Who will take over Brooks Brothers, the mythical brand of USA presidents?
It’s hard to believe, yet it is true. The mythical American ready-to-wear house has recently activated the (in)famous Title 11 of the Bankruptcy Code. A group of Italian investors is in line for its takeover.
By Bettina Bush Mignanego03 août 2020
Its two century-old history and the ultimate prestige of having dressed 40 presidents of the United States will not have been enough to save what is still today considered as the symbol of the American Dream. Neither have the years of management by Claudio Del Vecchio, an Italian businessman and son of the founder of the Luxottica empire, ever passionate about the brand who remembers buying a Brooks Brothers shirt, having just arrived on American soil at age 20. A sentimental crush which encouraged him to acquire the Marks and Spencer brand a few years later, in 2001.
His objective was clear: recapture the quality and iconic standard of the brand. The journey was however harder than expected and eventually stopped by the current sanitary crisis. The Del Vecchio era did not manage to regain the status of the mythical dress shirts.
Today, potential acquirers exist. Among them, a group of Italian investors called “Club Deal 8” and led by Alessandro Giglio (the Giglio Group CEO whose businesses in e-commerce rely on Italian luxury fashion, design and gastronomy brands with a strong presence in China), about whom several American media, such as the Wall Street Journal, have been writing.
Exclusively for Luxury Tribune, Alessandro Giglio explains the reasons which lead him today to bet on Brooks Brothers, and his recovery strategies for the brand whose annual turnover rose to 991 million dollars in 2019, totaling 250 points of sales in North America and 500 shops worldwide. The fight will be intense, and a 305 million-dollars buy-back offer was already made by Sparc Retail. “Club Deal 8”’s offer remains secret for the time being. The final decision will be made by the United States Bankruptcy Court for the District of Delaware, mid-August. Exclusive interview.
Why this interest in the Brooks Brothers brand, at a time where many other iconic fashion brands are suffering?
This is not just any brand! We are talking about a historical house that has dressed presidents, movie stars, a true myth which remains absolutely fascinating still. And may I add that talking about 200 years of American History is equivalent to speaking about 2000 years of Italian History! Brooks Brothers has an enormous symbolic value, a rare emotional engagement on a mature American market, but still under-exploited in Europe, and even less in Asia.
Which mistakes were made during the Claudio Del Vecchio management?
One general mistake made by all: retail was in constant downfall, specifically in the ready-to-wear industry and in luxury in general. Last year already, I remember having journeyed through New York, between Madison and 5th, and having noticed that half of the windows were empty and available for rent. It was clear that the physical shops’ costs had become unbearable. Brooks Brothers didn’t anticipate the situation and Covid-19 handled the rest. It’s an underlying problem in the fashion industry, even in fast fashion. Just look at the 1,500 Zara boutique closures worldwide. Brooks Brothers was repositioned from luxury to mid-market, the segment that was most in trouble.
Can you tell us about the investment group "Club Deal 8"?
Actually, there’s five of us but the number 8 is lucky in China.
Are you superstitious?
No, but I like to rely on a few family references (my wife’s). If the operation works out, I will have the pleasure of leading the digital side of the brand, a big challenge. Actually, it’s Luciano Donatelli who had the idea of this acquisition. He told me about it, I thought it over during a weekend, and I made my decision. We also have Lorenzo Morello as well as Chinese funding, Brando Crespi, founder of pro-Natura, an investment fund that supports sustainable projects, and the group Verzoletto whose business focuses on weaving precious fibers.
How do you imagine the new Brooks Brothers, solely online?
Absolutely not, we will find the right balance between retail, physical and digital. However, we need to promote it on markets that still have a thin knowledge of the brand on a digital level. We will rely on multibrand and monobrand e-commerce websites and will focus on social media in China. Just imagine, on WeChat, Chanel sold more than 200 limited-series bags at 20,000 euros in just a few minutes. In China, everything happens on WeChat, which includes e-commerce, payment mode, videos, the Facebook, Instagram, YouTube and WhatsApp-like communication and is used roughly three hours a day by one billion users. The Giglio group already has a partnership with WeChat.
An American brand Made in Italy combined with e-commerce: does that seem viable to you?
We plan on keeping the factories in the USA, while Italy will offer added value on the quality of the fabric and the patents. And with the help of Italian stylists, we will be able to create a virtuous cycle, offering what’s best for the brand.
Do you think Brooks Brothers represents a first in a series of important projects?
The heart of our craft consists in creating digital content for Made in Italy fashion. A company such as ours needs to grow rapidly and use the right opportunities. We wish to rely on Italian knowledge and savoir-faire to act on an international level, and Brooks Brothers can be the symbol of a great playground in that respect. We plan on multiplying our turnover by three over the next five years.
How is e-commerce doing in a post-covid-19 world?
The strong recovery is mainly visible in China and Korea. I think that we will manage to reach a new normal in about three months. However, in the USA, the situation is quite difficult, and I can’t say what will happen. With regards to Europe and Italy in particular, I think that the Recovery Fund is a joke, a way for Europe to stall in order to avoid a confrontation with the current government. The 209 billion euros will not be useful in 2021. We need it now! I sincerely hope I am mistaken, but I will add that the only true insight from Europe concerns the request made towards Italy with regards to digitalization. Today, Italy only exports 6% via digital channels and we could go up to 25% with an increase from 2 to 3 points of GDP. With the closure of physical shops, we are risking a big loss, without having been able to invest in digital. This could have dramatic consequences for the Made in Italy label. I am very worried about the Fall season. We could enter in a deep depression, even a recession, as well as a very serious social crisis.
Are you optimistic for Brooks Brothers?
Facing us, we have American funds with enormous liquidity at their disposal. We wish for Brooks Brothers to remain an American brand, yet in Italian hands, and famous even in China.
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