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Brooks Brothers suits up for the future with eye on online sales, millennials
IN EARLY 2002, just a few months after he officially took over as the new owner and chief executive officer of Brooks Brothers, Claudio Del Vecchio confronted the reality that the classic American retailer had largely lost its way.
Del Vecchio knew that many of the clothing fabrics were no longer of high quality, that too many of its shirts were ill fitting and that there were often disconcerting irregularities, like a rack of navy blazers that weren't the exact same shade of navy.
And longtime customers had noticed.
Among Del Vecchio's first acts as owner was to read a stack of angry letters from Brooks Brothers loyalists who griped about how the merchandise quality had fallen under the previous owner, the British retailer Marks & Spencer. They also balked at the limited selection of blazers and suits.
That confirmed much of what Mr Del Vecchio, a wealthy Italian entrepreneur, had seen for himself and stiffened his resolve to return to the company's roots. "I saw the business opportunity to increase sales," he said. "I knew how to fix this."
A new executive team shifted into crisis mode. Led by an experienced chief merchant, Eraldo Poletto, with whom Del Vecchio had worked at Casual Corner (a womenswear retail chain that Del Vecchio sold in 2005), they began to corral the company's best suppliers to revamp all the store's merchandise. Hundreds of garment styles required new specifications, better fabrics and apparel factories. It took about six months for the first shipments of the improved garments to arrive in stores - swapping out the oversize khakis and shapeless polo shirts.
Among the upgraded versions were luxurious three-ply Italian cashmere sweaters, replacing the two-ply Mexican cashmeres, and three styles of blazers and khakis, instead of just one. By April 2003, the store had completely overhauled its merchandise - and its loyal fans started coming back.
By 2004, Mr Del Vecchio said, the privately held Brooks Brothers was modestly in the black, reversing a series of money-losing years that had begun in the late 1990s.
The history of Brooks Brothers and the tenure of Mr Del Vecchio - who has been wearing Brooks Brothers for more than half of his 61 years - will be celebrated on Wednesday evening, when the company will host a black-tie gala at Jazz at Lincoln Center for 1,000 of its best customers, friends and celebrity guests to mark its 200th anniversary. The all-American jazz programme , produced by the Jazz at Lincoln Center Orchestra's artistic director, Wynton Marsalis, befits the all-American clothier, which has been the group's corporate sponsor and official clothier since the 1990s.
Original Oxford shirts
"Brooks Brothers is a special place," Del Vecchio said during an interview in his upper-floor office at the 346 Madison Avenue store, where an antique grandfather clock owned by the store's founder, Henry Sands Brooks, stands across from his mahogany desk. "This is a great institution with a heritage."
Claudio Del Vecchio grew up in Milan, the oldest of six children of Leonardo Del Vecchio, the self-made billionaire founder of the Italian eyewear giant Luxottica Group.
Del Vecchio, like many other Italian men, first learned about Brooks Brothers through the stylish Fiat patriarch Gianni Agnelli, who started wearing Brooks Brothers original Oxford shirts in the early 1960s. (He customised his shirts by leaving the collar points unbuttoned.) Generations of Italian men idolised the dashing Agnelli and copied what he wore.
When Luxottica sent Del Vecchio to New York to run its North American operations in 1982, the young executive headed straight to Madison Avenue to buy his wardrobe at Brooks Brothers. Later, in 1992, he got to know the store's executives when he signed up Brooks Brothers to be Luxottica's first eyewear licensee in the United States.
Over the next few years, however, he observed with increasing alarm how Brooks Brothers was abandoning its long tradition of being the standard-bearer of American business classics, one that came with its status as an outfitter of the nation's presidents. It has clothed 40 of the 45, including Donald Trump for his 2017 inauguration.
Under Marks & Spencer, which bought it in 1988, Brooks Brothers enthusiastically embraced the casual wear boom of the 1990s, as the store's merchants were told to copy the business-casual look of Banana Republic. (Staff members jokingly called their store "Banana Brothers".) In the mid-1990s, the company's executives even eliminated the signature Golden Fleece logo from its knit polo shirts, which Del Vecchio, as an influential supplier, was able to talk them into restoring, he said.
By 2001, it was clear that the British-American marriage wasn't working, and Marks & Spencer, suffering from a global recession and a downturn in its home business, put Brooks Brothers up for sale. With US retailers shaken after Sept 11, Del Vecchio was able to swoop in and grab Brooks Brothers for US$225 million, less than a third of what M&S had paid 13 years earlier.
