A

Eddie Bauer Inc.

FOUNDED: 1920

Contact Information:

HEADQUARTERS: 15010 NE 36th St.
Redmond, WA 98052-5317
PHONE: (425)861-4851
FAX: (425)882-6383
TOLL FREE: (800)426-6253
URL: http://www.eddiebauer.com

OVERVIEW

Launched with a single store in Seattle in 1920, Eddie Bauer Inc. has grown into an international retail marketing giant. The company is famous around the world for its product line of sportswear, accessories, and home furnishings, all designed for the casual lifestyle. The company markets through four different outlets: Eddie Bauer Sportswear, Eddie Bauer Home, AKA Eddie Bauer, and Eddie Bauer Outlets.

Eddie Bauer Sportswear, the heart of the company's business, is retailed through a network of more than 400 stores across the United States and Canada. Outlets are also operated under joint venture arrangements in Germany, Japan, and the United Kingdom. The company's sportswear line, best known for its outerwear, also features a full range of casual apparel and accessories, footwear, and travel gear marketed through nearly a dozen annual catalog mailings, as well as over the Internet.

The company has embarked on an ambitious expansion program, which has as its goal the opening of 70 to 80 news stores every year. If successful, the company's total retail outlets will come close to doubling in five or six years.

COMPANY FINANCES

As a wholly owned subsidiary of Spiegel Inc., Eddie Bauer does not report independently on its financial operations. Eddie Bauer generates estimated annual sales in excess of __BODY__.5 billion, which indicates that the chain accounts for slightly more than half of Spiegel's total revenue, which totaled $3.06 billion in 1997. Spiegel reported net losses of $33 million in that same year. This compared with a net loss of $13 million on revenue of $3.02 billion in 1996. In 1995, Spiegel registered a net loss of $10 million on revenue of $3.18 billion, compared with net earnings of $25 million on revenue of $3.02 billion in 1994.

HISTORY

Eddie Bauer, founder of the billion-dollar-plus retail empire that bears his name, was born on October 19, 1899, the child of Russian immigrants. A lover of the outdoors, Bauer's hunting and fishing exploits often landed his name in the Seattle newspapers. A story, perhaps untrue, suggests that he was moved to launch his own line of outerwear when he came down with hypothermia after the woolen clothing he wore on a fishing trip failed to perform as advertised.

Bauer's original store, dubbed quite simply, Eddie Bauer's Sporting Goods, opened in downtown Seattle in 1920. Two years later, Bauer set a retailing precedent when he introduced his unconditional guarantee that pledged that "every item we sell will give you complete satisfaction or you may return it for a full refund." Introduced at the same time was the company creed: "To give you such outstanding quality, value, service and guarantee that we may be worthy of your high esteem."

In 1927, shortly after his marriage to Christine "Stine" Heltborg, Bauer added women's apparel to the product line at his Seattle store. When the company secured the U.S. and Canadian patents for the Bauer Shuttlecock in 1934, it helped to popularize the game of badminton in North America. Two years later, Bauer shook up the sportswear industry when he introduced his patented Skyliner jacket, the first garment insulated with goose down; this was an immediate hit with customers. A year later, the company began marketing the Down-light vest.

The company got a boost in 1941 in the form of an order from the U.S. Army Air Corps for the Eddie Bauer B-9 Flight Parka. More than 50,000 of the jackets were produced for use by airmen during high-altitude flights. Near the end of World War II in 1945, Eddie Bauer Inc. mailed out its first catalog. During the period between 1953 and 1968, the company outfitted a number of scientific and exploratory expeditions. These expeditions included the American assault on K-2 in the Himalayas, a 1957 scientific expedition to Antarctica, and the American Antarctic Mountaineering Expedition of 1966.

In 1968, Eddie Bauer retired, selling his business to William Niemi, a longtime friend and partner. That same year the company opened a store in San Francisco, its first store outside Seattle. Three years later, in 1971, Eddie Bauer Inc. was sold to General Mills Inc. This kicked off an aggressive drive to expand the company's retail outlets nationwide. By the end of 1988, the chain had expanded to a network of 61 stores with more than $250 million in annual sales. Eddie Bauer was sold to Spiegel Inc. that same year. This further accelerated the company's expansion of retail outlets, which numbered close to 400 in 1996.

