Eddie Bauer Files for Chapter 11

Outdoor clothing chain Eddie Bauer Holdings Inc. (Seattle) filed for bankruptcy protection yesterday. According to The New York Times, private equity firm CCMP Capital Advisors had placed an offer to buy the retailer for $202 million through a 363 sale process in bankruptcy court. A judge will need to approve the sale, and other potential bidders could emerge.

Eddie Bauer operates 371 stores in North America. Earlier this year, the company cut 193 jobs and reported fourth-quarter revenue declined 6 percent, hurt by the promotional retail environment prompted by the economic downturn. The tough economic climate put the chain in jeopardy of violating the consolidated secured leverage ratio on its term loan.

“Eddie Bauer is a good company with a great brand and a bad balance sheet,” says ceo Neil Fiske. “This process will allow the business to emerge with far less debt, positioned for growth as the economy recovers and as our new products gain traction. We expect this process to be completed very quickly, protecting our employees and critical vendor partners every step of the way.”

For the three months ended April 4, Eddie Bauer’s loss increased to $44.5 million and same-store sales at full-price and outlet stores fell 13.7 percent.