May 06, 2007

Annual Report Update: Eddie Bauer

A few tidbits from Eddie Bauer's Annual Report:
  • Management believes that recent changes in merchandising strategy are responsible for Q4 comp store sales increases of 4.6%, Q1 comp store sales increases of 9.5%, and Q1 direct sales increases of 12.9%. We learn over and over again the importance of merchandising and merchandise presentation, not marketing, in driving customer response.
  • Target customer = 30-54 years old women and men, income of $75,000 per year.
  • Comp store sales have decreased in 23 of 28 quarters since 2000.
  • Following a "relaunch of the brand" in Fall 2005 (which came after hiring new management in merchandising, creative and marketing), with new merchandise and creative presentation, comps by quarter were -4.3%, -7.1%, -10.0%, -5.0% and -1.9%.
  • In the tradition of Otto Versand (former parent company of Spiegel, which was the former parent of Eddie Bauer), Bauer leverages preview catalogs to determine sales potential of items at the start of a season, and then adjusts inventory buys as a result of what is learned in the preview catalogs. Preview catalogs are mailed nearly three months prior to the start of a season. 70% to 75% of the buy is placed, then adjusted following performance of the preview catalog.
  • 3.1 million twelve-month buyers, 1.8 million e-mail addresses.
  • 28 catalog editions with total circulation of 80.8 million.
It will be fun to see if the turnaround can continue for this beleaguered brand.

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