The 1990s brought continued expansion for Eddie Bauer Inc. and the beginning of its expansion beyond North America. In 1993, the company launched its first mail-order catalog in Germany. The following year, a catalog was introduced in Japan, and three retail outlets were opened in Tokyo. In 1995, the company launched a joint venture in Germany, which would open stores in Germany and elsewhere in Europe. In addition, these stores would handle mail-order catalog operations. Eddie Bauer UK, the company's joint venture in the United Kingdom, was launched in 1996 to develop and operate stores and mail-order operations.

Eddie Bauer Inc. suffered a public relations setback in 1997. A jury awarded __BODY__ million to three young African-American men who accused the company of "consumer racism" when it detained them on suspicion of shoplifting. One of the plaintiffs in the suit claimed store security personnel forced him to take off his shirt.

STRATEGY

Eddie Bauer experienced extremely strong growth from the late 1980s through the mid-1990s. However, there was no sign that the company would be resting on its laurels. The company set for itself the ambitious goal of opening 70 to 80 new stores every year. Retail outlets are not the only arena in which the company planned to keep busy. Its direct mail operations were sending out more than 100 million catalogs every year. The company's demographic profile was a broad one, focusing on the 18- to 34-year-old market segment.

The company expanded on the popularity of its casual sportswear and successfully translated that into a line of dressier apparel appropriate for the business setting. Talking about the success of its AKA Eddie Bauer stores, Julie Cosser, senior vice president of marketing, told CNNfn's "Biz Buzz" that since most of their loyal customers "obviously have other days in their week, it seems only natural to take our casual foundation and actually roll that out into products that are appropriate for the office. So it's a business that's based still in comfort and casual wear but a little bit more dressed up."

INFLUENCES

One of the keys to the success of Eddie Bauer Inc. has been its executives' recognition that the nature of retail marketing was evolving continually. This evolution dictated a sometimes drastic periodic revamping of its strategy. The company has managed to build itself into an international retailing giant with annual revenues of about __BODY__.5 billion by staying ahead of the wave of change, especially in the areas of direct mail and the Internet.

CURRENT TRENDS

The growing American and worldwide appetite for doing business in cyberspace has not been lost on Eddie Bauer Inc. The company launched its World Wide Web site (http://www.eddiebauer.com) in 1996 and opened up a whole new world of marketing possibilities. Cyber-shoppers are able to order almost any product the company offers through its web site.

PRODUCTS

Eddie Bauer Inc. markets a wide range of sportswear, accessories, and home furnishings through four basic outlets. Eddie Bauer Sportswear, the company's core retailing operation, sells men's and women's sportswear designed for the casual lifestyle of the late twentieth century. Eddie Bauer Sportswear stores, numbering more than 400 by the close of the 1990s, also markets accessories, footwear, and travel gear. The sportswear product line is also available through direct mail and the Internet.

AKA Eddie Bauer targets the market for those wanting apparel that offers the comfort and styling of the company's traditional sportswear yet is dressy enough to be worn in a work setting. There were approximately 30 AKA Eddie Bauer stores across the country by 1998. The AKA Eddie Bauer line is also marketed by direct mail and online.

The company's venture into the home furnishings market, Eddie Bauer HOME, sells a line of wood and upholstered furniture, home decorating accessories, gift items, tableware, bed linens, and products for the bath in its 30 to 40 U.S. stores. The goal of its HOME stores was to bring to home furnishings the same comfort and relaxed feel that made the company's sportswear line popular throughout the years of its existence.

Acting as the company's clearinghouse, Eddie Bauer Outlets offers regular Eddie Bauer merchandise at prices marked 30 to 70 percent below regular retail. There were about 50 Eddie Bauer Outlets in the United States by the end of the 1990s.

CORPORATE CITIZENSHIP

Eddie Bauer Inc. always felt a strong responsibility to the communities in which it operated. The company has taken particular pride in its Global ReLeaf Tree Project, a joint venture with American Forests, the nation's oldest citizen conservation group. Eddie Bauer's headquarters in the Pacific Northwest also has been home to extensive forestry operations. The tree planting campaign, however, extends throughout the United States.

