Eddie Bauer Inc.

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Eddie Bauer Inc.

15010 Northeast 36th Street
Redmond, Washington 98052-5317
(206) 882-6100
Fax: (206) 882-6383

Wholly Owned Subsidiary of Spiegel Inc.
Incorporated: 1920 as Eddie Bauers Sports Shop
Employees: 8,500
Sales: $1 billion
SICs: 5699 Miscellaneous Apparel & Accessory Stores; 5941 Sporting Goods & Bicycle Shops; 5719 Miscellaneous Home Furnishing Stores; 5947 Gift, Novelty & Souvenir Shops; 5961 Catalog & Mail-Order Houses

Eddie Bauer Inc., a mail-order and storefront retailer of outdoor apparel, sporting goods, and home furnishings, is one of the fastest growing retail businesses in the country. As the largest specialty outdoor merchandiser in the United States, Eddie Bauer boasts 272 stores in virtually every major market in the United States and Canada and receives a considerable amount of business through its catalog sales.

Created by the son of Russian immigrants, Eddie Bauer Inc. began as a tennis racquet stringing business in Seattle, Washington. While his parents would eventually play a significant role in the development of Eddie Bauer Inc., Eddie Bauer initially drew upon his childhood years on Orcas Island, a sparsely populated island near Seattle, as the inspiration for what would eventually become a billion dollar retail business.

Those early years were spent fishing, hunting, and trapping on the wooded island, imbuing Bauer with a love of the outdoors. When his family moved to Seattle in 1912, Bauer was 13 years old and looking for work. He immediately gravitated toward the only full-line sporting goods store in the city, Piper & Taft, and landed a job as a stock boy. Over the years, Bauer watched and learned, eventually becoming adept at making guns, fly rods, and golf clubs. In addition to these talents, Bauer also developed considerable skill in stringing tennis racquets, winning the world speed championship, while in a display window at Piper & Tafts, by stringing 12 racquets in just over three-and-a-half hours. Still in his teens, Bauer had already gained the attention of Seattles sporting community. He was often referred to in local newspapers for killing the biggest elk, or catching the most fish, or for winning rifle- and pistol-shooting competitions. This local recognition would serve Bauer well when, in 1919, with $25 in his pocket and $500 borrowed on a 120-day loan, he rented 15 feet of wall space in a gun shop for $15 a month and began stringing racquets on his own. In this venture, Bauer enjoyed immediate success, stringing enough racquets to accumulate $10,000 within his first year. Encouraged by his initial success, Bauer arranged for credit from a bank and opened his own shop, Eddie Bauers Sports Shop, in 1920, the predecessor of Eddie Bauer Inc.

In addition to his renowned racquet stringing abilities, Bauer also offered golf equipment and trout fishing flies during his first year of business, and the 20-foot storefront quickly became a haven for sporting enthusiasts throughout the Pacific Northwest. Bauers success during these nascent years was largely due to his reputation as an experienced outdoorsman and his active participation in the sporting community. He worked at his store from February through August each year, then hunted and fished for steelhead throughout the winter. During these sojourns in the wild, he field tested all of the equipment he sold in his stores, which, after the first year, included an array of outdoor equipment and clothing. Two years after he opened for business, this firsthand knowledge of his stock enabled him to offer an unconditional guarantee of satisfaction on all of the products sold in his store, a rarity for retail businesses during the 1920s. Bauer also promoted sporting activities in his spare time, increasing the publics awareness of such sports as skiing by importing Norwegian hickory skis and persuading Norwegian skiers to come to the Pacific Northwest to help foster growth in the sport.

By 1924, Bauer had added a complete selection of fishing tackle, firearms, and skeet and trap equipment to his store and renamed it Eddie Bauers Sporting Goods. Customers continued to flock to Bauers store, lured by his unconditional guarantee and his knowledge of the outdoors. Eddie Bauers Sporting Goods had quickly become a favorite place for outdoorsmen to outfit themselves for a wide variety of sporting endeavors. With a large and loyal clientele, Bauers future success appeared as guaranteed as the products he sold, but, in the coming years, Bauers position as a successful operator of a local sporting goods store would be elevated to a height not imagined even during the optimistic 1920s.

