Eddie Bauer: Climbing To Higher Brand Peaks

Derrick DayeJune 19, 20091 min

Eddie Bauer, the iconic outdoor-clothing chain that sold goose-down coats to Mount Everest mountaineers and modern outdoor clothing to ski-schussing college students, filed for Chapter 11 bankruptcy protection Wednesday.

Eddie Bauer has been struggling to repay its debt. And the fact that consumers slowed down spending on anything but necessities can’t have helped. In fact, the falloff came as Eddie Bauer was attempting to pull off what would have been a multi-year turnaround. “Eddie Bauer is a good company with a great brand and a bad balance sheet,” said Neil Fiske, the company’s CEO, though the retailer also said stores, catalog business and Web sites would continue operating, and that they will honor all customer gift cards, returns, and their points program.

According to our 2009 Customer Loyalty Engagement Index, Eddie Bauer was just edged out of 1st place by J. Crew, another iconic clothing brand, whose ascension was largely aided and abetted by the patronage of Michele Obama, with L.L. Bean a distant #3.

On the marketing side of things, Eddie Bauer recently celebrated a new line called “First Ascent,” outfitting two mountaineers as they took on a climb of Mount Everest. On the financial side of things, there are plans in place to sell the company for $202 million to CCMP Capital Advisors.

A judge still needs to approve the sale, and other potential bidders still could emerge. But based on engagement and customer loyalty levels, whoever ends up buying the brand is pretty sure to end up on top of the world.

Contributed to Branding Strategy Insider by: Robert Passikoff, President, Brand Keys

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  • Shira

    June 19, 2009 at 4:32 am

    Just because you have high customer loyalty does not mean that it’s a good buy. Hemorrhaging money and bad management decisions have a high cost on corporate culture and take time to fix. Also, J. Crew is also having issues with sales (even with the Obama connection – and if Obama ends up losing face then J. Crew will suffer even more for it).

    Eddie Bauer needs to figure out what their customers actually want to BUY. Then they will be a company worth buying.

  • mark ritson

    June 22, 2009 at 8:47 pm

    Isn’t this a perfect illustration of the limits of brand equity (gasp).

    While I am not convinced Eddie Bauer is a particularly strong brand (this week in Boston a quick tour suggest around 75% of the stock was on sale – which explains the loyalty but not necessarily the brand strength). Even if you accept Fiske’s contention that his brand is strong, his business still stinks.

    Just because you have some brand equity does not mean all will be well. Does EB have enough brand equity to achieve a price premium that will enable the chain to make a profit?

    It’s just like poor old Volvo, and soon even poorer old Saturn. Yes there is some residual brand equity there – but not enough to fix broken business models in competitive categories where other organizations have much leaner costs, much better product and much strong brand equity.

    Brand equity is a vital element in most organizational success stories. But just because you it – does not mean you eventually succeed.

    Nice post and great quote from the CEO!

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