After those frantic first years, when management worked on both quality and public perception, retail sales began to steadily improve. By 2017, Brooks Brothers had 244 wholly owned stores in the United States, up from roughly 160 in 2001; in both cases, half were factory outlets. It also had wholesale accounts with stores like Bloomingdale's, Lord & Taylor and Dillard's.
Globally, Brooks Brothers had blossomed with sales in 50 other countries, accounting for 35 per cent of its total revenue. That was up sharply from 2002, when it operated international stores only in Japan, still its biggest overseas market.
Today, Brooks Brothers is typical of most retailers: Online sales now represent its largest percentage of revenue and is now the company's fastest-growing category. As more people have migrated to shop online, Brooks Brothers has provided more detailed product descriptions and has featured photos of people in lifestyle situations, as opposed to models in studios, which a company spokesman said had helped increase sales.
Del Vecchio credits Brooks Brothers' 27 airport shops, operated by a licensee, for helping win back businesspeople who had rejected Brooks Brothers in the 1990s. He calls the shops a "great showcase" for the brand. (In the 2009 movie Up in the Air, George Clooney's traveling businessman character lingers over a display of striped ties at a Brooks Brothers airport shop.)
Brooks Brothers has also reached out to established fashion designers for exclusive, high-profile capsule collections - Thom Browne from 2007 to 2014; Zac Posen for womenswear since 2016 - but its business remains rooted in its classic menswear, which accounts for 80 per cent of its business.
Dress shirts, now in about 1,000 varieties, have long been the calling card of Brooks Brothers, accounting for 30 per cent of its sales. In a nod to contemporary trends and to buffed, young guys, the shirts come in four fits: the Traditional, the Madison, the Regent and, the slimmest, the Milano. (Browne, famous for his tightfitting men's suits, helped steer Brooks Brothers toward slimmer silhouettes, said Lou Amendola, the store's chief merchandising officer. "Today over 50 per cent of our business is now in slim shirts and slim suits," he said.)
Hip, millennial shoppers
Deft management and deep pockets tell the story of how Brooks Brothers posted profits for 13 of the last 17 years. For the past three years, sales have hovered around US$1 billion and earnings have remained flat, Del Vecchio said. In the current challenging retail market - with Ralph Lauren and Abercrombie & Fitch closing stores, and J Crew getting rid of its entire top management team to try to reverse that company's revenue slide - breaking even can be considered something of an achievement for Brooks Brothers.
Drawing hip, millennial shoppers inside America's oldest retailer isn't easy - even to check out novelties such as Brooks Brothers' latest machine-washable merino sweaters, designed without side seams, and its lightweight hooded outerwear, rivaling labels like Moncler and Canada Goose.
"We have a level of technology and performance that they can't even dream about," Del Vecchio said. "We are authentic, and we have the stories. We just need to do a better job with social media and the influencers." Still a big believer in physical stores, Del Vecchio sees promise with Brooks Brothers' latest concept, Red Fleece boutiques, featuring midprice casual wear. Its popular location in the Flatiron district of Manhattan recently added a downstairs cafe, now a hangout for the tech workers in the neighbourhood.
"We need to refine it to create synergies between the cafe and the boutique," Del Vecchio said.
Even with a challenging economic landscape, Brooks Brothers, with its freedom from public shareholders and the pressure of quarterly financial disclosures, "is suddenly the retailer that everyone wants to emulate," said Robert Burke, a New York retail consultant.
Though much of Brooks Brothers' apparel is imported, including its best-selling no-iron shirts (made in Malaysia) and its made-to-measure suits (Italy), Del Vecchio says he remains committed to producing many of the signature items at home, in company-owned factories where he has invested in new machinery and in the training of workers.
Its ties, for example, are manufactured at a factory in Long Island City, with a label embroidered with an American flag and the words "Brooks Brothers. Proudly Made in New York United States of America". There are two other domestic factories. One is in Haverhill, Massachusetts; it makes men's suits, sport coats and trousers, and has produced clothes for the designer Todd Snyder and uniforms for United Airlines. It employs 550 workers, up from 300 in 2008. The other is in Garland, North Carolina, where 250 workers produce the classic US$140 oxford shirt - and is the only domestic factory that operates at a loss, Del Vecchio said.
"Part of the Brooks Brothers institution are its factories and what it means from a social standpoint to put things together," he said. "Not every consumer can afford to buy 'Made in America'. But we have a brand that can justify that cost, and there are enough customers who understand this." Del Vecchio said he knew that closing the Garland factory would erase the livelihoods of half the town, which has fewer than 1,000 inhabitants.
"Many of the decisions we make are with that in mind as well," he said. "We keep saying every year this is the year we aren't going to lose money, so that's the reason to keep trying to improve. But until the day I can't afford it, we won't close it." " NYTIMES