The recession due to the coronavirus pandemic has now hit one of the most popular as well as oldest retailers. Unfortunately, the Brooks Brothers are now planning to close down several of its stores. The brand boasts to have dressed all the premium business executives as well as US Presidents, except four. Brooks Brother started the business more than 200 years back and is known for the best quality of crisp Oxfords, casual polos, and the most classic suits. According to a spokesperson of Brooks Brothers, they have already finished filing for bankruptcy protection. Now, they are in search of an eligible buyer.
The company is expecting to dissolve almost 1/5th of all its North American outlets. It means that around 50 out of its total of 250 outlets will close down soon. Besides, they are also planning to stop all production work in a few of the factories located in Massachusetts, New York, and California. However, production will not be affected much because the above-mentioned factories produce even lesser than 7% of the finished product. The remaining 200 stores will open when the situation is better. They are waiting for the local public health offices to issue an order for reopening.
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The reason behind the decision of Brooks Brothers
Brooks Brothers, claimed by its CEO, Claudio Del Vecchio, has since quite a while ago looked for a purchaser and has not battled to handle offers. However, the pandemic, alongside changing work environment style patterns, disturbed the dealing procedure. The organization made sure about $75 million in indebted persons under lock and key financing to proceed with its activities during the deal procedure. Adding to the organization’s misfortunes are out of this world rents in a portion of the country’s priciest strip malls. Brook Brothers have seven stores in Manhattan alone, just as leaders in downtown Chicago and San Francisco’s Union Square.
As a part of the bankruptcy filing, Brooks Brothers have revealed that they owe something between $500 Million to $ 1 billion to around 25,000 people. The figures include rent of $8 million. They have also mentioned their listed assets costing anything between $500 Million to $ 1 billion. CEO Del Vecchio says that they are now ready to handover the charges to a new owner who will understand the value of Brooks Brothers’ legacy, and also has enough ideas to make the business better in the future. The brand is following its competitors J.C. Penney, Neiman Marcus, and J. Crew in the league of dissolution due to legal bankruptcy. According to news sources, Ascena Retail that functions Lane Bryant and Ann Taylor may be the next member to join the bankruptcy league.
History of Brooks Brothers
Brooks Brothers established back in 1818 and is presently the oldest clothing retailer of the USA. Over so many years the name has become a cultural icon. As mentioned earlier, the Brooks Brothers have dressed almost all the Presidents of the USA, along with the soldiers of the Civil War. They are also given the credits of bringing to the market ready-to-wear suits. Along with that, the Shetland sweaters and Madras Shirts were also their contributions to the American consumer market. At the time of the assassination, President Abraham Lincoln was wearing a Brook Brothers custom coat too. However, in the last few years, the brand has become popular for the old-school and formal approach to clothing.
They were unable to keep with the current scenario of customer styles and tastes. The Managing Director of Global Data Retail, Neil Saunders has decoded the business pattern of the Brooks Brothers. Therefore, he has come out with the conclusion. He adds that the fashion followed by the brand has now become irrelevant to the current scenario. The people in America working in the corporate sectors have a very modern taste in clothing. They no more wear business suits and ties. Instead, corporate fashion now calls for puffy vests and jeans. The younger generation now prefers to shop from Suitsupply, Bonobos, Tie Bar, or J. Crew.
The present scenario
According to Saunders, Brooks Brother is suffering for a long time due to the lack of proper and prompt decision-making ability. They are unable to keep up with the changing fashion trends, and this has led to losing out on a massive chunk of new generation customers. The young generation is always looking for a smarter, more casual, and edgy approach. So, the style of Brooks Brothers does not suit them for obvious reasons.
The COVID-19 has given another blow. As a result, thousands of white-collar workers are now having to work from home. So, there is almost no one who has the requirement of wingtip shoes or new shirts. According to the latest figures, the sales volume of men’s clothing has dropped by almost 74% in the second quarter in comparison to last year’s figures. Experts believe that it could take years for the pre-pandemic level of demands to make a comeback. On July 8, the official website of Brooks Brothers was offering massive discounts. They were offering even a 70% discount on the clearance items. Suits that cost $998 usually were available at $299. The corduroy pants that usually cost $128 were selling at $38 only.
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