His goal: warm up Bauer's sales

Ailing clothing chain pinning its hopes for turnaround on new CEO

September 22, 2002|By Susan Chandler | Susan Chandler,SPECIAL TO THE SUN

Fabian Mansson knows rough weather.

As a teen-ager growing up in Stockholm, Sweden, he didn't let snow and frigid weather deter him from practicing jumps on his trusty skateboard. The payoff for his frosty fingers and toes was a skateboard championship in the 1979 European Open.

As the new chief executive of Eddie Bauer, Mansson is going to have to show the same fortitude and derring-do.

Sales at the apparel retailer have been in the deep freeze, falling by double digits in 10 of the past 12 months. In May, a key month for summer fashions, sales plunged 21 percent. Late last year, when many retailers were enjoying a last-minute holiday rush, Bauer missed the train. Sales were down 21 percent in November and again in December.

After that dismal showing, Bauer's veteran chief executive, Richard T. Fersch, threw in the towel, saying it was time for someone else to try to turn around the company, a casual-apparel leader in the 1980s and early 1990s. Eddie Bauer's owners, the Otto family of Germany, agreed.

"The well-intentioned efforts of the last four years haven't worked," said Neil Stern, a partner with McMillan/Doolittle, a Chicago retail consulting firm. "You really need a change agent."

Mansson, 38, is hoping he can parlay his cold-weather expertise into a turnaround at Eddie Bauer.

High stakes

After years of missteps, the stakes have never been higher for Bauer and its parent, the Spiegel Group of Downers Grove, Ill., retail experts say. Spiegel's nonvoting stock trades for pennies and has been delisted from the Nasdaq stock market.

Even if Mansson proves to be a brilliant strategist and merchandiser, it will take almost a year for his influence to show up in Bauer's private-label products, which are manufactured overseas with long lead times.

"The situation is serious, and the jury is still out," said Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates.

Even with only a few weeks at Bauer's Seattle headquarters under his belt, Mansson knows the general direction he plans to take: Bauer will play up its Pacific Northwest heritage as a purveyor of cold-weather gear. There will be more coats and parkas, more "outerwear" in retail jargon.

"We have unique history here with our down jackets and Skyliner jackets. We supplied the U.S. government with [flight] jackets during World War II. It's been wonderful to see what's in the archives," Mansson said. "What naturally differentiates Eddie Bauer from most competitors is our heritage and history."

But taking Bauer back to its roots won't be enough in today's competitive environment, retail experts agree.

Fersch tried a similar approach in 1999, reinforcing Bauer's outdoorsy cachet with a new advertising campaign and a new store design with natural timbers and big action photos of outdoor activity.

The chain also played up new lines of merchandise that emphasized Bauer's reputation for keeping people warm and dry, including EBTek, high-performance outerwear aimed at skiers and mountain climbers.

Sales improved for a while but plummeted again in 2000 when many consumers decided Bauer's new look was bland and too casual to wear to the office.

Mansson acknowledges that his success will be determined by how Bauer executes the strategy this time around.

If Mansson succeeds - no easy task - his next challenge will be getting Bauer back on consumers' minds.

"Becoming relevant to consumers is the biggest challenge," Stern, the analyst, said. "They have already found other places to get casual clothing, and they're not checking every six months to see if Eddie Bauer has fixed it yet."

The turnaround task is tougher now because many shoppers have cut back on their clothing budgets since last September, preferring to spend money on their homes.

Sales at Bauer's main competitor, Gap Inc., also have been falling by double digits, prompting the departure of longtime Chief Executive Officer Millard S. "Mickey" Drexler. Other popular chains such as Abercrombie & Fitch have struggled, too.

Still, Gap's problems give Bauer a chance to regain market share, retail experts say. And before Mansson's appointment, Bauer executives were hard at work on new, more interesting merchandise. Hitting the stores this month will be garments crafted from a new washable suede fabric that Bauer calls "Seattle Suede." Mansson said it's a good example of the rugged appeal he wants to see more of in Bauer's assortment.

Good resume

In addition to a clean slate, Mansson has a good resume going for him. He spent 1998 to 2000 as chief executive of Hennes & Mauritz, the fast-growing Swedish retail chain, known for the latest fashion at affordable prices.

H&M, which opened a U.S. flagship store on New York's Fifth Avenue in 2000, is renowned in the retail business for its "short cycle time," which means getting its trendy looks to stores fast. Its "disposable fashion" plays well with the sought-after 18-to 35-year-olds.

Those strengths don't necessarily translate to Bauer, which targets an older group and is known for high-quality, not-so-trendy khakis and knit tops.

"They don't have the authority to be trendy. That's not what their brand stands for," said Cynthia Cohen, president of Strategic Mindshare, a retail consulting firm based in Miami. "That would be a huge repositioning."

Mansson said he has no intention of trying to turn Eddie Bauer into H&M but that he thinks his former company's intense focus on consumers is something Bauer's insular culture could benefit from.

"You have to be out there, out there where people are," Mansson said. "You do it by walking around in the mall, looking at what competitors are doing, looking at what people are wearing. It's a common-sense approach. Keep it simple."

Susan Chandler is a reporter for the Chicago Tribune, a Tribune Publishing newspaper.

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