Eddie Bauer is the latest retailer to buckle under the pressure of rising costs and changing tastes.
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The Bellevue, Washington-based outdoor apparel retailer began liquidating stock at its brick-and-mortar locations this week amid discussions of an upcoming Chapter 11 bankruptcy filing that’s reportedly been under consideration since the start of the year.
Most of Eddie Bauer’s roughly 180 locations in North America are expected to close, although there are some buyers circling select locations for continued operations, according to CoStar. If the company moves ahead with the restructuring, it would be the firm’s third bankruptcy since 2003.
The Eddie Bauer name and intellectual property are owned by Authentic Brands Group. Its North American locations are owned and operated by Catalyst Brands, a joint venture formed last January when JCPenney merged with Sparc Group. Catalyst Brands, like Sparc before it, operates stores under license agreements and has backers including mall operator Simon Property Group and Authentic Brands Group.
Eddie Bauer's e-commerce, manufacturing and wholesale business wouldn't be impacted by the bankruptcy, and its roughly 20 locations outside North America will remain in operation.
Simon CEO David Simon said on the company's earnings call Monday evening that tariff pressures were weighing on Catalyst’s underperforming brands.
“It's going to take $200M of EBITDA away from Catalyst to pay the government,” he said, referencing the impact of tariffs on a common profitability metric. “Catalyst, rightfully so, is very focused on doing the best they can not to pass it on to consumers.”
Catalyst didn’t respond to a request for comment Tuesday morning.
Indianapolis-based Simon posted $3B in fourth-quarter profits and has seen its stock rise more than 10% in the last six months despite a string of high-profile retail bankruptcies starting last year.
Its profits would have been greater but for a one-time, $120M loss that Simon realized in the fourth quarter to account for a Catalyst Brands restructuring.
Another big-box tenant bankruptcy from the start of the year might be a positive for the REIT, Simon said. Saks Global announced its Chapter 11 reorganization last month and the closure of 62 stores, mostly Saks Off 5th discount locations — many of which are at Simon properties — to focus on the luxury segment.
Simon said on the call that the Saks closures would lose the REIT roughly $18M in revenue, but that it was already in talks for new leases on half the locations Saks is exiting that would generate a combined $30M.
“The retailers that don't make it — even though I could sit here and blame tariffs — they're not highly productive retailers,” Simon said. “And given that, it's our view that we can replace them with more productive retailers, or higher rents.”
CORRECTION, FEB. 3, 12:40 P.M. ET: A previous version of this story misstated the ownership structure of Eddie Bauer and its North American footprint. Its real estate is operated by Catalyst Brands.
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