Could the ultimate American preppy fashion brand no longer be made in America?
As Brooks Brothers continues to explore its options, including a possible sale, the company has in the last few days quietly informed local and national authorities that it is planning to close its remaining factories in Long Island City, N.Y.; Garland, N.C., and Haverhill, Mass., this summer.
Reached for comment, the company said no final decision has been made about the fate of the manufacturing facilities and their employees, but admitted it is “likely” that they will be shuttered.
“In the ordinary course of business, Brooks Brothers consistently explores various options to position the company for growth and success,” a spokesperson said. “As part of this assessment, it is likely that we will be closing our factories in Long Island City, N.Y.; Garland, N.C., and Haverhill, Mass. We delivered WARN notices this week to the impacted employees in order to provide workers with sufficient time to prepare for potential loss of employment. This decision is subject to change, should alternative solutions be uncovered in the near term. The factories are incredibly meaningful to our heritage and we value our employees. All opportunities on the table are still being explored to avoid this difficult outcome.”
The Long Island City plant employs 136 people, manufactures neckwear and also operates an alterations shop, according to a Worker Adjustment and Retraining Notification, or WARN, notice from the New York State Department of Labor. The reason given is “unforeseeable business circumstances prompted by COVID-19,” according to the filing. That plant would be closed on Aug. 18.
The plant in Haverhill produces not only Southwick tailored clothing, which is wholesaled to other retailers, but has also been manufacturing suits, sport coats, dress coats and trousers for Brooks Brothers since the Forties. The closure of the 90-plus-year-old suit manufacturer would be a particularly hard blow to Brooks Brothers’ chief executive officer Claudio Del Vecchio, who rescued the plant from collapse in 2008 and has since expressed pride in how he designed a new state-of-the-art facility for the business and retrained all of its 300-plus workers.
Today, that facility employs 413 people and would have an effective closing date of July 20, according to the WARN notice.
The North Carolina shirtmaking facility would also close permanently on July 20, according to that state’s WARN notice, eliminating 146 positions in the small town where Brooks Brothers is the largest employer, according to the local newspaper. The reason cited for the potential closure was the same as that in the New York notice.
In 2018, according to the Raleigh News-Observer, Del Vecchio said the Garland plant was the only one that was operating at a loss.
Ironically, the decision to explore the closure of the company’s domestic plants comes mere weeks after Brooks Brothers publicly touted the conversion of these factories into facilities to produce face masks and gowns for workers in the health-care industry battling COVID-19. Those initiatives are continuing today with a limited number of workers brought back to manufacture the personal protective equipment. At the same time, it furloughed the workers at its retail stores and instituted payroll cuts for its management team.
Brooks Brothers has trumpeted its Made in the USA heritage almost since its founding, and has been donned by nearly every American president including Abraham Lincoln. If the company does close the three factories, it would come at a time when American manufacturing could be poised for a comeback due to both the coronavirus and the trade policies of President Trump. The pandemic has highlighted the vulnerabilities of a global supply chain, with even technology firms mulling the possibility of again building plants in the U.S. Meanwhile, Trump has boosted tariffs on not only apparel imports from China, but also imports of suits, knitwear and other fashion items from countries including the U.K., Italy and France.
The closures would almost certainly force the company to find alternative manufacturing facilities for these products overseas, since there are few factories able to handle orders of that size remaining in the U.S. today.
The factory closures would be the last disruption at the privately held Brooks Brothers, which has ben evaluating its options even before COVID-19 shut all of its stores and factories. Rumors began to bubble at the end of 2018 that the company was up for sale. At the time, Del Vecchio denied those reports, saying he was not looking to “dump the company.”
However, in November, the company hired the PJ Solomon investment bank to explore and analyze strategic options. That process is ongoing.
More recently, there has been speculation that the company could be considering a bankruptcy filing. Thought to be saddled with some $600 million in debt, a Chapter 11 filing would allow Brooks Brothers to restructure that debt and also exit leases for unproductive stores.
If it did opt to file Chapter 11, the retailer would join other venerable American firms that have turned to bankruptcy proceedings during the pandemic, including J.C. Penney Co. Inc., Neiman Marcus Group and J. Crew Group Inc. Brands including John Varvatos and Centric, which owns Robert Graham, have also filed Chapter 11 in the past few weeks.
Brooks Brothers reportedly has sales of more than $1.1 billion and operates more than 250 full-price and outlet stores in the U.S. and more than 700 international units in 50 countries.
Del Vecchio, the son of Luxottica founder and chairman Leonardo Del Vecchio, purchased Brooks Brothers from Marks & Spencer for $225 million in 2001. Since buying the brand, he has proven to be a white knight for the business, which celebrated its 200th anniversary in 2018.
He upgraded the merchandise mix, revamped its stores, expanded overseas and added several product categories. Del Vecchio hired Thom Browne in 2007 to create a collection called Black Fleece and Zac Posen in 2014 as creative director to grow Brooks’ women’s collection, which has consistently accounted for around 20 percent of overall sales.
The entrepreneur has also aggressively expanded overseas, where sales now account for around 35 percent of the total business. Its largest markets are Japan, where it has had a lucrative business for 40 years, as well as China.
In an interview at the time of the milestone birthday, Del Vecchio said if he hadn’t stepped in to save the business, “there’s very little possibility that we would have made it to our 200th anniversary. The brand might have still been alive, but it wouldn’t have been what it historically was.”
Brooks Brothers was founded in 1818 by Henry Sands Brooks as a men’s haberdashery, H. & D.H. Brooks & Co., on Catherine and Cherry Streets in lower Manhattan. It was later renamed Brooks Brothers in honor of his four sons: Elisha, Daniel, Edward and John.