Everything from tariffs, inflation and a post-pandemic shift away from outdoor apparel contributed to the demise of the Eddie Bauer stores operation.
The retailer’s full tale of woe was outlined in the first-day motions in the Chapter 11 bankruptcy filing of Eddie Bauer LLC, a division of Catalyst Brands.
As reported, the Eddie Bauer store operating company on Monday filed a voluntary Chapter 11 petition in U.S. Bankruptcy Court in New Jersey and will close its stores in the U.S. and Canada. This marks the third bankruptcy for the Eddie Bauer business, whose operating company was sold to SPARC Group Holdings and its intellectual property to an affiliate of Authentic Brands Group in 2021. In January 2025, SPARC was acquired by Catalyst Brands, which licensed the North American brick-and-mortar retail rights from Authentic.
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In a 131-page document filed by Eddie Bauer LLC’s co-chief restructuring officer Stephen Coulombe, he said the company, which operates 175 stores across 40 states and Canada and employs about 2,200 people, was benefiting from a renewed interest in the outdoors during the pandemic and posted positive earnings before interest, taxes, depreciation and amortization of $21 million during the last eight months of 2021.
But the trend didn’t last long.
“Multiple headwinds in recent years, including shifting consumer preferences, resulted in a decline in customer demand well below the historical trendline since 2023,” the papers said. The rise in inflation led to an increase in the company’s cost of doing business and the “long-standing though recently suspended ‘de minimis’ tariff exemption, allowed non-U.S. retailers to import goods without paying duties, and elevated tariffs have all coalesced to erode margins and have led to significant negative earnings,” he detailed.
The company lost $2 million in 2022, $10 million in 2023, $82 million in 2024 and $80 million in 2025.
“Financial challenges continued to mount in the fourth quarter of 2025,” the papers continued, and despite exploring multiple options to improve the business. But by that time, “sales had declined to an extent that they could no longer support payment of the fixed licensing fees,” Coulombe wrote.
The stores accounted for 42 percent of the company’s sales which, along with its e-commerce division, generated about $440 million in fiscal 2025.
The company’s e-commerce business, which accounted for about 24 percent of sales in fiscal 2025, had become only “marginally profitable,” and the wholesale business had become unprofitable.
This led the company to terminate its rights to use the Eddie Bauer IP for the e-commerce and wholesale businesses and by working with Authentic, that license was assigned to Outdoor 5 earlier this month and is not part of the Chapter 11. Eddie Bauer LLC retained the exclusive rights to operate the stores, a move that would result in about $220 million in savings, the papers said. But apparently it wasn’t enough.
Since that time, the company started store-closing sales at 49 unprofitable units whose leases had expired and were not renewed. Similar sales at the remaining 175 stores began Jan. 26 and Feb. 7 and will continue unless a buyer is found.
At the same time, SPARC had continued to fund the Eddie Bauer “cash shortfalls through intercompany loans” of about $215 million, he wrote, but that company had also expressed an intention to stop funding the money-losing business. That led to the company going into the market in an attempt to find a buyer for “all or any portion” of the fleet.
The court papers said the company has reached out to 126 potential acquirers, including 68 financial and 58 strategic counterparts, and 34 have signed non-disclosure agreements. Of those, two submitted “indications of interest” on Jan. 30, before the Chapter 11 filing. The company said it will continue to work with these parties to “solidify a going concern transaction” for some or all of the stores.
The company has hired RCS Real Estate Advisors to analyze the lease portfolio and Hilco to assist in the closure of the historically unprofitable locations.
A bid deadline is being set for on or about March 3, an auction, if needed, around March 6 and a sale hearing for around March 12.
The paperwork said the company’s restructuring support agreement is supported by 100 percent of its lenders. It allows the use of cash collateral rather than debtor-in-possession financing to fund ongoing operations.
The company owes $1.7 billion overall and its three largest secured creditors are Wells Fargo, which is owed more than $900 million; WhiteHawk, $600 million, and Copper Retail, $216 million.
