The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Not so long ago, the demise of Brooks Brothers would have been a seismic event in American fashion.
Founded in 1818, the company known for inventing the American suit, has survived the Civil War, two world wars, the Great Depression and the invention of casual Fridays. Brooks Brothers has dressed US presidents, from Abraham Lincoln to Barack Obama, and popularised now-hallmarks of classic American menswear, including the oxford-cloth, button-down shirt and the ready-to-wear suit, which revolutionised garment manufacturing when it debuted in 1849.
Even as recently as 2018, Chief Executive Claudio del Vecchio, who acquired Brooks Brothers in 2001, was predicting a long, bright future for the brand.
"I am here to reinforce a culture," del Vecchio told The New York Times just before the brand celebrated its 200th anniversary at a star-studded Lincoln Center concert. "I have to make sure that we are building a company that will last after me. I don't want to be here another 20 years. Forget about another 200 years. It's really about trying to build a culture that will last longer than the business. That will make it very hard for the next guy to screw it up."
On July 8, Brooks Brothers filed for Chapter 11 bankruptcy protection. It closed one of its three US factories in May, and the other two are currently making face masks instead of suits and ties.
How did one of America's oldest and most iconic clothing brands become just another casualty of the retail apocalypse?
The pandemic, which forced the brand to close its stores and threatened to usher in a work-from-home revolution requiring clothing no more formal than sweatpants, was the immediate catalyst.
But Brooks Brothers was already headed for a reckoning before Covid-19. And though the slow death of office dress codes is partly to blame, the company's response to this trend has only accelerated its slide, people familiar with its operations told BoF. Like so many other retailers, the brand is hamstrung by underperforming stores locked into long-term leases. A growing reliance on outlets, as well as questionable tweaks to iconic, if fading styles, has alienated once loyal customers.
Innovation is what keeps any brand relevant.
Brands come and go, but Brooks Brothers is to American tailoring what Coca Cola is to carbonated beverages. For much of the 20th century, men turned to Brooks Brothers for its iconic Number One sack suit silhouette — initially offered in a four-button configuration in 1900, it became a three-button after 1918. Its soft-front construction, natural shoulder line, centre-back vent, modest lapels and straight-leg trousers changed the typical look of men's clothing, making it an American icon, along with the button-down shirts and other markers of a post-war collegiate look known as "Ivy" style.
Since the 1970s, however, tailored clothing has taken up a diminishing share of men’s wardrobes. Office workers replaced their closet full of suits with racks of sport coats, which were abandoned in turn, leaving the dress shirt as the last remaining element from the traditional Brooks Brothers ensemble. According to a 2007 Gallup Poll, only 12 percent of men surveyed wore formal business clothes on most days. Compare that figure to the 1940s, when nearly every American man wore a suit for work and leisure, and many of them bought theirs from Brooks Brothers. The brand’s preppy look, once the standard for menswear, is now just another niche.
As tailored jackets gave way to woolly knitwear and fleece vests, traditional clothiers have struggled to make up for the loss in profits. A two-week wardrobe full of sweaters, chinos, and sneakers isn’t nearly as profitable as one with sport coats and tailored trousers.
Brooks Brothers tried to ride the trends, introducing its high-end Black Fleece label with Thom Browne in 2007, a more-casual "Red Fleece" line in 2013 and a recent womenswear collection collaboration with Zac Posen.
But efforts to refresh the brand’s image were held back by by its stores. Brooks Brothers’ retail footprint reflects the company at its peak: massive stores in premium shopping districts designed to display racks of ready-made suits and their assorted accoutrements. Their astronomical rents require brisk sales of tailored suits, which sell for as much as $1,698 at full price. As the shirt business has expanded, these stores have seen their sales per square foot decline (today, the company derives about 27 percent of sales from non-iron button-up shirts alone, currently available online at three for $149.)
The company's flagship in San Francisco, for example, is located downtown near the city's historic Union Square, a block away from Gucci and Saks Fifth Avenue. It's a 26,000-sq.-ft, four-story location filled with the company's casual wear, women's collections, home goods and men's tailoring, despite the city's reputation for dress down culture.
Of Brooks Brothers’ full-line US stores, just 40 are responsible for 80 percent of sales, with another 100 locations contributing the remainder, according to a person familiar with the company’s performance. Brooks Brothers has wrestled with what to do with these expansive locations. In internal discussions, del Vecchio has defended operating so many unprofitable stores, noting that other similarly positioned brands also lose money at many of their brick-and-mortar locations. But those brands have successfully used stores to add to their allure; Brooks Brothers has not.
Many of Brooks Brothers’ worst-performing stores are subject to long-term leases that would be difficult to break. It has tried to offset those locations by adding more stores, including the San Francisco location in 2013. But many failed to meet sales goals or were located too close to existing stores, splitting the customer base.
“The company has always opened stores in top locations,” a spokesperson said. “We have always, and we continue to analyse our portfolio to ensure that we are positioned to serve our customers. This ongoing evaluation may sometimes result in closing a location or in opening a new one.”
It’s also doubled down on outlets and now operates nearly as many of those stores as full-price locations in the US. But though sales are brisk, the outlets have diluted the brand’s value in the eyes of its core customers.
Even Amazon has gone and made shirts to compete with Brooks Brothers' button-down oxfords and non-irons.
Additionally, Brooks Brothers has followed the fashion industry’s seasonal production calendar, such that merchandise is delivered to stores and the website earlier in the season. Brooks Brothers’ largely “buy now, wear now” customer base had to be retrained to look for their Madras summer shirts in early spring, and the winter overcoats in August, which required discounts and promotions. It now runs what seem like perpetual sales. As one executive told BoF, Brooks Brothers has increasingly become a “$50 shirt and $500 suit” brand.
