Golden Gate Capital announced that the company has established a new operating company, PSEB Group. PSEB will be composed of two Golden Gate portfolio companies: Eddie Bauer and Pacific Sunwear of California. In connection with the establishment of PSEB, Golden Gate will invest additional equity in PSEB to support the company’s growth.
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. Both brands are performing well, as Eddie Bauer and PacSun grew same-store sales by 6.5 percent and 5 percent, respectively, in 2017, and year-to-date, same-store sales are up 6 percent at Eddie Bauer and are up 8 percent at PacSun.
Eddie Bauer and PacSun will continue to operate independent front ends, including unique brand identities, design, merchandising, marketing, e-commerce and retail operations, while benefitting from shared services and enhanced scale. Eddie Bauer and PacSun stores will continue to operate as usual and customers will experience no changes.
Josh Olshansky, managing director at Golden Gate Capital, commented, “Eddie Bauer and PacSun are powerful brands with differentiated, loyal customer bases. 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. Both brands have made great progress in the past 24 months and have generated strong performance. Bringing these two brands onto a shared platform will allow us to fuel this momentum and unlock their next stages of growth.”
Eddie Bauer Chief Executive Officer and President Mike Egeck will serve as chief executive officer of PSEB, with oversight of both the Eddie Bauer and PacSun brands.
Egeck commented, “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 hundred-year history. And 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.”
The transaction is expected to close in the third quarter of 2018 and is subject to certain closing conditions.
Golden Gate Capital is a San Francisco-based private equity investment firm with over $15 billion of capital under management. Representative consumer sector investments sponsored by Golden Gate Capital include Express Oil Change & Tire Engineers, Mavis Discount Tire, Bob Evans Restaurants, Red Lobster, California Pizza Kitchen and Zales.
Eddie Bauer has more than 400 stores in the United States, Canada, Germany, Japan and other international markets. As of Jan. 2, Pacific Sunwear operates 422 stores in all 50 states and Puerto Rico.
Photo courtesy Eddie Bauer
