A spokeswoman for Eddie Bauer, a division of the Spiegal Group, said the parties are in negotiations and will not comment until a deal is signed.
Other finalists in the review included Havas Advertising's Black Rocket Euro RSCG and a Seattle shop affiliated with the Seattle office of Omnicom Group's DDB Worldwide.
Eddie Bauer sells through a catalog and online but has been taking a hit with disappointing same-store sales. The retailer spends about $100 million on marketing each year, but much of the money is targeted toward its catalog operation.
According to Taylor Nelson Sofres' CMR, Eddie Bauer spent $1 million on advertising for the first 11 months of 2001, down from $8.7 million in 2000 and $23.5 million in 1999.
Executives at Mullen were not available for comment.