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Originally published February 22, 2014 at 8:02 PM | Page modified February 24, 2014 at 6:27 AM

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Eddie Bauer sees profit on the horizon

Eddie Bauer gives a peek at its long-hidden financial performance in preparation for sale to Jos. A. Bank Clothiers; also, penny-stock promoter must pay $4.9 million for hyping Tacoma company.


Seattle Times business staff

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Eddie Bauer has been a storied Seattle name for nearly a century. But since mid-2009, when the outdoor apparel retailer was acquired out of bankruptcy by a private equity company, its finances have been shrouded.

Until now, that is. Jos. A. Bank Clothiers’ recent bid to buy the company has shed some light on Eddie Bauer’s books. And they seem to indicate that the company has been kind of treading water under owner Golden Gate Capital — although the just-ended year may have turned a tiny profit.

Everest Holdings, the holding company for the Eddie Bauer brand, posted $530.7 million in revenues for the first nine months of 2013, Jos. A. Bank said in a securities filing this past week. Eddie Bauer’s full-year revenues are expected to range between $885 million and $895 million — about the same as in 2012.

That’s significantly lower than the billion-dollar revenue figure Eddie Bauer reported in 2008 when it was still publicly traded. However, the company seems to have a gained a better grip on its operations, as it expects a net profit between $7 million and $9 million when the books are closed on 2013, versus a $32 million loss in 2012 and a whopping $166 million loss in 2008.

The number of stores has remained flat through the years: about 370 stores in the U.S., Canada and Japan, according to the latest filing, versus 376 stores in the U.S. and Canada as of January 2009.

It remains to be seen whether the new owners will reignite the company’s expansion. In any case, that’s what they seem to want, even though observers have said that the acquisition is mostly a maneuver to thwart Men’s Wearhouse’s bid to take over Jos. A. Bank.

A spokesman for Jos. A. Bank said in recent statements that the men’s apparel retailer sees its proposed $825 million Seattle acquisition as “a growth story.”

— Ángel González: agonzalez@seattletimes.com

Penny-stock promoter must pay $4.9M

A self-professed investment guru who allegedly duped his followers into buying huge amounts of stock in a worthless Tacoma company settled a federal lawsuit this month by agreeing to pay $4.9 million and stay out of the penny-stock promotion business.

Jerry S. Williams, of Mesa, Ariz., ran a website called Monk’s Den and held costly seminars proclaiming that working together under his guidance, investors could corner the market on a thinly traded stock and force short sellers to pay a high price to cover their bets against the shares.

But according to the Securities and Exchange Commission (SEC) lawsuit, Williams actually was selling stock while urging his followers to buy it, and had never successfully used the “Float Lock Down” system he espoused.

The Tacoma company, Cascadia Interactive, was the subject of a Seattle Times story in February 2010 that reported Internet stock promoters had propelled its shares “from two-tenths of a penny six months ago to 27.5 cents.” The following month the stock peaked at 72 cents.

That price may not seem like much, but with 207 million shares issued, it implied a market value of more than $150 million — for a supposed interactive-game developer whose quarterly financial statement said it spent just $4,620 on its Internet business.

While urging his disciples to “dig deep” for money to buy more Cascadia stock, Williams himself sold 24 million shares during his campaign, according to the SEC suit, filed in federal court in New Haven, Conn. He “had in fact been hired by Cascadia and Green Oasis to promote their stocks” and was paid “with millions of free or heavily discounted shares.”

Although Williams assured his followers that he’d previously used his strategy twice to force large run-ups in the price of penny stocks, in fact he “had never led a team that had deployed the Float Lock Down strategy,” the SEC charged.

Williams received more than 17 million Cascadia shares in 2009 and 2010 as payment for his promotional efforts, according to the SEC suit. In addition to running the “Float Lock Down” campaign, he hired other promoters and passed along millions of shares to them as payment.

He followed the same pattern with another penny-stock company, Green Oasis Environmental of Alberta, according to the SEC suit.

Williams did not respond to a message seeking comment on the case.

The SEC sued Williams and his businesses in July 2012. A year earlier, as part of the first sweeping move by the agency’s Microcap Fraud Working Group to crack down on penny-stock manipulation, it ordered a halt to trading in the shares of Cascadia and 16 other companies.

By the time that trading freeze was issued, however, the Cascadia promotional effort had sparked trading of more than 196 million shares.

The settlement between Williams and the SEC calls for him to surrender $2.4 million in “ill-gotten gains,” and pay a $2.4 million civil penalty as well as $189,000 in interest.

A person familiar with the case, who was not authorized to speak to the media about it, said that if Williams doesn’t pay within two weeks the SEC can start collections proceedings against his assets.

The agency’s lawsuit didn’t identify the Cascadia backers who arranged for Williams’s promotional campaign, and has not taken legal action against anyone else in the case.

— Rami Grunbaum: rgrunbaum@seattletimes.com



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