The End of The Century and Beyond
Spiegel achieved $3.06 billion in 1997 revenue, with approximately $1.8 billion of that stemming from its Eddie Bauer operations. Regardless of Eddie Bauer's huge contribution to its parent company, however, the subsidiary had a very rough year. Following the immense demand for its products in 1996, the company mistakenly overproduced and overstocked in 1997. In addition, the new Eddie Bauer merchandise offerings did not hit home with consumers; thus the company was left with too much stock and no means of selling it all. In the August 17, 1998 issue of the Puget Sound Business Journal, Eddie Bauer's president and CEO, Rick Fersch, commented on the company's problems: "We were overplanned, overstocked, overstyled, overcolored--and it was overwarm (last winter) and that meant trouble." The company began formulating plans to turn things around in 1998.
The year 1998, however, brought additional challenges for the Eddie Bauer enterprise and, subsequently, for Bauer's parent company. Warmer than usual winter weather, brought about by a highly publicized weather phenomenon known as El Nino, once again hurt Bauer's sales figures. Spiegel's overall revenues for the year dropped to $2.94 billion as a result.
Spiegel set out to halt its downward spiral and achieve profitability again. The company redesigned its Spiegel catalog, which had become something of an amalgam of differing—and often conflicting—items and images. The company created a catalog solely to target the working woman and organized its main catalog so as not to place $1,000 designer outfits adjacent to $20 casual shirts, for example. Eddie Bauer also launched efforts to get itself back on track.
By the end of the year, Spiegel announced that its efforts had been fruitful and that the company had achieved earnings once again. Although its revenue dipped during 1998, the company inked a profit and achieved positive cash flow, according to a fiscal year-end document released by Spiegel in early 1999. Eddie Bauer's performance unfortunately disappointed again during the year, but Spiegel's other lesser-known subsidiary catalog, Newport News, posted solid results. Late in the year, rumors surfaced that the company's positive results had led to numerous unsolicited purchase offers, including one from Arizona-based IG Holdings.
As the new millennium approached, Spiegel had many obstacles to overcome but was headed in the right direction. Having spent many decades in the shadow of companies such as Sears, Roebuck & Co. and Montgomery Ward, Spiegel had come to be regarded as a leader in the catalog shopping industry by the 1990s. Relying on its past proven ability to adapt to changes in customer tastes and trends in competition, the company was attempting to maintain this status.
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“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
—Winston Churchill (1874–1965)
“It is seen
At the end that the kind and good are rewarded,
That the unjust one is doomed to burn forever
Around his error, sadder and wiser anyway.
Between these extremes the others muddle through
Like us....”
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