Eddie Bauer Holdings, Inc. reported a net loss for the fourth quarter of
$127.5 million, or $4.13 per share, compared to a net loss of $18.2 million, or
59 cents, a year ago. Adjusted EBITDA decreased to $54.0 million from $59
million for the fourth quarter of 2008. Total revenues for the quarter
decreased 5.7% to $369.9 million compared to $392.4 million in the fourth
quarter of 2007. Comparable store sales fell 5.7% for the quarter excluding the
effect of foreign exchange rates resulting from the sharp decline in the
Canadian dollar.

Adjusted EBITDA includes the fair value adjustments on the company's
convertible notes, non-operational gains and impairment charges related to
foreign investments and store leasehold improvements.

Gross margin percentage for the fourth quarter declined to 40.9% from 43.8%
in the year-ago quarter. Gross margin dollars declined by $19.7 million in the
fourth quarter of 2008 compared to $165.2 million in the prior year quarter, as
a result of higher markdowns spurred by the overall increase in promotional
activity by our competitors during the holidays and higher costs related to
increases in headcount and professional services for buying functions.

SG&A expenses showed improvement as the Company maintained its focus on
its key initiative of removing $25 to $30 million in total SG&A expenses in
2008. SG&A decreased by 7.0% ($9.3 million) in the fourth quarter of 2008.
The decrease in SG&A expenses resulted primarily from lower compensation
expenses, lower professional fees, and lower advertising and marketing costs.
Partially offsetting the lower expenses was a non-cash $7.5 million impairment
charge for store leasehold improvements.

Adjusted EBITDA decreased by $5.9 million to $54.0 million for the quarter
when excluding certain non-operational and non-recurring adjustments.

The $155.8 million increase in operating loss was primarily driven by $144.6
million of non-cash impairment charges of trademarks ($80 million) and goodwill
($64.6 million) during the fourth quarter. The goodwill impairment charge is
based on the company's enterprise value, which was estimated using an income
approach calculated from discounted cash flows, and was further supported by
market comparables for other retail companies, as well as the indicated value
based on the company's common stock price. The downturn in the economy, which
impacts the Company's and other retail companies' future expected sales and
cash flows, was a primary contributor to the impairment charges.

“The swift and dramatic downturn in the economy had a major impact on
us in the fourth quarter. The actions that we took throughout the year provided
some buffer against the worsening recession, but not enough to protect us fully
from the sharp pullback in consumer spending and a highly promotional retail
environment. Still, for the year as a whole we were able to show a significant
improvement in our EBITDA,” said Neil Fiske, the company's CEO.

To avoid the prospect of a going-concern opinion from its auditors,
Eddie Bauer said it is in talks to amend its $225 million term-loan
agreement, of which $193 million is outstanding. The company and its
lenders have agreed in principle on an amended deal requiring
substantial fees, substantially higher interest rates, and issuance of
warrants to buy common stock, Eddie Bauer said. The company has
requested a 15-day extension of the deadline by which it was supposed
to have filed its annual report on Securities and Exchange Commission
Form 10-K.