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Eddie Bauer And Pacific Sunwear Consider Merging, Slashing Stores

Eddie Bauer and Pacific Sunwear of California are mulling a merger and the combined reduction of their store count, Reuters reports, citing anonymous sources.


No number of closures have been specified, but the two currently operate about 700 stores combined.

The process would be facilitated by the fact that both retailers are controlled by the same investor, private equity firm Golden Gate Capital. The investor hasn't decided whether to go forward with the consolidation yet.

Golden Gate acquired both brands following their separate bankruptcies. The private equity firm snapped up Eddie Bauer, a victim of the recession, in 2009. More recently, it took over PacSun in 2016 after it went bust, a victim of more recent conditions in the retail world.

A number of apparel retailers have been bought out of bankruptcy in recent years. Besides Eddie Bauer and PacSun, Golden Gate Capital and Blum Capital acquired Payless ShoeSource, and TowerBrook Capital Partners bought True Religion Apparel.

A combo of the two brands would most likely be an efficiency play, Retail Dive said. Last year, Eddie Bauer was reportedly looking for a buyer, and a 2014 deal for a takeover by Jos. A. Bank Clothiers Inc. didn't pan out. 

Not everyone is convinced a merger would be a good move for either brand in the long run.

"What I'd be afraid of in the combination of these two brands would be that they would lose their individual identities. When that happens, customers stop having a reason to shop," Triangle Capital's Richard Kestenbaum wrote in Forbes.