Brooks Brothers files for bankruptcy, citing pandemic struggles
Mens clothier Brooks Brothers filed for bankruptcy protection Wednesday and said temporary store closures during the coronavirus pandemic played a role in making the move. Brooks Brothers said it hopes filing for a Chapter 11 restructuring to unload debt, cut costs and possibly re-emerge under new ownership will help save the 202-year-old company.
Brooks Brothers joins a long list of big-name retailers that have filed for bankruptcy protection recently, including J.C. Penney, J. Crew and Neiman Marcus. The pandemic has decimated clothing store sales nationwide as customers have been forced to stay home in recent months.
And the last thing stay-at-home workers are buying these days are the traditional corporate suits for which Brooks Brothers is famous. Brooks Brothers year-over-year sales fell 74% in April, May and June in its men's formal division and 62% in its casual apparel division, according to GlobalData Retail. The company laid off more than 400 workers in May at its Massachusetts plant.
Brooks Brothers' outdated, conservative clothing styles also played a role in the company's bankruptcy, GlobalData Retail Managing Director Neil Saunders said in a statement.
"Its formal, old-school approach found favor among mature and more traditional demographics, but it has become increasingly out of step with a new generation of consumers who are looking for a more edgy approach to smart casual," Saunders said.
Brooks Brothers is a strong brand that has survived and evolved through fashion trends, world wars and economic cycles, CEO Claudio Del Vecchio cautioned naysayers in a statement. The company hopes to emerge from bankruptcy "with a new owner that has appreciation for the Brooks Brothers legacy," Del Vecchio said in the statement.
Retail expert Saunders said Brooks Brothers' profit prospects are challenged by rents at "expensive city-based stores." Bankruptcy could help the company exit those property leases and, if successful, "will streamline the business and get it into a state that is more attractive to a potential buyer."
Brooks Brothers began temporarily closing its stores in mid-March. The company is reopening some of its locations, but also plans to permanently shutter 51 of its 200 U.S. stores.
Company officials said they will use revenue from the remaining stores and $75 million from WHP Global to fund Brooks Brothers operations during bankruptcy. WHP Global owns clothing brands Anne Klein and Joseph Abboud.
Brooks Brothers plans to auction off company assets through the bankruptcy process and complete the sale in coming months.