The bad news for Eddie Bauer is that it recorded a net loss of $165.5 million for fiscal year 2008, compared with a net loss of $101.7 million during its fiscal 2007. The worse news is that it has $193 million in outstanding debt, and is trying to amend the loan terms.
The company warned that it could be in violation of its loan terms by the first half of fiscal 2009. The company’s financial 2008 ended on Jan. 3.
Two previous attempts to renegotiate the loan have failed. The company is currently discussing terms that include upfront cash, in-kind payments, an increase in the loan’s interest rate and warrants for the company’s common stock. The company is delaying filing its annual results with the Securities and Exchange Commission pending the outcome of its loan negotiation.
During fiscal 2008, the company generated $971.3 million in sales, down from $989.4 million in 2007. The company recorded $144.6 million in impairment charges to trademarks and goodwill.
Direct sales slipped 1.3%, from $277.9 million in 2007 to $274.2 million.
Retail and outlet sales dipped 2%, from $711.5 million to $697.1 million, during the same period. During 2008, the company opened 8 retail and 6 outlet stores, while closing 24 retail and 5 outlet stores.
The Disbeliever’s Take: The press statement accompanying these results didn’t say whether the loan holder or Eddie Bauer had put the current terms on the table. Regardless, it’s hard to imagine what else Eddie Bauer could offer. Transfer of trademarks? Surrender of physical plant space? The firstborn children of Eddie Bauer executives? Then again, if Eddie Bauer does violate the loan covenants, it’s hard to imagine a lender that eager to take over the business…
