L.L. Bean studying feasibility of buying Eddie Bauer company

FREEPORT – L.L. Bean is moving forward on a possible purchase of the Eddie Bauer clothing company by hiring consultants to look at Bauer’s assets and talking with investment bankers who could structure a deal.

L.L. Bean chief executive officer Chris McCormick said the most appealing parts of Bauer are its brand, its customer list, and its warehouses in Virginia and Ohio.

But McCormick downplayed the value of Bauer’s 500-plus retail stores, although those stores would provide a major boost to McCormick’s efforts to reduce Bean’s reliance on catalog sales for the bulk of its revenues.

Bauer, based in Redmond, Wash., is going through bankruptcy reorganization with its parent company, The Spiegel Group.

McCormick said it probably will be several months before it is known if any or all of Bauer’s assets will be for sale, and how much Bean would be willing to pay for them.

Industry speculation now pegs Bauer’s worth at $100 million to $200 million, McCormick said. He doesn’t anticipate any problem raising money for a purchase, although such a major acquisition would be the first for Bean.

Bauer is now closing some underperforming stores and earlier this month announced it was laying off 545 workers, including 180 of the 730 who work at its corporate headquarters.

“They’re in the midst of cleaning their house in hopes of raising the price,” McCormick said.

Bean and Bauer have similar product lines, with Bauer emphasizing outdoor and casual clothing, and Bean offering a wider selection of hunting, fishing and camping gear.

Bean is trying to diversify its business, which always has been dominated by catalog sales, by opening new stores and developing new product lines.

Bauer’s retail stores, along with its partnerships with major retailers to sell its clothing lines, could help Bean diminish its reliance on catalog sales, which now account for about two-thirds of its revenues. Bean is aiming for a 50-50 split between catalog and Internet sales and its stores.

Land’s End, another major Bean competitor, gained access to a nationwide chain of stores when it was purchased by Sears, and that could put pressure on Bean to increase its presence in stores.

Matthew Caras, a partner with Leaders, a Portland firm specializing in mergers, acquisitions and company valuations, said he doesn’t expect that breaking up Bauer would produce the best price.

He said Bauer is valuable as a whole because much of its business is inter-related. The catalog and Web site help support the stores and the customer lists, and warehouses are key support pieces to the selling channels, Caras said.

“I would be very surprised if the assets of Bauer are sold in any kind of a piecemeal fashion,” he said.