Eddie Bauer Files Chapter 11 Bankruptcy As Tariff Pressure Mounts
Eddie Bauer LLC announced Monday it has filed for voluntary Chapter 11 bankruptcy protection, citing tariff uncertainty and mounting operational pressures.
Eddie Bauer entered into a Restructuring Support Agreement with its secured lenders and commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the District of New Jersey, according to a company statement. The retail operations are owned by Authentic Brands Group and SPARC Group, with retail operations controlled by Catalyst Brands.
Eddie Bauer is a Seattle-based outdoor lifestyle brand, founded in 1920, that designs, markets, and retails premium-quality apparel, outerwear, footwear, and accessories.
Stores in the U.S. and Canada will remain open during liquidation sales as Eddie Bauer pursues a going-concern sale. E-commerce and wholesale operations, which transitioned to Outdoor 5, LLC in January, are unaffected.
CEO Cites Tariffs, Inflation As Key Headwinds
Marc Rosen, CEO of Catalyst Brands, stated: “Over the past year, these challenges have been exacerbated by various headwinds, including increased costs of doing business due to inflation, ongoing tariff uncertainty, and other factors.”
Rosen added: “While the leadership team at Catalyst was able to make significant strides in the brand, including rapid improvements in product development and marketing, those changes could not be implemented fast enough to fully address the challenges created over several years.”
Analysts Warn Of Widespread Tariff Impact
Needham & Co. analyst Tom Nikic warned in April that brands relying on Asia-Pacific production face average pre-mitigation headwinds of 670 basis points to gross margin and 65% to earnings per share. Nikic identified Under Armour, Inc. (NYSE:UAA), VF Corp. (NYSE:VFC) and Nike, Inc. (NYSE:NKE) as most impacted, noting low margin structures with little cushion to absorb tariffs.
Ralph Lauren Corporation (NYSE:RL) and Foot Locker, Inc. (NYSE:FL) face just 20-25% pre-mitigation headwind to EPS due to international presence and high margins, according to Nikic.
J.P. Morgan analyst Matthew R. Boss noted in April that consumers are trading down, with retailers adopting strategies including renegotiating with suppliers, shifting sourcing, and selective price hikes. Brands with the highest China exposure include American Eagle Outfitters Inc. (NYSE:AEO), Nike, and Boot Barn Holdings Inc. (NYSE:BOOT), while Levi Strauss & Co. (NYSE:LEVI) and Birkenstock Holding PLC (NYSE:BIRK) remain less affected.
Industry Leaders Respond To Tariff Pressure
Levi’s CEO Michelle Gass stated in November: “There’s only so much you can absorb from the tariffs, because they’re just very high.”
Uniqlo CEO Tadashi Yanai warned in September that “America is the one that could suffer the most” from tariffs.
Image via Shutterstock