Bauers success had been predicated on his experience and interest in sporting equipment, so it was fitting that the innovation that would eventually launch his company into the upper echelon of the outdoor apparel industry came as a result, at least in part, of his desire to improve sporting equipment. In the late 1920s, Bauer attempted to improve the consistency of flight in badminton shuttlecocks. He imported premium feathers from Europe and developed a method utilizing buckshot that achieved the desired results. In 1930, his design was patented and eventually adopted for use in the badminton world championships.

While investigating which type of feather would improve the flight of shuttlecocks, Bauer came across goose down, reminding him of an uncle who had once extolled the virtues of goose downs insulating quality. Years earlier, Bauers uncle, a Cossack fighting in Manchuria during the Russo-Japanese war, had worn a coat lined with goose down to stave off the 50 degrees below zero winter weather. Bauer, who had suffered through many cold winters fishing and hunting in the mountains near Seattle, decided to use goose down to make a coat for himself. After designing and sewing a quilted goose down jacket for himself, Bauer discovered the truth of his uncles story, and soon was making down jackets for a few of his friends. The popularity of these jackets led Bauer to patent his design and begin production of Americas first quilted, goose down insulated jacket in 1936. Called the Skyliner and selling for $34.50, the jacket was an immediate success, particularly with Alaska bush pilots, and led to the production of a wide assortment of garments with different quilting styles. Starting with ten seamstresses in 1936, Bauer needed 125 by 1940 to meet the voracious demand for his quilted jackets. By this time, Bauer had secured a virtual monopoly on the insulated jacket market, employing as many seamstresses as his rapidly expanding business required and purchasing all the European and North American goose down he wanted.

This supply of goose down, however, ended just as Bauers quilted down garments began to attract orders through the mail. When the United States entered World War II in 1941, the war production board requisitioned all of the goose down supply on the market and froze Bauers existing supply. No longer able to purchase or use goose down, he was relegated to using eiderdown as a replacement, a substitution that negatively affected his sales. It appeared as if his flourishing retail trade had been swept away from him, but whatever losses Bauer incurred as a result of the governments seizure, he more than made up for them by providing goose down products to the United States Army Air Corps. At first, Bauer provided the military with sleeping bags and snowshoes and binders, which he sold at retail prices, and eventually his business with the government increased considerably. Using the war production boards goose down, Bauer manufactured 25,000 flight suits and nearly 250,000 sleeping bags for Air Corps flight crews and those fighting in the frigid Aleutian campaign. In order to satisfy the militarys needs, Bauer constructed a production factory, invested roughly $200,000 in specially built machinery, and hired 400 power sewing machine operators to work in three shifts, seven days a week. This prodigious wartime production salvaged what otherwise could have been a recessive period for Bauers company and, more important, it also carried the Eddie Bauer name across the nation. All of the garments Bauer manufactured for the military had the Eddie Bauer label stitched on them, the only garments during the war that carried the manufacturers private label.

Although Bauers civilian business slackened during the war, he continued to advertise in order to create a demand for his products when the war ended. Once it did, he steeled himself for an immediate return to the prosperous days of the late 1930s. Expectations now ran higher, however, considering the tremendous strides in name recognition the company had made as a result of the war, so Bauer introduced a new way to bring his products to the public. In 1945, just as many of those who had worn Eddie Bauer products during the war were returning home, Bauer issued the companys first mailorder catalogs. Although the introduction of the catalogs represented a significant landmark in Eddie Bauer Inc.s history, a more pressing concern during these immediate postwar years overshadowed their import. Bauers company seemed in danger of failing.

