Same-store sales have been dropping for a string of quarters, and fell 19% for the four-week period ended Aug. 29.
Michael Moran, one of three members of Spiegel's office of the president, said the Eddie Bauer division might have overreached following 1996, its most profitable year ever. Thinking sales would be even stronger in 1997, the company expanded inventory.
"There is no doubt Eddie Bauer has struggled," he said, adding that in trying to create some in-store excitement the chain lost sight of its most loyal customers.
COLOR CHANGES FLOP
To update its color palette, Eddie Bauer adopted the brighter shades of competitors Nautica Enterprises and Tommy Hilfiger USA, turning to kiwi at the expense of hunter green, and going to electric blue instead of navy. When core customers -- suburban and non-urban 25-to-45-year-olds -- balked at the scheme, Eddie Bauer hauled out another vibrant color, red -- as in markdown signs.
At the same time, merchandising difficulties stalled the launch of Eddie Bauer's branding campaign from Lowe & Partners/SMS, San Francisco, which won the estimated $6 million assignment in August 1997.
"Their brand problems begin with the product from a design standpoint," said one marketing executive outside the company.
Jack Sansolo, senior VP-global brand development, said Eddie Bauer is moving back to a traditional fall color collection developed by a new designer.
"We walked away from our roots," said Mr. Sansolo. "We are not a brand about people who are figuring out who they are. It's not a brand in decline, but we stumbled."
As Eddie Bauer tries to work out its color assortment, it's also attempting to come to grips with its identity. The basic brand now has 500 retail stores, some of them in the Florida and Sun Belt markets where down jackets are never in season. Its other brands are Eddie Bauer Home and AKA Eddie Bauer, plus it has a catalog business and an online store.
Additionally, the company has licensed its name to products ranging from eyeglasses to the Eddie Bauer Ford Explorer. Soon, a Bauer-branded bicycle is coming from Giant Bicycles. While Bauer executives said the licenses help extend and strengthen the brand, others in the trade see licensees as potential trouble if not carefully monitored for quality.
Eddie Bauer also has moved into sponsorships, linking with the U.S. Canoe & Kayak Team as well as the Bobsled Team.
RESHAPED OUTDOORS FOCUS
Mr. Sansolo said Eddie Bauer is reshaping its focus to the outdoors, a theme that can play in any climate. Instead of just hunting and fishing, Eddie Bauer will center on skiing and, starting next year, golf. Stores will be remodeled using wood surfaces, genuine canoes and stone wall facades at cash registers, hinting at the brand's heritage.
Retail isn't the only business concerning Eddie Bauer. While some observers said the retailer is struggling with the conflict of whether it's a retailer or direct marketer, its core catalog, like that of competitor Lands' End, is under some pressure.
Starting this fall, Bauer moves to bring some excitement to its non-retail offerings by redesigning its catalog via ad agency Citron Haligman Bedecarre, San Francisco.
Its online store, meanwhile, thanks to its traditional direct marketing business, is poised to take advantage of the e-commerce era.