Eddie Bauer and Pacific Sunwear could merge in a play that would shrink store count from their combined 700 or so storefronts, mostly based at malls, Reuters reports, citing unnamed sources.
Private equity firm Golden Gate Capital acquired both companies during Chapter 11 proceedings, PacSun in 2016 and Eddie Bauer in 2009.
Eddie Bauer has tried to sell itself in the past, but has not met with much success. Golden Gate didn't immediately return Retail Dive's request for comment.
A combo of these two brands — one a 100-year-old brand launched as a hunting and fishing store in the Pacific Northwest, the other as a Newport Beach, California surf shop in 1980 — would most likely be an efficiency play. Eddie Bauer runs about 370 stores in the U.S. and Canada, according to its website, and PacSun about 570 after it exited bankruptcy two years ago.
But the Pacific Coast is a long one, and, despite departures each brand has made from its origins, the outdoorsy hiking and performance vibe of Eddie Bauer doesn't seem like a natural fit for PacSun's easygoing, beach vibe. Each banner had a 6% rise in comparable sales last year, according to Reuters' sources.
In addition to expense cuts from potential store closures, such a move could solve Golden Gate's ongoing problem of unloading Eddie Bauer. The brand spent most of the 21st century burdened with debt, surviving two trips to bankruptcy court, one in 2003 and again in 2009, when Golden Gate took it over. Last year Eddie Bauer was reportedly looking to sell itself; a 2014 deal for a takeover by menswear retailer Jos. A Bank ultimately fell through and there's been scant interest since.
In a note emailed to Retail Dive late last year, Moody's Investors Service called out Eddie Bauer for needing good holiday sales in order to avoid further downward rating pressure, and last July the company made it onto Retail Dive's list of retailers at risk of bankruptcy.