Inventing an Edgier Eddie Bauer

CEO Fabian Mansson says he'll modernize the mostly conservative brand by making outdoor lifestyle wear that's both trendy and colorful

Two years ago, when scandalously low-cut jeans in funky washes were all the rage, Abby Overton found a "plain and simple" respite at Eddie Bauer. The 34-year-old Brooklyn resident has been a fan ever since and says she just spent a bundle on the Redmond (Wash.) retailer's fall tops in rich burgundy and lavender tones.

If CEO Fabian Mansson's efforts to reverse recent sales declines work, Overton will keep coming back for more. And so will other shoppers, women especially. For spring, 2005, Eddie Bauer's 440 stores will feature a collection characterized by a lively color palette, high-quality fabrics, and edgier styles -- but still no low-cut jeans. The Eddie Bauer image will stay pretty conservative in fashion terms, but by Overton's estimation "it has a little more pizzazz than the usual flannel shirts."

Though it has its loyalists, the retailer has had several tough years. Same-store sales (those for stores open at least one year) declined 14% in 2004 and 6% in 2003. Though it doesn't disclose financial metrics, Mansson says performance at the chain has improved in 2004. And he's optimistic that recent hires for merchandising and design from J. Crew and Tommy Hilfiger will reinvigorate Eddie Bauer even more.

They'd better, because parent company Spiegel, which has been under Chapter 11 bankruptcy protection since March, 2003, has been shopping the retailer around since April of this year. Spiegel hopes to fetch at least $1 billion for Eddie Bauer -- it's most coveted asset.

Not everyone is so high on what Mansson, formerly of Swedish apparel chain Hennes & Mauirtz, has been up to since arriving in summer, 2002. Says Candace Corlett, principal at WSL Strategic Retail: "Eddie Bauer draws a blank page." The latest catalogs are uninspired, she notes. "It seems it's still being the same old Eddie." Mansson recently spoke with BusinessWeek Online reporter Amy Tsao at the retailer's viewing of its spring, 2005, line in New York. Here are edited excerpts of their conversation:

Q: How is this collection different from last spring?


I would say that it's more colorful, it's a more focused line. On the women's side, we've got a new initiative where we've named pants by their fits.

Even though it's a spring collection, you're going to see a lot of what we call the third pieces -- a blazer, a trench coat, or a light parka. That's another big story you're going to see in both men's and women's here.

Q: The outfits look a little more trendy that what you've had in the past. Are you trying to be more fashion-forward?


Everything is relative. You're talking about a customer that's [age] 30-plus, on average. So yes, it's a little more fashion-forward for that customer, which means they're not going to walk through the store and go, "Oh my God, what is this?" We go just so far ahead. But our customer still wants to be fashionable.

Q: Where do you see Eddie Bauer vs. Gap (GPS ), which is expanding more into your core market with plans for a new line of stores for boomer women?


We have a fantastic brand to start off with. We want to take the best parts of our heritage and keep it updated for today's consumers. We need to create a point of view that speaks to the Eddie Bauer lifestyle -- an outdoor lifestyle. It's about carving out a unique positioning that we're just going to have to execute better and better going forward.

The Gap has probably the biggest share of wallet from most people because they're so big. But I wouldn't say that there's any single one. That's what's so interesting about our opportunities going forward. In the mall-based environment, there's nobody who's like us that targets the same age group with the same offering.

Q: How far along are you in the turnaround?


We've clearly come quite a ways, but we still have a lot of work cut out for us. This company has a history of going left and right strategically. That's not good. They had jumped into the dress-casual era prior to me coming on, and that's not what Eddie Bauer has been about. We have gone back to the inspiration of the outdoors and are trying to carry it through the brand in a modern, relevant way. You have to make sure you have a balance, even within casual. This is clearly a more balanced assortment than what we've had.

Q: So how has financial performance improved since you arrived in 2002?


We're starting to see a better productivity. This is a company that has been sliding for a long time. So we're starting to turn the corner now, and we're seeing a lot healthier sales, less markdowns. Spiegel has announced that we're profitable.

We're flowing our inventory differently and working our way through it quicker. Inventory [is] like milk and bread. It doesn't get better with time. So you have to move things when it's not working.

We're starting to change the look and the feel of the brand. We're bringing in more quality, but also dividing quality into two aspects -- the technical aspects such as tear strength, shrinkage, all of those things. And then injecting the more subjective side of, "What kind of feel does this fabric have? What kind of wash are we putting on it?"

Q: You currently have 400-plus stores. Will you be adding more or pulling back?


: Step by step, we're going to start growing that number. We're actually opening up five this year, which doesn't sound like a high number, but if you ask anybody who has been in this industry, they've never heard of anybody who's under Chapter 11 being able to open any stores at all and getting an O.K. from the creditors. So it's clearly a great vote of confidence from their side. We've been O.K.'d to open up 18 stores [in the next several years.]

Q: Is there a timeline for finding a buyer for Eddie Bauer?


I hope so. But we're just focusing on running the business.

Q: Will you stay with the company after it's sold?


I'd like to have some more fun than just turning things around. But I do get enjoyment out of changing things. Even when you're doing good you have to reinvent, you have to look at what you're doing. [We have to ask:] "Can we do it in a different way?" But it would be nice to get to a place where you don't have to do as much reinventing as we have been.

Q: So a year from now, where is Eddie Bauer?


I think it's still a gradual process. Every year we're going to get better. By next year, hopefully, we'll have a very clear ownership structure at that point.

Edited by Patricia O'Connell

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