Eddie Bauer Stems Spiegel’s Faltering Sales Northwest-Based Company Is The Gem Of Its Struggling Parent’s Holdings

A walk down tony Michigan Avenue finds Tiffany, Cartier - and now Eddie Bauer.

It doesn’t sell pricey jewelry, but the new Eddie Bauer superstore is being held up as the gem that will help boost sales for its parent company, struggling retailer Spiegel Inc.

The move onto one of the priciest shopping streets in Chicago, and one of the most expensive for real estate, represents Spiegel’s growing reliance on Eddie Bauer.

“It does make a statement about how we feel about Eddie Bauer,” Spiegel spokeswoman Debbie Koopman said Wednesday. “We feel very positive about where it’s been and where it has the potential to go.”

Spiegel, based in suburban Downers Grove, bought Eddie Bauer when it consisted of 58 stores in 1987. This year, Eddie Bauer is opening 30 stores in the United States, Japan and Germany. The Redmond, Wash.-based chain now has more than 400 stores in the United States and Canada and officials hope to have 800 to 1,000 in five years.

The 30,000-square-foot, “premier” store opening Oct. 11 is the sixth nationwide that combines Eddie Bauer’s casual clothing, dressier wear, outdoor clothing and gear, and home products. The first opened in 1991 in suburban Oak Brook. The Michigan Avenue store is expected to become a volume leader along the lines of other superstores such as Nike and Warner Bros.

Eddie Bauer’s rapid expansion comes as many catalog-driven retailers struggle in a fiercely competitive retailing environment. The company’s prowess in snaring a core group of higherspending 35-to-44-year-old consumers is expected to bring in $1.5 billion in sales this year, accounting for about half of Spiegel’s revenue.

“Eddie Bauer has been the jewel in the Spiegel chain,” said retail analyst Debra O’Shea at Barrington Resources Associates Inc. “It’s doing well in an extremely difficult industry and is seen as Spiegel’s main vehicle for growth.”

Spiegel’s stock has fallen sharply this year amid poor sales from the company’s core catalog business.

For the first six months of the year, Spiegel lost $17.6 million, or 16 cents a share, compared with a loss of $24.3 million, or 22 cents a share, a year earlier. Revenue fell to $1.3 billion from $1.38 billion a year ago.

Eddie Bauer’s sales rose 10 percent in the same period, while sales at stores open at least a year rose 3 percent.

Sales have cooled off somewhat in the second half as Eddie Bauer trimmed its extensive shoe line to make way for a new line of clothing.

Spiegel’s continuing reorganization of its catalog operations and Eddie Bauer’s sales decline is expected to contribute to a 16 cents a share loss when the company reports earnings Oct. 23, analysts predict.

Critics believe Spiegel should get rid of its Big Book, much as Sears, Roebuck and Co. did years ago, to focus on specialty catalogs that appeal to specific groups.

John W. Irvin was appointed in April to the new position of president of the catalog division and is reviewing its operations. Irvin, a former executive at Dayton Hudson’s Mervin’s division, plans to add a higher quality of branded merchandise to the catalog for shoppers looking for upscale lines such as Donna Karan and Calvin Klein.

“At this point, there are no plans to discontinue the Big Book,” Koopman said. “The last couple of years (have) been challenging for the catalog industry and for us in particular, but our customers still look forward to those books for the breadth of offerings and ideas.”