Iconic American suit maker Brooks Brothers files for bankruptcy
- Brooks Brothers filed for bankruptcy early Wednesday morning.
- The coronavirus pandemic and associated store closures hurt sales, but the retailer was reportedly considering restructuring even before the virus hit.
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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 (R1.2 billion) in debtor-in-possession financing to aid in its restructuring.
The retailer, often credited with inventing the American suit and which founded in 1818, 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 (R17 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 during the lockdown, 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 socialising 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, Gordon Brothers announced it would be giving Brooks Brothers a $20 million (R340 million) secured loan.
It also permanently closed some stores and in May filed WARN notices to shutter its three US factories, located in New York, North Carolina, and Massachusetts. If those factories were closed, nearly 700 jobs would be eliminated.
Business Insider reached out to the company for comment but did not immediately hear back.
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.
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