Brooks Brothers files for bankruptcy in ‘work from home’ era
Brooks Brothers has become the latest venerable retailer to be pushed overboard by the coronavirus pandemic as the two-century-old US business clothing supplier filed for bankruptcy protection in the United States.
The New York-based company, whose high-end suits were once sported by presidents such as Abraham Lincoln and John F Kennedy and stars such as Fred Astaire as well as generations of Wall Street bankers, filed for protection on Wednesday. of Chapter 11 in Delaware.
Brooks Brothers, which has about 500 stores worldwide and employs 4,000 people, said it secured $75 million in financing to weather bankruptcy as it intended to find a buyer and avoid liquidation.
“Brooks Brothers is here to stay and serve our loyal customers for years to come,” he said in a statement Wednesday, adding that he hoped to close a sale in the coming months.
The dossier highlights the growing financial pressures on retail in the United States as drop in sales leaves the chains struggling to meet their financial obligations. fashion group J-Crew and department store chain Neiman Marcus are among other chains that have also filed for bankruptcy protection during the pandemic.
Further bankruptcies are expected in the coming weeks. Ascena Retail, the womenswear group behind Ann Taylor, which did women’s office wear, said it was weighing “all options” to protect its business as it grapples with a heavy burden of the debt.
Over the past week, denim fashion companies G-Star RAW and Lucky Brand have filed for Chapter 11 protection.
Founded in 1818 by Henry Sands Brooks, Brooks Brothers is today owned by Italian businessman Claudio Del Vecchio, whose father founded the Luxottica eyewear group.
Mr Del Vecchio took charge after buying the business from Marks and Spencer in 2001 for $225 million, a fraction of the $750 million the British retailer had paid for it. Former owners of the retailer, which is headquartered on Madison Avenue in Manhattan, include Robert Campeau, the late Canadian real estate developer.
Despite its prestigious history, the company suffered as workplaces became more casual and the button-down Oxfords, suspenders and oxfords that had long epitomized the Brooks Brothers look fell out of favor.
Conservative brands seemed increasingly disconnected from younger shoppers who turned to alternative brands in part because they were seen as more inclusive, said Neil Saunders, managing director of GlobalData Retail.
“When it comes to taste and style, Brooks Brothers is swimming against the tide,” he said. “Its formal, old-school approach has found favor with a mature, more traditional demographic, but has become increasingly out of step with a new generation of consumers.”
Brooks Brothers was looking to modernize the brand, offering shorts, fleeces and t-shirts, and had conducted a strategic review before the pandemic.
However, the coronavirus shutdown has taken its toll, not least because the increase in working from home has further reduced demand for her workwear. The company had already decided to close around fifty stores.
Mr Del Vecchio said in a statement: “Our priority is to begin this important chapter with a new owner who appreciates the heritage of Brooks Brothers.”
Bankruptcy financing for Brooks Brothers will be provided by WHP Global, a brand management company, subject to court approval.
Brooks Brothers is advised by law firm Weil, Gotshal & Manges, restructuring specialists Ankura Consulting and financial adviser PJ Solomon.