Brooks Brothers filed for bankruptcy on Wednesday, with a commitment for a debtor-in-possession financing facility of $75 million already secured from brand management firm WHP Global and with plans to permanently close 51 stores.
The 202-year-old brand said it is looking for a buyer and plans to hold an auction during the bankruptcy process on an unspecified date. Various plans announced Wednesday are subject to approval by the U.S. Bankruptcy Court for the District of Delaware, according to a company press release.
Simon Property Group on June 17 took the brand to court over $8.7 million in unpaid rent, but withdrew its lawsuit a couple of weeks later, according to documents filed with the Marion Superior Court in Indiana. Simon and WHP Global are both reportedly interested in acquiring the brand, according to multiple news reports.
In 2018, the year Brooks Brothers celebrated its 200th anniversary, the company ran more than 280 stores in the United States and more than 700 locations in 45 countries abroad.
But by then, the once longstanding tradition of conservative, if stylish, garb for people in law, finance and other professions had begun to fray, giving way to more casual styles. Even longtime holdout Goldman Sachs recently stopped requiring tailored suits for men, Shawn Grain Carter, professor of fashion business management at the Fashion Institute of Technology, noted in an interview with Retail Dive last year.
"So now even the bankers don't have to spend $3,000 on a bespoke suit," she said. "They can wear a sweater like they're going on to the Hamptons. Everybody wants to have this hip look from the entrepreneurs who are revolutionizing society."
With so many office workers working from home due to the pandemic, that trend has only become more entrenched, helping to decimate apparel sales in recent months. Sales of men's formal clothing fell 74% year over year in the past three months, and even men's "smart casual" sales fell 62% in that time, according to GlobalData Retail research. Analysts there expect demand to remain down well into next year.
The retailer, which gave Ralph Lauren his start in the business, has worked somewhat to keep up with the times, tapping Zac Posen as its creative director for women's six years ago and leveraging its store network for fulfillment well before the COVID-19 pandemic forced most specialty retailers to do the same. After spending time owned by U.K. retail giant Marks & Spencer, the brand was bought by Retail Brand Alliance in 2001 for less than a third of its previous price.
But, along with professionals ditching their suits and ties, the brand "has long suffered from a failure to decisively adapt to changing trends," leaving others to appeal to "a new generation of consumers who are looking for a more edgy approach to smart casual," according to GlobalData Retail Managing Director Neil Saunders.
Newer brands like Kiel James Patrick and established ones like Vineyard Vines and J. Crew have taken some of that business, he said in emailed comments.
In a statement Wednesday, Brooks Brothers CEO Claudio Del Vecchio said the retailer was already strategizing a turnaround before the pandemic interfered, and had already been exploring a sale. "Our priority is to start this important chapter with a new owner that has appreciation for the Brooks Brothers legacy, a vision for its future, and aligns with our core values and culture," he said.
Despite its challenges, the company will probably find little trouble in finding a suitable buyer, according to Saunders.
"The brand has a solid foundation on which a new owner can build, and it has a good digital business that has the potential for future growth," he said. "However, the process of reinvention will not be easy; it will take time, capital and effort to reconfigure Brooks Brothers into a retailer ready to serve the needs of modern consumers."