of quality, but not necessarily in terms of merchandising focus.”

Neil Stern, a retail analyst and senior partner for retail consultancy McMillan Doolittle, agrees. Eddie Bauer has been in the process of trying to turn around the brand for the past two years, but ran into a tough economy, he notes. “The brand is trying to return to its roots as an outdoor activewear brand–with performance at a better price.”

The field has certainly become more crowded, Stern says, especially now that rival L.L. Bean has been opening bricks-and-mortar stores, “but the right multichannel combination might work” for Eddie Bauer.

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