After news surfaced in May that Golden Gate Capital was considering a merger of Eddie Bauer and Pacific Sunwear of California, the private equity firm has created a new operating company comprised of the two retailers. A new PSEB Group consists of both brands, which will operate their own independent front ends but benefit from shared services, retail news source Chain Store Age reported.
“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,” Josh Olshansky, managing director at Golden Gate Capital, said in an announcement. “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.”
The group, which is estimated to take in $1.5 billion in sales this year, will encompass 700 brick-and-mortar stores. According to Golden Gate, the deal is projected to close in the third quarter and “is subject to certain closing conditions.”
Golden Gate acquired Eddie Bauer out of bankruptcy protection in 2009 with a cash bid of $286 million. For its part, California-based Pacific Sunwear emerged from bankruptcy in 2016 after Golden Gate reduced PacSun’s outstanding debt from $88 million to $30 million and invested about $20 million more into the company. It also emerged with a $100 million revolving line of credit from Wells Fargo.
“PacSun has successfully transitioned beyond its historical base of action sports brands to what we believe is the most relevant and coveted mix of brands celebrating the California lifestyle,” Olshansky said at the time. “We believe in the future of the company, as reflected by our significant injection of new capital into the business.”
Eddie Bauer and Pacific Sunwear saw same-store sales rise 6.5 percent and 5 percent, respectively, in 2017. Year to date, Eddie Bauer’s same-store sales are up 6 percent, while Pacific Sunwear saw an 8 percent increase.