In order to fill the demands of his contract with the Air Corps, Bauer had invested in equipment that could only serve his production needs during the war. Both the profits and the machinery were temporary, so, once the war ended, Bauer was left with the machinery and nowhere to sell it, leaving him in a precarious situation. As he would later recall, We were stuck with the machinery and I lost practically everything I owned, down to where I had to start all over again. To assist with this rebuilding process, Bauer entered into a partnership in 1951 with William F. Neimi Sr., a friend with whom Bauer hunted and fished, and together they strengthened the company by placing an emphasis on the mail-order side of the business and concentrating on producing a larger selection of products. From this point forward, until the 1970s, Bauers company would be primarily a mail-order business. Before the end of the decade, Bauer would close his stores in Seattle and rely almost exclusively on purchases made through the mail, with the only retail sales being generated by a factory store in Seattle.

The changes made by Bauer and Neimi worked. By mailing catalogs to potential customers and outfitting those outdoors-men who came to the factory in Seattle, the company generated $1 million in sales in 1960. Although Bauers financial position had seemed bleak 15 years earlier, the widespread recognition of the Eddie Bauer name had always remained secure. And now a new generation of potential customers were being introduced to the Eddie Bauer line of products through the catalogs arriving in the mail. By this time, Bauers company used nearly half of the worlds supply of northern goose down and had outfitted every American expedition to the Himalayas over the previous ten years. When mountain climbers needed to train for assaults on the towering peaks in the Himalayan range, they often selected the mountains in proximity to Seattle as suitable sites. By the 1960s, a visit to Bauers factory store became a natural stop for climbers needing clothing and equipment, which further bolstered the nations recognition of the Eddie Bauer name. When James W. Whittaker became the first American to reach the top of Mount Everest in 1963, he wore an Eddie Bauer parka, slept in an Eddie Bauer sleeping bag, and used Eddie Bauer gear, as did the entire expedition. Three years later, Bauers company outfitted the American Antarctic Mountaineering Expedition, and it continued to produce the preferred gear for expeditions to follow in later years.

In 1968, Eddie Bauer retired and sold his company to a group of Seattle investors. These investors, however, were undercapitalized, so after three years of operating the company and two unsuccessful attempts to make Eddie Bauer Inc. a public company, they sold it to General Mills, Inc. for a reported $10 million. What General Mills received was still essentially a mail-order business. Since Neimi and Bauer had decided in 1951 to concentrate almost entirely on revenues garnered through mail-order purchases, the companys retail sales had been limited to the products sold from its factory store. It was this segment of Eddie Bauers business General Mills wanted to fortify.

It was several years, however, before the disparate merchandising philosophies of the two companies would effectively join together and even longer until Eddie Bauer obtained consistent leadership. From 1975 to 1978 the company went through four presidents, until finally settling on James J. Casey, who had joined Eddie Bauer three years earlier. At this time, the state of Eddie Bauers product line was still in flux, as General Mills attempted to reshape its subsidiarys market appeal. Six months after Casey assumed leadership of the company, he maneuvered it away from a merchandising failure that had added golf and tennis apparel to the companys product line. For customers inured to a product line whose reputation had been built on manufacturing down parkas and outfitting expeditions to the Antarctic, the shift was a difficult one to make, and potential customers went elsewhere when purchasing items for warmer climes. Although General Mills continued to struggle with the specialty outdoor market niche, it had increased the number of Eddie Bauer retail locations. By the end of the decade, there were 16 retail stores and plans in place to double that figure. In General Mills first year of ownership, Eddie Bauer posted $11 million in sales, and, with the boost in sales provided by the additional stores, sales climbed to $80 million, ranking the company second only to L.L. Bean in the specialty outdoor market. The disparity between retail and catalog sales disappeared, with half of the total revenues generated by the stores, and 14 million catalog customers accounting for the remainder.

By 1984, the changes initiated by General Mills had substantially altered the image Eddie Bauer projected to its customers. Apparel now generated approximately 70 percent of the retail store revenues, and much of it did not resemble the clothing worn by members of a Mount Everest expedition, or even the clothing worn by weekend adventurers camping in the woods. Tents, backpacks, and fishing rods had slowly begun to disappear from the shelves of the companys stores and were replaced with oxford cloth shirts, lambs wool sweaters, and other items uncharacteristic of the rugged, expedition outfitter. With 41 stores located in Canada and the United States, the company broadened its appealenough for Ford Motor Co. to begin production of the Eddie Bauer Bronco IIand attracted a more diverse clientele. The expansion of the retail side of the business represented a move toward greater growth for the mail-order segment as well. In 1983, Eddie Bauer mailed 14 million catalogs, and, by the following year, 30 million catalogs were sent to potential customers, two million of which were printed in French to accommodate the companys burgeoning clientele in Canada. Plans called for further expansion of the companys retail business, some 60 stores over the next five years. To lead the company toward this goal, a switch in leadership was made. In 1984, Michael Rayden replaced Casey and began separating retail, mail-order, and manufacturing into three distinct divisions.

