You know all those retail stores you used to love before they went bankrupt, either before or during the pandemic? Retailers like Barneys New York, Frye (boots), Juicy Couture, Forever 21, Aeropostale, Brooks Brothers, Lucky, Sports Illustrated, Prince (tennis), and Thomasville -- among others? They're coming back. And with the addition of one beloved newcomer to this group: Eddie Bauer.
Simon Property Group (NYSE: SPG) (of mall fame) partnered with Authentic Brands Group (ABG) to form SPARC Group LLC (which stands for Simon Properties Authentic Retail Concepts), and together they're reviving flailing stores. The latest acquisition is Eddie Bauer, an outdoor outfitters store that formed in 1920, filed for bankruptcy in 2009, and has been sitting in a private equity firm ever since -- until now.
SPARC Group bought Eddie Bauer from a unit of Golden Gate Capital, a private equity firm that purchased Eddie Bauer when the retailer filed bankruptcy for a second time. Now, with this latest development, Eddie Bauer is owned by SPARC, a sort of brand repo company. The business model of ABG (and now SPARC as well) is to acquire brand-name retailers on the cheap and try to eke out any life (profit) that might be left in them. It's sort of what house flippers who specialize in buying foreclosed properties do.
The idea is with the proper branding and marketing, and probably some cost-cutting as well, some of these stores might be given new life. The partnership ABG struck with Simon is designed to cut costs: When you partner with your landlord, you probably get a break on rent. And Simon benefits too from possibly being able to keep its mall tenants.
The future of Eddie Bauer
Eddie Bauer will be the first outdoor apparel brand in the ABG portfolio of brands. Now that Eddie Bauer is part of SPARC, you can probably expect to see a push to more e-commerce business and some store closings. Eddie Bauer wasn't in bankruptcy when SPARC acquired it, which is different from other ABG acquisitions, but Eddie Bauer hasn't exactly been causing a sensation lately in the retail world either (although it did partner with Kohl's in February 2021).
About Eddie Bauer
There was a real Eddie Bauer. He was an outdoorsman who started the store in 1920 in Seattle. It was called "Bauer's Sport Shop" at that time. Bauer introduced the goose-down jacket to America after suffering from hypothermia on a winter fishing trip. His company then landed a huge government contract in 1943, supplying airmen with down flight suits.
Eddie Bauer's jackets became a huge part of mountaineering expeditions, starting in the 1950s and lasting for decades. The brand was mainly associated with outdoorsmen and women, hunters, and fishermen.
Eddie Bauer was sold to General Mills in 1971, and the company went from a true outdoor outfitters store to more of a regular mall retailer, mainly to distance from the hunting and fishing aspects of the store. That plan didn't work out too well, and Eddie Bauer filed for bankruptcy, first in 2003 when under ownership from Spiegel, and then again in 2009. Eddie Bauer currently has 300 stores in the United States and Canada, down from more than 400 in 2005.
The Millionacres bottom line
The outdoor outfitters market around the world is booming. It's said to grow $3.9 billion by 2023, according to MarketWatch. But is Eddie Bauer still relevant among heavy hitters in the industry such as Patagonia and REI?
If you're interested, as a commercial real estate investor, in investing in Eddie Bauer, you'd be interested in what its president Damien Huang has planned for the store: namely to focus both on e-commerce and expanding the brand to China, Korea, Latin America, and Europe.