Northwest Arkansas Democrat-Gazette
Brooks Brothers files bankruptcy
Vaunted suit retailer latest to fall from pandemic’s pressure
Brooks Brothers, the retailer known for dressing U.S. presidents and legions of business executives since 1818, filed for bankruptcy Wednesday, buckling under the pressure from the coronavirus pandemic after years of declining sales as customers embraced more casual apparel and sales shifted online.
The company, founded and based in New York, filed for Chapter 11 restructuring proceedings in the U.S. Bankruptcy Court for the District of Delaware. Claudio Del Vecchio, the Italian industrialist who bought the brand in 2001 and still owns the company, told The New York Times in May that he would not rule out Chapter 11 as a possibility.
Brooks Brothers said in an emailed statement Wednesday that the filing would allow it to obtain additional financing as it facilitates a sale.
The bankruptcy represents the latest high-profile retail fall during the pandemic, which has caused widespread store closures and sales declines, reshaping the shopping streets of cities across the country. Since May, major names like J.C. Penney, Neiman Marcus and J.Crew have all been pushed into Chapter 11 proceedings. The chains, including Brooks Brothers, plan to keep operating, though likely in a paredback fashion.
In its bankruptcy filing, the company said it owes between $500 million and $1 billion to as many as 25,000 creditors, including at least $8 million in rent. It listed assets of $500 million to $1 billion.
“Our priority is to start this important chapter with a new owner that has appreciation for the Brooks Brothers legacy [and] a vision for its future,” Del Vecchio said in a statement.
The company employed 4,000 people in March, before it furloughed about a third of its workers.
“Brooks Brothers is the most iconic American brand,” said William Susman, managing director at Threadstone Advisors. “While in a different form, I am confident the brand will survive and continue for years to come. This is a case of a failed company, not a failed brand.”
Brooks Brothers, known for its suits and preppy clothes, has been hit especially hard by the virus crisis. It is an era of remote work and job interviews through Zoom, and the postponement of celebrations like weddings, bar mitzvahs and graduations.
The company, which is the oldest apparel brand in continuous operation in the United States, said that it had decided to close 51 U.S. stores out of its roughly 250 in North America. Earlier this year, Brooks Brothers said it would close its three factories in the U.S., which are in Queens in New York City; Haverhill, Mass.; and Garland, N.C., spurring concern around the future of the brand and its identity as a “Made in America” name.
Brooks Brothers has a unique and rich connection to American heritage and culture. It has dressed all but four U.S. presidents, and its overcoats have been worn for the inaugurations of Abraham Lincoln, Barack Obama and Donald Trump, among others. Lincoln was wearing a custom Brooks Brothers coat when he was assassinated.
The company has outfitted Clark Gable, Andy Warhol and Stephen Colbert. Even Ralph Lauren started out as a salesman at Brooks Brothers in New York. Actress Jennifer Aniston once appeared on the cover of GQ magazine wearing nothing but a red, white and blue Brooks Brothers tie.
For decades, the brand was synonymous with professional American menswear, its somewhat boxy suits framed as a less fashion-centric riposte to the more structured English tailoring and the more showy Italian style. Preppy, pinstriped, and red, white and blue, its clothes, for both men and women, were symbols of East Coast success in the Kennedy vein. Its Madison Avenue flagship, a limestone Italian Renaissance building, became a pit stop for commuters hopping the train from Grand Central to family life in the suburbs.
The Times reported last month that Del Vecchio hired P.J. Solomon, the investment banking firm, last year to explore “options” such as a sale or further investment. Before the pandemic, a restructuring plan was created, and this year a group of potential investors valued the company between $300 million and $350 million. But Del Vecchio told the Times that he had not felt that the discussions “matched the needs we saw.”
Del Vecchio also said that annual sales from 2017-19 were effectively flat at about $1 billion each year, and that it had debt of “less than” $300 million.
Brooks Brothers said in its Wednesday email that it expected to complete the sale “within the next few months,” and noted that it is “critical that any potential buyer aligns with our core values, culture, and ambitions.” The company said it secured $75 million in financing to help support it until it found a buyer.