By 1988, Eddie Bauer had 57 retail stores located in the United States and Canada. But just as General Mills was announcing further plans to augment Eddie Bauers retail holdings, the corporation put Eddie Bauer up for sale along with another specialty clothing chain it owned, Talbots, in a bid to divest itself of all non-food related businesses.

Speigel Inc., a catalog marketer of apparel, home furnishings, and other merchandise agreed to buy Eddie Bauer for $260 million, roughly equal to the sales the company generated at the time of its purchase. Wayne Badovinus was selected to lead Eddie Bauer and, over the next two years, 100 stores were added to the retail chain, bringing total sales up to $448 million. In 1991, Eddie Bauers first Premier store was opened in Chicago, which housed all of the companys recently introduced specialty product lines. All Week Long, Eddie Bauers collection of womens sportswear and casual attire, first introduced as a catalog business in 1987, had evolved into a retail business by 1991 with the opening of its first store in Portland, Oregon, and now was part of the Premier store concept. Also included in the Premier stores were The Sport Shop at Eddie Bauer, featuring custom-built fishing rods, reels, and fishing flies, and The Eddie Bauer Home Collection, which sold a wide assortment of indoor and outdoor furnishings. The addition of these specialty retail concepts, each first introduced in 1991, marked another dramatic leap in revenues. In the three years since Speigel had purchased Eddie Bauer, the parent company had witnessed an increase in revenues from roughly $260 million, to nearly $750 million, occasioned primarily by the dramatic increase in Eddie Bauers retail business. This expansion continued after 1991, giving the company 265 retail stores by the end of 1992.

Since 1920, the Eddie Bauer name has evoked several images. What once represented fishing tackle, guns, and mountaineering equipment, stood for durable, comfortable apparel in the 1990s. As Eddie Bauer planned for the future, with its new image and new products, and pursued its goal to establish a store in every major North American market, its product lines appeared to remain as strong as the Eddie Bauer name.

Further Reading

Eddie Bauer Catalog Sidesteps Recession Doldrums, Direct Marketing, November 1983, p. 72.

Evolution of a Down-Wear Retailer, New York Times, March 12, 1981, p. D4.

Palmeri, Christopher, Indoor Sportsman, Forbes, March 29, 1993, p. 43.

REI, Eddie Bauer Expand, Chain Store Age Executive, August 1987, pp. 4647.

Retreat, Hell: Four Contrarians Who Hear Opportunity Knocking, Business Week, January 14, 1991, p. 64.

Ricketts, Chip, Eddie Bauers Southern Expansion Push Includes Metroplex, Dallas Business Journal, February 26, 1990, p. 3.

Schwadel, Francine, and Richard Gibson, General Mills Is Putting Up for Sale Talbots, Eddie Bauer Clothing Chain, Wall Street Journal, January 8, 1988, p. 4; General Mills to Sell Last Retail Units, Talbots and Bauer, for $585 Million, Wall Street Journal, May 19, 1988, p. 4.

Schwadel, Francine, Waters Resigns From General Mills, Pursues Purchase of Units He Managed, Wall Street Journal, January 11, 1988, p. 32.

Spector, Robert, Eddie Bauers New Look, The Weekly, January 2, 1985, pp. 2022; Eddie Bauer: The Man Behind the Name, Pacific Northwest Magazine, May 1983, pp. 6164.

Warren, James R., Eddie Bauers Guarantee Was Key to Firms Success, Seattle Business Journal, June 13, 1983, pp. 67.

Jeffrey L. Covell