Eddie Bauer Home builds on 2000

Jennifer Negley, July 13, 2001

Redmond, WA — As is the case with many retailers working through the sluggish climate of 2001, Eddie Bauer Home is concentrating on its best bets and reigning in trickier ventures. However, unlike some others, it is expecting greater gains during the second half of the year.

Accounting for more than 25 percent of sales in The Spiegel Group's Eddie Bauer division, Eddie Bauer Home had a strong 2000, outperforming the core operation during a year in which Eddie Bauer's apparel assortment left consumers cold.

Late last year, Eddie Bauer reorganized the apparel side's management structure and strategy. With the fruits of that shift soon coming to market, "our company should see a significant change in business over the next six months that might be counter to the industry," said Harvey Kanter, managing director and vp, Eddie Bauer Home.

Although "home is the most happening thing at Bauer," Kanter told HTT, its success can be hampered by a misstep in the apparel group — most particularly at store level. With 35 of 42 Eddie Bauer Home stores lodged inside apparel units, home is dependent upon the apparel to drive traffic.

And the first six months of 2001 have not witnessed much consumer interest in apparel in any channel. "We've really struggled to hold our own," Kanter said. For home stores tied to apparel, a good month this year has seen home sales 10 points ahead, a bad month five points ahead, he said.

The freestanding home stores have performed somewhat better. "They're not typically draws in and of themselves," he said. "They're doing better, but not incredible. The days of when we were running 20-point comps are no longer here."

The home division has been driving sales this year by refining the Great Master concept for bed and bath it launched in 1999.

"We see customers adding pieces to existing collections," Kanter said. "We've added new elements to update the collection. We want to afford them a multiplicity of options to update the bed."

In bath, the best business over the spring has been primarily novelty, he said. A daube check pattern towel on blue, green and white blanks has performed well. Other winners included Cabana Hut and Thistle Floral hand towels as well as Cabana stripe towels. The solid-color Egyptian and combed cotton business is unremarkable, Kanter said.

"The whole thing we're trying to accomplish in the positioning of our business is to take a specific track. In the specialty arena, we don't really offer industry-spec product. It's all about the lifestyle," he added.

With the team intently working to build out the master collections, development of the baby and juvenile businesses has moved to the back burner. As a freestanding business, baby continues to outperform juvenile, which is treated as an extension of the master collection business, Kanter said. Although products are still carried in stores and at eddiebauerhome.com, the lines have been pulled from Eddie Bauer catalog because the book could not convey the breadth of the assortment, he said.

"Baby and juvenile in its entirety has not performed at the level we wanted it to," he said. "Based on the size of the market, there's no question we can go farther. We think of this as more of a hiatus for us in terms of the catalog. It's all about productivity. In the terms of the overall business, it's not the most significant area for us right now."

The home division's year-old Internet business, however, has been growing steadily, Kanter said. "Our Internet business has tripled in relation to Eddie Bauer Direct," he said. "And we're looking for another 25 percent in penetration growth for fall."

On the product development side, this past spring saw the first arrival of Eddie Bauer Home goods made in China — two patterns in master bedroom and one in baby. Eddie Bauer International now has sourcing agents devoted to home in its Hong Kong office, Kanter said, and the company is more aggressively pursuing overseas factories.

"If we could have more domestics placements, we would," he added. "But we don't operate like a Wal-Mart. We need people who can understand a lifestyle concept."

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