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Eddie Bauer Reports Lower Sales

Eddie Bauer Holdings Inc. on Thursday reported lower sales and estimated earnings results for the fourth quarter.

Eddie Bauer Holdings Inc. on Thursday reported lower sales and estimated earnings results for the fourth quarter.

This story first appeared in the January 23, 2009 issue of WWD.  Subscribe Today.

For the quarter ended Jan. 3, the outdoor lifestyle apparel retailer said sales declined 5.7 percent to $356 million from $377.6 million a year earlier as comparable-store sales slid 8.8 percent overall and 5.7 percent excluding the impact of the fall of the Canadian dollar.

Eddie Bauer said it anticipates quarterly adjusted earnings before interest, taxes, depreciation and amortization of $53 million to $58 million, a decline of $2 million to $7 million from the year-earlier quarter.

During the quarter, the firm said that high levels of promotions drove down merchandise margins, and that inventories fell about 8.2 percent. The company ended the year with 376 stores, 16 fewer retail units and one more outlet store than at the beginning of the year.

Neil Fiske, president and chief executive officer of the Bellevue, Wash.-based specialty chain, described the retail environment in the quarter as “brutal — the worst in decades.”

Shares ended Thursday’s trading session at 93 cents, up 45 cents, or 93.7 percent, the largest percentage gain on the Nasdaq exchange.

To cope with the downturn in 2009, the company said it would limit capital spending to $15 million, reduce selling general and administrative expenses to $10 million to $15 million from the 2008 level of between $45 million and $50 million, freeze salaries and cut the size and expenses of its board. However, it also plans to accelerate product development and new launches.

For the year, the company estimates adjusted EBITDA of between $50 million and $55 million, an increase of $8 million to $13 million over 2007. Sales for the year totaled $971.3 million, 1.8 percent lower than in 2007, and were down the same amount on a same-store basis. Excluding currency translation, comps fell 1.1 percent.

The company ended the year with $60.4 million in cash.

“In spite of the recession in 2008, we managed to improve our year-over-year adjusted EBITDA and cash flow,” Fiske noted. “Our sales were soft, but much of the market fared worse. Our turnaround program continues to show results, even in a tough environment.”

Even with their strong showing Thursday, Eddie Bauer’s shares continued to trade at a fraction of their recent price. One year ago, the stock closed at $5.74 and as recently as Sept. 11 hit a 52-week high of $8.72. The corresponding low, going back to Dec. 5, was 30 cents.

The company has struggled to regain momentum since shareholders rejected its sale to private equity firms Sun Capital Partners Inc. and Golden Gate Capital in February 2007.

Eddie Bauer’s advance came on a day when stocks struggled to avoid declines, although the S&P Retail Index’s 0.7 percent retreat, to 267.50, was better than the Dow Jones Industrial Average’s 1.3 percent drop, to 8,122.80, or the S&P 500’s 1.5 percent descent to 827.50. All three indices outperformed the Nasdaq’s 2.8 percent drop to 1,465.49, paced by Microsoft Corp.’s 11.7 percent sell-off after it jolted Wall Street with news of disappointing second-quarter earnings and 5,000 layoffs, the first in its history.

Among the larger declines registered in the worlds of fashion and beauty were Casual Male Retail Group Inc.’s 19.2 percent slide to 42 cents and Saks Inc.’s and The Bon-Ton Stores Inc.’s respective declines of 14.3 percent, to $2.40, and 13.6 percent, to $1.08. Zale Corp. had its second consecutive double-digit decline since the announcement on Tuesday of the departure of chief financial officer Rodney Carter, dropping 15.7 percent to $1.45.