Eddie Bauer, Pac Sun merge under new umbrella group

Eddie Bauer and Pacific Sun are set to merge under a single company.

Dubbed PSEB Group, the new subsidiary has been set up by the U.S. apparel brands' owner and major investor Golden Gate Capital, according to the private equity investment firm on Thursday.


PacSun


Outdoor apparel brand Eddie Bauer and LA-inspired fashion retailer PacSun will continue to operate independently, said San Franciso-based Golden Gate. The pair will maintain separate front ends, including unique brand identities, design, merchandising, marketing, e-commerce and retail operations.

However, each will benefit from "shared services and enhanced scale," and "customers will experience no changes," confirmed Golden Gate.

With the establishment of PSEB, Golden Gate said it will invest additional equity to support its growth, without disclosing an official amount.

“Eddie Bauer and PacSun are powerful brands with differentiated, loyal customer bases," said Josh Olshansky, managing director at Golden Gate Capital.

"By creating PSEB and investing additional equity, we will accelerate the growth trajectories for both businesses, while preserving the autonomy and discrete cultures of each brand." 

Olshansky went on to highlight the "great progress" made by both brands in the last two years.

"Bringing these two brands onto a shared platform will allow us to fuel this momentum and unlock their next stages of growth," he added.

In 2017, Eddie Bauer and PacSun grew same-store sales by 6.5% and 5%, respectively, and year-to-date, same-store sales are up 6% at Eddie Bauer and are up 8% at PacSun.

With the new subsidiary comes a management reshuffle. Eddie Bauer's chief executive officer, Mike Egeck will serve as chief executive officer of PSEB, with oversight of both the Eddie Bauer and PacSun brands.

Talking of the amalgamation, Egeck said that "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.

"We look forward to the competitive advantages that a unified shared services platform will provide us, while we continue to invest in the two brands’ consumer connections and distinct identities," he added.

PSEB will have a retail footprint of over 700 stores and is on track for approximately $1.5 billion in combined total sales in 2018, including $400 million in e-commerce sales.

The transaction is expected to close in the third quarter of 2018 and is subject to "certain closing conditions."

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