Bankrupt Brooks Brothers Agrees to Sale to Simon Property and Authentic Brands


Brooks Brothers, the venerable retailer that was based in 1818 and filed for chapter final month, mentioned it might be offered to Simon Property Group, the most important mall operator within the United States, and Authentic Brands Group, a licensing agency.

The $325 million supply for Brooks Brothers, up from a $305 million bid final month from the identical suitors, is topic to court docket approval this week, the businesses mentioned in a press release late on Tuesday. The patrons dedicated to proceed working a minimum of 125 Brooks Brothers retail areas. Before the pandemic, the corporate operated 424 retail and outlet shops globally, together with 236 within the United States, in accordance to court docket paperwork.

The supply for Brooks Brothers got here from an entity often known as the SPARC Group, a three way partnership between Simon Property and Authentic Brands Group. The mall proprietor and A.B.G. have teamed up on offers to purchase different bankrupt retailers lately, together with the teenager chain Aéropostale and the fast-fashion behemoth Forever 21. SPARC has additionally bid on Lucky Brand, the denim firm that filed for chapter final month. A.B.G. is understood for buying the mental property of manufacturers like Barneys New York and Sports Illustrated, then licensing their names to different corporations and incomes royalties from associated merchandise.

The coronavirus outbreak has toppled a number of storied retail manufacturers, particularly these targeted on attire, as many shops had been pressured to briefly shut and demand for brand spanking new clothes dropped in a distant, much less social setting. Chains together with J.C. Penney, J. Crew, Neiman Marcus and the proprietor of Ann Taylor and Loft have filed for chapter safety since May, combating misplaced gross sales and heavy debt masses. Most say they plan to re-emerge with fewer shops.

Brooks Brothers, based mostly in New York, is the oldest attire model in steady operation within the United States, and has a uncommon and storied repute. It has dressed all however 4 presidents courting to James Madison, has been worn by Clark Gable and Andy Warhol and is the official clothier of the Jazz at Lincoln Center Orchestra. Abraham Lincoln was wearing a Brooks Brothers coat the night he was assassinated.

It was revived in the past two decades by the Italian industrialist Claudio Del Vecchio, who bought it in 2001. The retailer started to slip in recent years, battered by the rise of more casual workplace attire and the shift to online retail, prompting a search for new buyers or investors. Brooks Brothers said in court documents that since April 2019, its business had been marketed to more than 90 potential investors around the world. The retailer said that its revenue exceeded $991 million for the fiscal year that ended 2019, with about one-fifth of that coming from its North America e-commerce business.

The pandemic dealt a new and unexpected blow to Brooks Brothers, given its pricey, formal merchandise and reliance on physical retail. Not only were its stores temporarily closed, but so were the offices of many of its customers. Proms, weddings, graduations, bar mitzvahs and other special occasions fell off calendars. On Zoom, sweatpants cannot be distinguished from tailored dress pants.

The level of distress at Brooks Brothers came into sharper focus this year when the company prepared to close its three U.S. factories, in Massachusetts, New York and North Carolina, forgoing its “Made in America” calling card, and announcing plans to lay off nearly 700 employees. Like many retailers, it furloughed most of its staff — it had roughly 4,000 employees before the pandemic — and cut the salaries of corporate workers. Before filing for bankruptcy, it had already decided to close 51 Brooks Brothers stores in the United States.

If it is approved, the acquisition by the SPARC Group will have proceeded remarkably quickly, given that Brooks Brothers filed for bankruptcy protection on July 8.

On an earnings call this week, David Simon, the chief executive of Simon Property, outlined several benefits to the acquisitions of bankrupt retailers through SPARC, which he referred to as a 50-50 joint venture with A.B.G. He said that it was acquiring inventory at or below cost, buying any intellectual property at “attractive values,” cutting the overhead costs of purchased companies and able to reject certain leases.

He disputed the notion that Simon Property was “buying into these retailers to pay us rent,” saying that the company believed in the brands and thought they could make money. He also noted that the venture was saving jobs at places like Brooks Brothers.

“That’s what we should talk about,” he said on the call. “We’re doing our fair share for trying to keep this world as normal as we can.”

Elaine Yu contributed reporting.



Source link Nytimes.com

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