NEW YORK — Bankrupt Spiegel Inc. is quietly shopping its Eddie Bauer retail chain.

Financial sources have told WWD that Spiegel is gauging how much interest is out there — as well as how much a sale could garner — to help ease bankrupt Spiegel Inc.’s credit crunch. Sources familiar with the marketing of Bauer said that the catalog firm is hoping to get close to $200 million for the 535-unit chain, but will likely get far less.

"We don’t comment on rumors," a Spiegel spokeswoman said of the reports on Bauer, adding that Spiegel "is taking action to strengthen its financial position and operations to complete its restructuring and emerge from bankruptcy as soon as possible."

According to one investor, who decided to walk away from a potential purchase of the chain, the amount that Spiegel was seeking was "way too high" for the specialty retailer in its current format. The source didn’t rule out the possibility of another look at the chain, but only after a substantial number of stores were closed.

Several financial sources said that Spiegel might fetch $125 million to $150 million for Bauer if the specialty chain were downsized. However, at least 200-plus stores would need to be pared from the total store count, they said.

Pruning Eddie Bauer’s store count is now easier to do, since Spiegel is under Chapter 11 bankruptcy court protection and can take advantage of the process to reject unwanted leases.

Others added that Eddie Bauer could be a more attractive nameplate if certain merchandising changes were made, such as shuttering its home furnishings department, decreasing its sportswear offerings and focusing more on its original active-outdoor concept.

Spiegel filed for bankruptcy court protection last month in Manhattan. At the time, it was hoping to keep the Eddie Bauer division, which it acquired in 1988 from General Mills. As its most profitable operation, it is also the business most often cited for a possible sale.

Spiegel last month received bankruptcy court approval to use up to $150 million of its $400 million debtor-in-possession (DIP) package on an interim basis. A hearing originally scheduled for Wednesday for final approval of the balance of the financing facility has been adjourned until April 28.Given the current economic climate, a deal to sell Eddie Bauer is not likely to be concluded anytime soon.

Sources at investment banks and private equity firms have complained about the scarcity of attractive acquisition candidates. It is a problem for cash-rich companies trying to find places to invest their dollars.

A financial source in the credit markets observed: "Why would any firm — strategic or financial — invest in Eddie Bauer or any other retailer now? Until the war is resolved and the economy stabilizes, this is not the time to do a merger or acquisition."

That could be really bad news for Spiegel, which needs to stem the decline in sales to avoid a liquidation. Unfortunately, it is caught in a viselike grip because of its troubled and now comatose credit card operation.

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