Eddie Bauer Declares Bankruptcy

The rumors have finally come true. Overwhelmed by debt payments and a steep drop in customer spending, Eddie Bauer filed for bankruptcy protection today, becoming yet another high-profile Northwest corporate casualty of the recession. Major retailers that have filed for bankruptcy protection since the start of the economic turndown of 2007 include: Linens ‘n Things, Circuit City and Joe’s Sports & Outdoor.

Eddie Bauer has reported struggling with its debt which has worsened as revenue dropped. This is being seen as an overall trend affecting most retailers. The company reports that they have lost nearly a half billion dollars since 2007.

Most retailers — except discount stores like Wal-Mart — have reported a fast drop-off in retail revenue across the board. Many of the specialty retail department stores have reported double-digit same-store sales declines.

As of May 11, Eddie Bauer reported having $289.5 million in outstanding debt, including $187.8 million in term loans and $75 million in convertible notes, which company executives have been trying to persuade debt-holders to convert into shares of the company. According to a filing with the Securities and Exchange Commission, Eddie Bauer had total assets of $525.22 million in April. The company listed total liabilities of $448.9 million. Eddie Bauer reported net losses of $165.5 million in fiscal year 2008, part of a total of $478.7 million in losses during the past three fiscal years. In the first quarter that ended in April, the company reported net losses of 44.5 million.

For the first quarter of fiscal year 2009, which ended April 4, Eddie Bauer reported a loss of $44.5 million. That was a greater loss than the first quarter of 2008, when the company reported a $19.3 million loss. Net sales for the first quarter of 2009 were $179.8 million, compared with net sales of $213.2 million in the first quarter of 2008. The company said that combined comparable store sales — their barometer of success at the store level — fell 11.3 percent for the first quarter, a decline the company blamed on the recession and reduced retail spending.

Sales were down nearly 15 percent in Eddie Bauer’s retail stores and sales through its direct channel were down nearly 11 percent. The outlet stores saw sales decline by nearly 76 percent.

“The first quarter was a difficult one, as the sharp downturn in the economy took its toll on our sales. We continued to focus on cost cutting and cash flow management, which helped mitigate the impact of lower sales,” said CEO Neil Fiske, in a statement with the first-quarter results filed with the SEC.

Eddie Bauer has 370 stores, including 251 retail stores and 119 outlet stores in the United States and Canada. Eddie Bauer has 17 stores in Washington and 11 stores in Oregon.

(See a copy of the bankruptcy filing here.)