As of Wednesday, June 13, 2018
Rumors of a merger between outdoor retailer Eddie Bauer and surfwear and streetwear retailer Pacific Sunwear of California have been circulating for the last few weeks.
As preposterous as it sounded, the rumors turned out to be true. Golden Gate Capital, the San Francisco-based private equity investment company that owns both retailers, announced on June 7 that it was forming a new operating company called PSEB, which will be the umbrella organization for Eddie Bauer and PacSun.
On the front end, the two retailers will operate as usual, but on the back end, the two will share services and an enhanced scale of economies to save money.
Eddie Bauer Chief Executive Officer and President Mike Egeck will serve as the CEO of PSEB, overseeing both brands.
“PacSun’s curation of youth culture and brands through the lens of the California lifestyle permeates its brand in the same way Eddie Bauer’s heritage of outdoor innovation underpins its nearly 100-year history,” Egeck said. “While customers and fans of Eddie Bauer and PacSun won’t see any change in their store or online experience as a result of the creation of PSEB, they too will benefit as the brands are powered by a larger and stronger platform.”
There was no news about what role interim PacSun CEO James Gulmi will play. Last year, he replaced Gary Schoenfeld, who had been PacSun’s chief executive for eight years, starting in 2009. Schoenfeld guided the Anaheim, Calif.-based retailer through a Chapter 11 bankruptcy reorganization.
PacSun emerged from bankruptcy in 2016 after reducing its debt and shedding stores. It was then acquired by Golden Gate Capital, which agreed to infuse the struggling retailer with $20 million in capital.
Last year, reports said that Golden Gate Capital had enlisted Financo and Guggenheim Partners to explore selling Eddie Bauer as a large debt came due.
At the time, Eddie Bauer was seeking relief from a $225 million term loan due in 2020 and a $200 million revolving-credit line that comes due in 2019.
Eddie Bauer’s past is also laden with a bankruptcy, which was in 2009, a delisting from the NASDAQ and subsequent sale to Golden Gate Capital for $286 million.