Brooks Brothers is under new ownership, but the future of its Made in America legacy remains in doubt.
The joint partnership between Authentic Brands Group and Simon Property Group on Friday received the approval of a Delaware bankruptcy court to proceed on its purchase of Brooks Brothers, concluding one of many fashion bankruptcies winding through the legal system.
The Brooks acquisition is expected to close by the end of this month. The joint partnership, under the name Sparc, clinched the deal after agreeing to up its offer to $325 million, $20 million above its original stalking horse bid.
In May, word surfaced that the retailer would close the three stateside factories that gave the brand its storied “Made in America” aura. Under the new ownership, while not directly under ABG’s brand portfolio, Brooks could still preserve the USA-made credentials if it can work out an arrangement with the American factories that produce ABG’s men’s suiting brands Hart Schaffner Marx and Hickey Freeman.
The two men’s brands, among others, were acquired by ABG back in 2012 following the bankruptcy filing of parent company HMX LLC, the successor firm to Hartmarx Corp. after its 2009 bankruptcy. After the acquisition, ABG spun off the operating arm to W Diamond Group, a new company founded by HMX CEO Doug Williams.
Based in Des Plaines, Ill., W Diamond is the largest manufacturer of men’s tailored clothing in the U.S., with factories in Rochester, N.Y. and Chicago.
Sparc, under ABG’s leadership, is expected to move quickly to restructure operations at Brooks Brothers.
On the real estate component of the business, under the leadership of Simon, Sparc will need to figure out its store base network. Sparc plans to keep at least 125 stores open, but there’s a chance it could try to keep more locations in operation. Just exactly how many doors will be kept open won’t be known for a few months as bankruptcy court rules allow any buyer time to decide which locations it plans to keep open. The 202-year-old American apparel retailer currently operates about 250 locations in the U.S., and about 75 doors in its store network count Simon as its mall landlord.
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There was no immediate word about the future of the Brooks Brothers flagship at 44th Street and Madison Ave., however. That site is owned by Claudio Del Vecchio, the Italian businessman who acquired Brooks Brothers in 2001 from Marks & Spencer. The retailer does about $1 billion in annual volume. It had been struggling for a few years and in 2018 began reviewing strategic options, including the sale of the company.
Friday’s decision marked a double win for Sparc, which on Wednesday closed on its acquisition of bankrupt Lucky Brand Dungarees.