Brooks Brothers Files for Bankruptcy, Hit by Casual Fridays and COVID
Brooks Brothers dressed the American business class for two centuries, through two world wars and the trend toward casual dress. However, the coronavirus pandemic spurred its financial decline, causing the company to file for bankruptcy protection in Wilmington, Delaware, on Wednesday.
One of the last brands to produce clothes in the US, the company will halt manufacturing at its three American factories on August 15 and use the bankruptcy process to search for a new owner to replace Claudio Del Vecchio.
The suit company joins the array of US retailer seeking relief in bankruptcy court since March: Neiman Marcus Group Inc., J.Crew Group Inc., and JC Penney Co. among them. Del Vecchio blamed the pandemic for the company’s financial troubles; temporarily closing stores reduced their revenues while they still met contractual obligations to workers, suppliers, and vendors.
“Through every era, we had challenges, but we were confident we would be able to manage through them,” he said. “Retailing has been changing a lot in the last four to five years, and we were in the process of adapting to that new environment. When coronavirus came, there was really no way to sustain things.”
Brooks Brothers secured a $75 million debtor-in-possession loan from WHP Global, backed by Oaktree Capital and BlackRock. The company faced challenges before the pandemic, and now restructures its debts while looking for a new buyer. Corporate America became more casual, especially with the recent uptick of working from home.
“I’ve seen a growing trend toward more casual dress partly because that’s how our clients are dressing,” said Quyen Ta, a partner in law firm King & Spalding LLP’s San Francisco office. “I’ve met with general counsels of public companies who are in hoodies.”
Last year, Brooks Brothers hired the investment bank PJ Solomon to discuss strategic options, including sale. Gordon Brothers, a liquidation firm, provided Brooks Brothers with a $20 million loan from the financing arm. Brooks Brothers is expected to attract buyers, such as Authentic Brands Group LLC, a licensing company with potential interest.
Brooks Brothers pioneered ready-made suits, introduced the first button-down collar shirt, and popularized trends like the reverse-stripe “repp” tie and the Shetland sweater.
“It was the uniform,” said Robert Herbst, a 62-year-old lawyer. “Brooks Brothers was a way of life,” he said. “It represented a traditional, old-line way of dressing.”
As casual dress trended upward in the 1990s and 2000s, Brooks Brothers tried to adjust, producing Golden Fleece as a new casual line.
Brooks Brothers was bought by British retail chain Marks and Spencer Group PLC in 1988, then by Retail Brand Alliance Inc. in 2001. Del Vacchio was passionate about restoring the brand: he upgraded the fabrics, overhauled the supply chain, introduced new lines, and pushed the brand toward international expansion.
“For now, I want to ensure a long life for this company,” said Del Vecchio.