The company announced in June 1998 that the project had planted its 1.25 millionth tree, halfway to its ultimate goal of planting 2.5 million trees by 2000. Under the company's "Add a Dollar, Plant a Tree" campaign, customers are encouraged to add a dollar or two to their purchases to be used for the planting of trees. Each dollar donated pays for the planting of a single tree. In addition to donations from customers, Eddie Bauer employees, known as associates, can contribute to the tree planting project through payroll contributions.

Accepting the Natural Resource Council of America's 1998 Award of Achievement, Adam Schoenberg, American Forests' director of corporate development, said much of the credit for the project's success can be traced to "the commitment of the Eddie Bauer associates. Last autumn for the first time Global ReLeaf became a part of the Associates Pledge Drive. More than $70,000 was pledged for planting trees in 1998."

GLOBAL PRESENCE

Eddie Bauer began expanding outside the United States in 1993 when it launched its first mail-order catalog into the German market. This was followed two years later by the inauguration of Eddie Bauer Japan, which opened three retail outlets in Tokyo and mailed out the first Japanese catalog.

The globalization of Eddie Bauer Inc. continued in 1995 when the company launched its Eddie Bauer Germany joint venture. The venture's announced goal was the development and operation of Eddie Bauer retail outlets and catalogs in Germany and elsewhere in Europe. The following year, the company launched a joint venture in the United Kingdom to develop and oversee stores and catalog operations in that country.

In 1996, the number of Eddie Bauer stores in Japan rose to 14, plus they had 3 discount outlets. Eddie Bauer Germany opened its first 2 stores in that country during the same year. The next year, an additional 11 stores were opened in Japan. The total in Germany rose to 7 that same year. Eddie Bauer UK opened its first 2 stores in Cardiff and in Kent.

EMPLOYMENT

Eddie Bauer has always sought ambitious, energetic people who want to work for a company that could offer integrity, opportunity, and excitement. For the right candidates, the company has promised challenging career growth as well as the training and support needed to succeed.

Eddie Bauer Inc. employed about 1,500 people at its Seattle headquarters in 1998. Thousands more work in the company's retail outlets across the United States and overseas. Plans to open between 70 and 80 new stores each year would mean that opportunities in retail sales would continue to grow steadily.

The company's boast in its literature has been that as an employer, they are "one of the best in the business—a fact proven by our industry-leading education and training program, our excellent benefits package, and our team-oriented approach to doing business. As we continue to achieve impressive sales growth and open more stores across North America and internationally, we offer you a future full of possibilities. Eddie Bauer's future holds the promise of explosive expansion."

SOURCES OF INFORMATION

Bibliography

Bessonette, Colin. "Q&A on the News." Atlanta Journal and Constitution, 30 December 1997."

"Eddie Bauer Company History: A Legend for 78 Years." Eddie Bauer Home Page, February 1998. Available at http://www.eddiebauer.com/eb/EBhq/companyoverview.asp.

Eddie Bauer Global ReLeaf Tree Project Reaches Halfway Mark." Business Wire, 17 June 1998.

"Eddie Bauer Inc." Hoover's Online, 28 June 1998. Available at http://www.hoovers.com.

"Employment@Eddie Bauer." Eddie Bauer Home Page, 28 June 1996. Available at http://www.eddiebauer.com/eb/EBhq/employ-mentcenter.asp.

Loviglio, Joann. "Plaintiffs in Eddie Bauer Suit Awarded __BODY__ Million." Columbian, 10 October 1997.

"Spiegel Inc." Hoover's Online, 28 June 1998. Available at http://www.hoovers.com.

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Eddie Bauer's primary SICs are:

2321 Men's/Boys' Shirts

2325 Men's/Boys' Trousers and Slacks

2329 Men's/Boy's Clothing, NEC

2339 Women's/Misses' Outerwear, NEC

2369 Girls'/Children's Outerwear, NEC

2511 Wood Household Furniture

2512 Upholstered Household Furniture

2519 Household Furniture, NEC

5311 Department Stores