Clothing retailer feeling the hard times
Here lies another clothing retailer. Weep for them…
When consumer confidence is as low as it has been, it’s a hard sell getting lots of people to come out and spend their money on outdoor wear. They can sulk about the state of their bank accounts perfect well indoors, thank you. It’s been more important that they cover their bills with help from cheap loans and instant payday loans in West Covina.
But some people say shopping is good therapy, even if it’s window shopping. But American apparel chains could definitely use more of the former, as bankruptcy cases have been popping up all over. Mervyn’s, Steve & Barry’s, Goody’s and Gottschalk’s have fallen under the axe. Now Eddie Bauer and bankruptcy will be spoken in the same sentence. It’s a fact. Cost cuts, management and merchandise changes weren’t enough to save the outfitter from this legal action.
Not as messy as some, however
Stephanie Rosenbloom and Michael de la Merced report for the New York Times that the outdoor-clothing chain has filed for Chapter 11 bankruptcy protection. The company plans to sell itself to private equity firm CCMP Capital for $202 million. Bank of America, General Electric and the CIT Group have agreed to provide as much as $100 million in financing during Eddie Bauer’s bankruptcy hearing.
“Eddie Bauer is a good company with a great brand and a bad balance sheet,” said Eddie Bauer CEO Neil Fiske. “This process will allow the business to emerge with far less debt, positioned for growth as the economy recovers and as our new products gain traction. We expect this process to be completed very quickly, protecting our employees and critical vendor partners every step of the way.”
Shares had plummeted to a low of 25 cents last week, after recently showing at $1.44 per share. The company has 371 stores in North America. It was founded by Eddie Bauer in 1920.
That’s one big Spiegel
Overall, sales at full-price and outlet stores have declined 13.7 percent over the previous year. $427 million in debt and a tight credit market didn’t help Eddie Bauer, either. In a court documents, the company blames much of its debt on having taken on its onetime parent company Spiegel when it filed for bankruptcy in 2003. That deal hit Eddie Bauer with $300 million in debt. It also had to take on Spiegel’s benefits and pension plans. Most recently, 50 percent of Eddie Bauer’s earnings were going toward paying down its debt.
“The high leverage that Eddie Bauer assumed as a result of the Spiegel bankruptcy became a greater debt than Eddie Bauer could carry in the current depressed economic and retail market environment,” company CFO Marvin Toland said in court.
Still going
Despite the bankruptcy proceedings, Eddie Bauer has promised that they will continue to operate. That means that its stores, catalog business and Web sites will still be available. Gift cards, returns and club points will also still be honored. But for… how long? How… long? Beam them down some cheap loans and instant payday loans in West Covina, they’re going to need them.
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