With a glance backwards, Brooks Brothers looks to the future
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.
Mr. 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 Mr. 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 classic blazers and suits in the stores.
Those letters 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 Mr. Del Vecchio had worked at Casual Corner (a women’s wear retail chain that Mr. 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 program, 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.
“Brooks Brothers is a special place,” Mr. 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.”
Elegantly attired in a Brooks Brothers navy tweed sport coat, a white button-down shirt, a burgundy knit tie, slim gray slacks and brown oxfords, the chief executive spoke about what he saw as his mission.
“I am here to reinforce a culture,” he said. “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.”
Bought at a Discount
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.
Mr. 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 customized his shirts by leaving the collar points unbuttoned.) Generations of Italian men idolized the dashing Mr. Agnelli and copied what he wore.
When Luxottica sent Mr. 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 nearly all of them, including Donald J. 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 cotton knit polo shirts, which Mr. Del Vecchio, as an influential supplier, says he 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 American retailers shaken right after Sept. 11, Mr. Del Vecchio was able to swoop in and grab Brooks Brothers for $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 percent of its total revenue. That was up sharply from 2002, when it operated international stores only in Japan, still its biggest overseas market.
Online and in Airports
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.
Mr. 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 women’s wear since 2016 — but its business remains rooted in its classic men’s wear, which accounts for 80 percent of its business.
Dress shirts, now in about 1,000 varieties, have long been the calling card of Brooks Brothers, accounting for 30 percent 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. (Mr. 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 percent of our business is now in slim shirts and slim suits,” he said.)
Charles Moore, founder and president of the Banc Funds, a private equity firm in Chicago, said he had stopped wearing Brooks Brothers dress shirts for several years because “the quality of the shirt fabric suffered and the collar wasn’t fitting.” He shifted to $200 custom shirts until a few years ago when he returned to Brooks Brothers, for its trim Regent silhouette, which was new to him.
“I like the fine Supima cotton and the way the shirts ride on your neck — the spread collar and the button-down collar,” he said. For around $80, “they’re great value for the money.”
‘We Are Authentic’
The privately held Brooks Brothers has posted profits for 13 of the last 17 years. For the past three years, annual sales have hovered around $1 billion, with profits at a break-even level, according to figures provided by Mr. Del Vecchio. (In the current challenging retail market — with Ralph Lauren Corp. and Abercrombie & Fitch closing down stores, and J. Crew getting rid of its entire top management team to try to reverse that company’s revenue slide — steady results can be considered something of an achievement for Brooks Brothers management.)
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,” Mr. 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, Mr. Del Vecchio sees promise with Brooks Brothers’ latest concept, Red Fleece boutiques, featuring midprice casual wear. Its popular Flatiron location recently added a downstairs cafe, now a hangout for the tech workers in the neighborhood.
“We need to refine it to create synergies between the cafe and the boutique,” Mr. 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. Notably, Nordstrom, which had $15.48 billion in revenue in 2017 and which over the past year had tried to take itself private, finally pulled the plug on that effort in March after the board rejected the founding family’s $50-a-share bid, saying it wasn’t high enough. (Retail stocks, as whole, gained just 2.52 percent in 2017, well behind the 25 percent rise in the Dow Jones industrial average and the 19 percent return of the Standard & Poor’s 500-stock index.)
“Claudio has been very disciplined and measured on how he has grown Brooks Brothers, focused on where the brand will go, upping the quality, not going for the quick sales and not opening too many stores,” Mr. Burke said. “He’s elevated Brooks Brothers without deviating from its heritage and tradition.”
Mr. Del Vecchio said, “I am naturally a long-term thinker, and I don’t see the benefit of going public.”
Made in America
Though much of Brooks Brothers’ apparel is imported, including its best-selling no-iron shirts (made in Malaysia), Mr. Del Vecchio says he remains committed to producing many signature items at home, including its made-to-measure suits, 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, Mass., which 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, N.C., where 250 workers produce the classic $140 oxford shirt — and is the only domestic factory that operates at a loss, Mr. 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.”
Mr. Del Vecchio said he knows 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.”
The philanthropic-minded Mr. Del Vecchio began the practice of hiring English-language tutors to teach the immigrants who work at his factories. In Haverhill, the workers speak 30 languages, from countries including Afghanistan, Poland and Myanmar.
“We don’t hire illegal immigrants, but now there are the laws that stop immigrant refugees, which were a great source of skilled labor for our factories,” he said.
He and his wife, Debra, and members of his executive team visit each factory every Christmas season, donning blue aprons embroidered with “Brooks Brothers” to serve lunch to workers. Mr. D., as they call him, joins in to dance and to speak Italian and Spanish with the workers. He also gives out certificates for graduates of the English classes and awards for years of service.
“Whenever he walks into the factory, everybody claps,” said Adriana Lucin, the production manager at the tie factory. “He’s like a star. Everyone wants to take a selfie with Mr. D.”
Correction: April 21, 2018
An earlier version of this article misstated where Brooks Brothers’ made-to-measure suits are manufactured. They are produced at the company’s factory in Haverhill, Mass., not in Italy.
Source: New York Times
Fashion Journalist: Teri Agins