NEW YORK — Eddie Bauer Holdings Inc. expects that its sales and earnings will be "significantly lower" in fiscal 2006 than in fiscal 2005, the company said Monday in a regulatory filing.
The outdoor lifestyle brand on Monday refiled its long-awaited Form 10-12G with the Securities and Exchange Commission, a move that will allow it to later trade on the Nasdaq. It currently trades in the over-the-counter market. The SEC review period is expected to take 60 days. Late last month, financial sources said the company hired Goldman Sachs as a financial adviser to help it explore options for a sale.
Bauer said for the year ended Dec. 31, 2005, net income fell by 12.8 percent to $38.1 million from $43.7 million a year ago. Sales dropped 5.4 percent to $1.06 billion from $1.12 billion in the same year-ago period.
The company, which operates 373 stores, also said preliminary results for the first quarter of fiscal year 2006 indicate same-store sales are down 10 percent. If customer purchases continue to lag behind its expectations, the company noted, Bauer may continue to experience decreases in net sales and negative comps.
One of the problems the company encountered was a not-so-positive reaction to initiatives for the fall-holiday 2005 season that was designed to revitalize the brand. Instead, Bauer said in the filing that it skewed its style to appeal to the younger half of its customer target, along with slimmer fits and too few Eddie Bauer classic pieces. The company said it had inconsistent fit across the board in many categories and it offered too many color choices. Because of the lead times required to correct the initiatives that didn't work, it said 2006 sales and earnings would likely be lower than what the results were for 2005.
Bauer's target demographic is adults between the ages of 35 and 54, with the average age at 43 years. The average household annual income is $75,000.
The company said several factors could work against its efforts to revitalize the brand. Among them are the shift in customer preferences in the U.S. toward more casual apparel, unwillingness to spend for items at the midprice points and the company's focus in a sector — apparel and footwear — where spending has lagged personal and consumption expenditures since 1970.
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