Brooks Brothers, the storied seller of classic American clothing, filed for bankruptcy early Wednesday.
Founded in 1818 by Henry Sands Brooks, the 202-year-old apparel retailer filed a voluntary Chapter 11 petition in Delaware and secured $75 million debtor-in-possession financing to keep it afloat while it searches for a buyer. Brooks will permanently close 51 stores but is continuing to reopen others that were temporarily shuttered amid pandemic disruption that crippled its cash flow. It operates more than 500 locations worldwide, including roughly 250 in North America.
“The purpose of this filing is to obtain additional financing and facilitate a sale process in an efficient manner to maximize value for our stakeholders and ensure that our iconic brand is positioned to continue under new ownership,” a spokeswoman for Brooks, which employs more than 4,000, said Wednesday. “Brooks Brothers is here to stay and serve our loyal customers for years to come.”
The troubles at Brooks, which is believed to generate $1 billion in annual turnover, have been simmering for years. In late 2018, it was sniffing around for a buyer and has been looking at all available options to keep the business going. But the ongoing casualization of America’s wardrobe, coupled with the COVID-19 outbreak that kept consumers indoors and in comfy clothing, has ratcheted up pressure on a company that hawks tailored heritage clothing to a population more likely to reach for leggings and loungewear than to pull on a pricey pant suit.
In May, word surfaced that Brooks was planning to wind down three stateside factories on which it has burnished its “Made in America” credentials. Even a $20 million financial lifeline did little to derail plans to close the manufacturing facilities, located in Long Island City, N.Y., Garland, N.C. and Southwick, Mass., which are still on track to cease operations next month.
And then there’s the pesky lawsuit the nation’s largest mall operator leveled at Brooks last month. Simon Property Group sued the clothier for $8.7 million in unpaid rent, exacerbating its financial woes at a time when its bottom line was already at breaking point.
Filing could help Brooks figure out its second act. “We are seeking this protection and selling the business to ensure Brooks Brothers can survive and thrive,” the spokeswoman said. “It will make sure that we continue to serve as an institution known for its unique heritage and timeless American aesthetic.”
Brooks is continuing to evaluate potential buyers, which must submit bids that will be reviewed by the retailer’s management team, board and financial and legal advisors. “It is critical that any potential buyer aligns with our core values, culture and ambitions,” the spokeswoman said.
Several parties, including a number of brand management firms, have expressed interest in the brand, which at the time of its bankruptcy filing is said to be worth at least several hundred million. Authentic Brands Group is said to be working with Simon and Brookfield Capital to put together a bid. The trio, which is kicking the tires on bankrupt J. C. Penney, has acquired retailers out of bankruptcy before, including Aéropostale and Forever 21, and just recently were named stalking horse in the Lucky Brand bankruptcy. Of all the brand management firms, the venture led by ABG is the most experienced in saving distressed companies that are in bankruptcy, and they have the financial firepower to continue making more acquisitions.
Despite the filing, Brooks seems to believe it will survive this tumultuous moment. “Throughout our history, we have remained resilient under various ownership structures, while navigating an ever-evolving fashion landscape, fluctuating economic cycles and even world wars,” the spokeswoman said.