Back in March, I wrote with some skepticism about Eddie Bauer's (NASDAQ: EBHI) efforts at reinvention as a higher-end outdoor apparel company: "The problem for Eddie Bauer may be that it's too late: Years of eight- and nine-digit losses have hurt the company's balance sheet and the company currently has a negative tangible book value. With better-financed competitors like EMS, Eddie Bauer may have a hard time breaking through."The continued weakening of the economy may have finally done Eddie Bauer in. Bloomberg reports that "The outdoor clothing retailer may seek bankruptcy protection as soon as this week, according to five people with knowledge of the discussions."
Eddie Bauer lost $44.5 million in the first quarter on sales of $180 million and, given the sales volume and iconic brand, Eddie Bauer will likely attract tremendous interest in a bankruptcy sale. Free of its crippling debt load, Eddiie Bauer just might have a shot at turning it around and returning to a lower-key version of its former glory.
Hilco Consumer Capital has been a player in nearly all of the major retail bankruptcies of the past year or so, and is expected to make a bid for the company's assets. It also wouldn't be surprising to see a more strategic buyer with a strong retail footprint enter the fray. Eddie Bauer looks like one of the best prizes to be hitting the bankruptcy block during this mess.
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