When Brooks Brothers lowered prices, it also opened itself up to competition from entry-level brands, including Charles Tyrwhitt and Untuckit.
“Even Amazon has gone and made shirts to compete with Brooks Brothers' button-down oxfords and non-irons,” a former Brooks Brothers executive told BoF. “For the average consumer who is looking for a decent quality shirt at a certain price, these shirts are not bad. If you look at them as a ‘garmento,’ you poo-poo them. But for the average person, they’re looking at price and price-value."
Somewhere along the way, Brooks Brothers lost confidence in its own American story. Instead of championing American manufacturing and style, it has chased trend after trend. Items such as luxury leather sneakers, stretch denim jeans, and contemporary fits and styling lead some to describe the new Brooks Brothers as “watered-down Italian.” Some customers baulked at choosing between a growing array of sizes (shirts now come in extra slim, slim, fitted, classic, relaxed and specialised) and lower-rise suit trousers.
Seemingly minor adjustments could generate a major backlash among the brand’s cult following. When Brooks Brothers switched from soft, unfused collars on its classic button-down oxford shirts to a harder, thicker, non-wrinkle collar they received backlash from customers, said menswear writer Bruce Boyer. The old collar was reintroduced in 2016 — at a significantly higher price point.
The spokesperson said the shirt with the old collar was reintroduced “in response to numerous requests from customers.”
The constant changes hurt what should be Brooks Brothers’ most valuable asset: its status as a heritage brand. Many of Brooks Brothers’ customers value the company’s history, tradition, and American manufacturing. However, as the company has tried to bolster profit margins by offshoring production and chase new consumer markets, it’s lost many of its core customers and been unable to capture enough new ones.
“The legacy has become more and more tarnished, the heritage more faded,” Boyer said. “It wasn’t Brooks Brothers’ legendary style of Anglo-American gear. It was a mongrel, a mixed breed, a mutt cast adrift in a highly competitive sea where more and more customers are interested in authenticity and heritage.”
The spokesperson said that Brooks Brothers “has always been a leader in adapting to changing styles,” adding that slim-cut suits now outsell full-cut suits by a wide margin.
“Innovation is what keeps any brand relevant,” the spokesperson said.
That heritage-minded American professional isn’t Brooks Brothers’ only customer anymore, however. The brand’s revenue has held steady at around $1 billion since 2013. However, where US sales totalled $880 million in 2013, they have fallen to $660 million today. The company has opened up more international points of sale.
The legacy has become more and more tarnished, the heritage more faded.
A similar shift has occurred in Brooks Brothers’ supply chain. Many shirts are now made in Malaysia. Last year, the company terminated its long-term relationship with Alden, a Massachusetts-based footwear manufacturer that has produced some of Brooks Brothers’ most iconic dress shoe and slip-on styles. Replacing their Alden-made shoes is now a new line of Italian footwear. There have also been discussions at the company to move its tie production from New York to cheaper factories in Italy.
In recent years, some of these factories have also made clothes for Brooks Brothers’ competitors. Roughly 20 percent of Southwick’s production went to labels such as Paul Stuart, J. Press and Todd Snyder, which surround Brooks Brothers on the traditional and contemporary side of the market. For a while, a portion of Garland’s shirt production was dedicated to Untuckit’s “Made in America” line.
Having failed to sell the company earlier this year, Brooks Brothers’ management announced that it would shutter all three of its US factories this summer. Garland, the company’s shirt factory, has completely shut down, leaving nearly a third of the city’s residents unemployed. The Southwick suit factory and Brooks Brother’s Long Island-based tie factory have been reduced to making facial masks, but those will also close in July and August, respectively, unless the company is able to sell them to new owners.
In an interview with The News & Observer, Garland Mayor Winifred Hill Murphy called the closure a "devastating loss" for her town.
“We have been known for Brooks Brothers,” she told the newspaper. “I am praying that something can happen between now and July. We are praying that another company will be interested in buying the factory.”
She added that she had been worried about the factory’s future for years and wasn’t “'blown away' by the news.”
“It is well-known that domestic manufacturing is costly and that these factories have rarely been profit centres,” the Brooks Brothers spokesperson said. “Shutting down our domestic factories is an outcome we would like to avoid and all opportunities to avoid this are still on the table and being explored.”
It’s possible that a Chapter 11 filing will allow the company to get out of bad leases, shrink its debt and reduce manufacturing costs, making it more attractive to potential buyers or continue to operate independently.
However, other brands that have gone through bankruptcy in recent years have exited the process in a diminished state. Some once-venerable retailers, including Barneys, have been acquired by licensing firms mainly interested in exploiting their famous names.
“If a buyer comes in and purchases the business in bankruptcy, they’ll be able to cherry-pick assets,” said Brien Rowe, a consumer and retail banker at DA Davidson. “Certainly their intellectual property has great value, their online business, their customer list — those are still there. Out of 250 stores, 50 or 75 I’m sure will still do well. A certain number will survive and continue to run with the Brooks Brothers name.”
It’s not hard to envision a future where Brooks Brothers’ grand stores in San Francisco and New York have closed, and the brand lives on as one of dozens of button-down shirts piled on tables at Macy’s, or perhaps even Amazon.
“Brooks Brothers is a great American brand,” a former executive told BoF. “But … from the standpoint of being able to run this brand, perhaps you can close some stores and sell shirts via e-commerce. I think e-commerce is the future.”
Editor's Note: This article was revised on 12 June 2020. An earlier version attributed statements about Brooks Brothers' quality being similar to Amazon, as well as its future potentially being in e-commerce, to a current executive. This is incorrect. These comments were made by a former executive.