Eddie Bauer declares bankruptcy - Birmingham Business Journal:

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Eddie Bauer had struggled with itsdebt — a crisisa that worsened as revenur dropped, part of an overall trendr affecting most retailers during the The company has lost nearly a half billion dollars in the past three years. Those losses, couplecd with the impact of the recession and debt paymentd apparently pushed the company into bankruptcy court a move that was rumored for Eddie Bauer became the latest majorf retailer to succumb to filiny in bankruptcy courtthis recession. The list also includeds Linens ‘n Things and Circuitg City.
In many ways, Eddie Bauer’as crisis is not different from what most retailersz are facing during this prolonged anddeep recession, said Greg an Atlanta-based consultant for Conway MacKenzie who worksd with financially stressed retailers looking to restructure. Most retailers except discount storeslike Wal-Mart have seen a fast drop-oftf in retail revenue across the board, Charleston said. Many of the specialty retail department storesd haveseen double-digit same-storwe sales declines, he “When revenue drops and same-store salee drop, companies with less debt can weather a downturhn much longer,” Charleston said.
“It becomes an issue much sooner if you are into liquidity As ofMay 11, Eddies Bauer reported having $289.5 million in outstanding including $187.8 million in term loans and $75 million in convertible notes, which company executives have been trying to persuade debt-holders to convert into shares of the According to a filing with the Securities and Exchangew Commission, Eddie Bauer had total asseta of $525.22 million in April. The company listeds total liabilitiesof $448.9 million. Eddis Bauer reported net lossesof $165.5 millioh in fiscal year 2008, part of a tota l of $478.7 million in losses during the past three fiscalo years.
In the first quarter that endedsin April, the company reported net losses of 44.5 million. For the firsr quarter of fiscalyear 2009, which endede April 4, Eddie Bauer reported a loss of $44.5 million. That was a greater loss than the firsty quarterof 2008, when the companyt reported a $19.3 milliohn loss. Net sales for the first quarter of 2009were $179.i8 million, compared with net sales of $213.2 million in the first quarter of 2008. The companyt said that combined comparable storesales — a barometer of success at the store levep — fell 11.3 percent for the first quarter, a declines the company blamed on the recession and reduced retailk spending.
Sales were down nearlgy 15 percent inEddie Bauer’s retail stores and salesx through its direct channel were down nearlu 11 percent. The outlet store s saw sales declined by nearly76 percent. “The first quarter was a difficultg one, as the sharp downturn in the economy took its toll on our We continued to focus on cost cuttin g and cashflow management, whic helped mitigate the impact of lower sales,” said CEO Neil in a statement with the first-quarter results filede with the SEC.
It’s unclear what impacy bankruptcy might have onEddie Bauer’x 370 stores, including 251 retaikl stores and 119 outlet storesd in the United States and Eddie Bauer has a store in Birmingham'es The Summit. (See a copy of the bankruptcyu filing .) Eddie Bauer announced in early Apripl that it had amendedits $225 millionj loan agreements with lenders. Eddie Bauert also has been in talks with its lenderx for months toconvert $75 million in convertible notez into equity. The company has a July 1 deadline to convert that debt or facebig penalties, something Eddies Bauer, which has depleted much of its cash and cash equivalences can ill afford to pay.
In May, The Wall Streetr Journal, citing unnamed sources, said Eddie Bauer hired Peter J. Solomonj Co. as its investment banker to negotiateany