Iconic American suit maker Brooks Brothers files for bankruptcy
- Brooks Brothers filed for bankruptcy early Wednesday morning and said it is pursuing a sale.
- The coronavirus pandemic and associated store closures hurt sales, but the retailer was reportedly considering restructuring even before the virus hit.
- Brooks Brothers plans to close 51 stores and has already permanently shuttered some of these locations, a company spokesperson said. It also plans to close its three US factories in August.
Brooks Brothers filed for Chapter 11 bankruptcy protection in the US bankruptcy court for the District of Delaware early Wednesday morning.
It said it had secured $75 million in debtor-in-possession financing to aid in its restructuring while it seeks a buyer.
Brooks Brothers plans to close 51 stores and has already permanently shuttered some of these locations, a company spokesperson said. In May, it filed WARN notices to shutter its three US factories, located in New York, North Carolina, and Massachusetts. A company spokesperson confirmed on Wednesday the factories would be closing by August 15, affecting nearly 700 jobs.
The retailer, founded in 1818 and often credited with inventing the American suit, is one of the oldest apparel brands in the country.
According to the New York Times, Brooks Brothers was considering restructuring even before the coronavirus pandemic hit, as annual sales were flat at around $1 billion for the years 2017 through 2019. The gradual shift to a more casual workplace hurt sales, and once many office workers began to telecommute due to the pandemic, demand for its workwear plummeted.
According to GlobalData Retail, year-over-year sales of men's formal clothing fell by 74% during the months of April, May, and June, and it doesn't expect this to pick up anytime soon.
"While this deterioration will ease over time, demand will remain suppressed for the rest of 2020 and well into 2021 as office working, business meetings, and socializing are all reduced. This leaves Brooks Brothers very exposed to a depressed market," Neil Saunders, managing director of GlobalData Retail, said in a note to clients on Wednesday.
Brooks Brothers furloughed about 80% of its staff and temporarily closed all of its stores in response to the coronavirus pandemic. On May 21, advisory firm Gordon Brothers announced it would be giving Brooks Brothers a $20 million secured loan.
Brooks Brothers joins a growing group of retailers including JCPenney, J.Crew, and most recently, Lucky Brands, that have filed for bankruptcy in the past few months after being hit hard by the coronavirus pandemic and shifts in consumers' style.