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TheStreet Open House

Eddie Bauer Seen as Ripe For Auction Block

NEW YORK ( The Deal) -- As a result of Jos. A. Bank Clothiers' (JOSB) window-shopping Eddie Bauer, the outdoor clothing seller could also be an attractive target to a number of suitors, according to industry sources.

Sources confirmed that the Hampstead, Md.-based Jos. A. Bank is looking over Eddie Bauer for its acquisition possibilities. The potential target is backed by private equity firm Golden Gate Capital.

Golden Gate and Jos. A. Bank declined to comment.

But Eddie Bauer has largely struggled since the private equity firm acquired the retailer out of bankruptcy in 2010 for nearly $290 million, a source said. Even after it brought retail apparel veteran Mike Egeck on board in 2012, doubts remained that it could recover enough to be sold.

Over the past 12 months, consumer spending has been anything but kind to apparel retailers. There was a lackluster second quarter followed by a difficult back-to-school, ending with a disappointing holiday, and a January that some analysts have described as nothing short of a disaster.

Yet Eddie Bauer had positive Ebitda last year with revenue greater than $1 billion, a source familiar with the company said. The brand, with cultural roots in the Northwest United States, had a strong 2013 that included a good holiday season, as well as a solid start to 2014, the source said.

Egeck has plenty of experience helping clothing retailers expand, as well as experience in selling them. He was CEO of Seven For All Mankind LLC when it was sold to VF Corp. in 2007 for $775 million. Prior to that, he was president of North Face, also a unit of VF until 2006, taking it from $220 million in sales to $1.7 billion. He also headed up True Religion Apparel Inc. from 2010 to 2011, before it sold to TowerBrook Capital LP last year for $835 million.

Strategics such as VF may be interested in the outdoor retailer, a source said. When Eddie Bauer was in bankruptcy, VF took a look at the company, although, as previously reported by The Deal, it was interested only in acquiring the brand name, in order to license it out.

Ultimately, San Francisco-based Golden Gate acquired Bellevue, Wash.-based Eddie Bauer when the company's liquidation plan won confirmation from the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

But VF remained interested in similar companies, as it went on to buy Timberland in 2011 for $2 billion.

Another strategic acquirer that has shown an interest in active outdoor life retailers include Paris-based Kering SA, formerly PPR SA, which acquired surf- and snow-apparel maker Volcom Inc. for about $600 million in 2011.

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