Eddie Bauer looks to mountaineer Jim Whittaker for turnaround help
Bellevue-based Eddie Bauer faces major economic headwinds in its quest to become profitable again: Consumers worried about a sluggish job market, rising food and gas costs and a housing downturn might not be willing to give it another look.
Seattle Times business reporter
Target customer: Women and men between 30 and 55 years old with an average annual household income of $75,000
Most-expensive item: Quilted down leather sherpa jacket for $349
Least-expensive item: Mini ice scraper for $3.50
Source: Eddie Bauer
Eddie Bauer is turning to legendary mountaineer Jim Whittaker to help remake it into a serious outdoor gear and apparel brand — and possibly put it on the comeback trail.
Whittaker, who in 1963 was the first American to reach the top of Mount Everest, has agreed to work exclusively with the Bellevue company on product design and marketing.
Eddie Bauer faces major economic headwinds in its quest to become profitable again. Consumers worried about a sluggish job market, rising food and gas costs and a housing downturn might not be willing to give it another look.
But Whittaker — who also carries the title of first full-time REI employee — said he believes in Eddie Bauer's new chief executive, Neil Fiske.
"Eddie's up there saying, 'Right on, you guys. You've got the right idea now,' " Whittaker said, referring to the company's late founder.
As an example of its renewed outdoor focus, Eddie Bauer is working to bring back the Sport Shop, a space in its stores where hunting and fishing gear used to be sold. Fiske said the new Sport Shop will be a "modern interpretation," though he declined to give details.
Fiske predicts a turnaround will take three to five years, practically an eternity on Wall Street. In the past year, shares have traded between $2.91 and $14.25. Tuesday's closing price of $4.19 was near the bottom of that range.
The company lost money in both 2006 and 2007.
"We've sort of drifted. Nobody really knows right now what Eddie Bauer stands for," Fiske said at the company's annual shareholders meeting in May. "People are confused, so we're going to provide some clarity."
Last year, Eddie Bauer posted an annual sales increase for the first time this decade. It also narrowed its first-quarter loss to $19.3 million from $44.8 million a year ago, primarily because of cost-cutting that claimed 76 headquarters jobs.
But Roy Ophir, research manager at Matrix USA in New York, said he's not persuaded by Fiske's plea for patience. Ophir, one of two analysts covering Eddie Bauer, rates the stock a "strong sell." (The other analyst, Nick Capuano of Imperial Capital, rates it a "buy.")
"If the CEO is telling me he needs time to turn it around, why wouldn't I deploy my capital into another investment until he thinks he has it fixed?" Ophir said. "I'm not a bleeding-heart investor. I participate in the markets to make money, not to make friends."
Eddie Bauer's current share price values the company at about $142.5 million, well below a $285 million buyout offer by a pair of private-equity firms in late 2006. Several months later, shareholders rejected the offer, and then-CEO Fabian Månsson resigned.
Founded in 1920, Eddie Bauer made down parkas for World War II pilots and outfitted more than 30 major mountaineering expeditions, including Whittaker's 1963 ascent of Everest.
Spiegel Group acquired the company in 1988 and its focus shifted to selling casual clothes for women. "We became more of an indoor company than an outdoor company," Fiske said.
Spiegel filed for bankruptcy protection in 2003, and Eddie Bauer emerged as an independent company in 2005.
Fiske, 46, took over Eddie Bauer last July after leading a turnaround as CEO of Bath & Body Works. One of the first things he did was create a small "archaeology" team to sort through boxes of Eddie Bauer memorabilia.
He adopted the mantra "past is prologue" and devoted a room in Eddie Bauer's Lincoln Square offices to old photos, catalogs and customer letters.
"This is really a back to the future story," he said.
Whether a strategy rooted in the past can carry Eddie Bauer forward remains to be seen.
"It's a great brand that is well known. Those are the positives," said Tim Boyle, CEO of Columbia Sportwear, a Portland-based outerwear brand. "The negatives are that it's probably known better by older consumers than younger consumers."
Others recommend a more radical approach. Dick Outcalt, a principal of Outcalt & Johnson: Retail Strategists in Seattle, said he thinks the company should file for bankruptcy protection. Such a move would allow it to get out of its store leases in the South and focus on the North, he said.
Eddie Bauer has about 370 stores in North America, including Florida, Georgia, Alabama and Louisiana.
"They're trying to be all things to all people. They're trying to sell swimsuits against swimsuit experts, and sleeveless clothes against sleeveless-clothes experts," said Outcalt, who does not consult for Eddie Bauer. "The entire company should be focused on fall and winter merchandise for northern-climate stores."
"You don't see Jim Whittaker in swim trunks, do you? Hell no!" he added. "They need to stand for something."
Whittaker, who lives in Port Townsend with his wife, Dianne Roberts, is a fit and healthy 79 (or, as he calls it, "seventy-friggin'-nine"). He and Roberts plan to test prototypes of new Eddie Bauer gear this fall on a return to Everest Base Camp in Tibet.
Whittaker said his affinity for Eddie Bauer goes back to his history-making climb, when he depended on the company's outerwear to keep him warm. "The stuff couldn't be beat," he said. "There was nothing like it."
At the time, Whittaker worked for another outdoor-oriented retailer, REI.
Co-founder Lloyd Anderson had been one of Whittaker's early climbing instructors, and in 1955 he hired Whittaker in as REI's first full-time employee.
Whittaker became president and CEO in 1971, overseeing REI's expansion into the Bay Area, Los Angeles, Portland and Anchorage, before retiring in 1979.
He jokes that his "golden parachute" was a 30 percent discount off purchases for the rest of his life.
"I don't criticize them," Whittaker said of REI. "I just know we can make a superior product."
Sally Jewell, REI's president and CEO, dismissed the notion of an intense rivalry in the making. "If they get more people outdoors, then they're an ally," she said, adding that Whittaker is a "free agent" under no obligation to REI.
Kent-based REI still sells Whittaker's 1999 memoir, "A Life on the Edge."
Amy Martinez: 206-464-2923 or email@example.com
Copyright © 2008 The Seattle Times Company
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