BROOKS BROS. OPERATING NET DROPS IN YEAR
Byline: James Fallon / with contributions from Jean E. Palmieri, New York
LONDON — Brooks Bros. is applying the brakes to its ambitious expansion plan, and its plans for freestanding women’s shops have been put on indefinite hold.
On Tuesday, the men’s and women’s wear retailer reported a 38.3 percent drop in operating profits to $12.7 million on an 11.6 percent increase in sales to $640.7 million for the 53 weeks ending March 31. This compares with operating profits of $20.6 million on sales of $574.2 million in the 52-week period a year earlier, according to Marks & Spencer PLC, Brooks’s parent.
Although business improved significantly in the second half, the firm still has no plans to open additional stores. This is in sharp contrast to the prediction made two years ago when Brooks Bros. executives said they would add 100 stores in the U.S. within five years.
Guy McCracken, executive director for international retail, business systems and information technology, said women’s now represents about 15 percent of its sales, and plans call for further expanding women’s offerings. However, the company is revamping its strategy slightly and in future will merchandise women’s wear with its men’s wear, as it has in its Fifth Avenue store in New York.
Brooks has tried three freestanding women’s wear stores but McCracken said there are no plans to open more. “We decided women’s wear works best in the existing footprint of stores,” he explained.
Joseph Gromek, chief executive of Brooks, said in a telephone interview from his New York office that the women’s stores were a “test, and we feel we have still things to learn.” However, season-to-date, women’s is running 25 percent ahead, he noted.
McCracken said the profit drop last year resulted from the company’s aggressive expansion over the last 12 months and the shift in men’s and women’s wear toward more casual dress. But he generally was optimistic about Brooks, saying there should be an improvement in its performance as it consolidates its operations.
Brooks operates 81 full-line stores and 73 factory outlets in the U.S., 70 in Japan, five in Hong Kong and two in Taiwan.
Marks & Spencer had said last year that it was looking for a site for a Brooks Bros. flagship in London but McCracken said there currently are no plans to open one. “There is significant international interest in Brooks Bros., and when we deem it appropriate we might do more franchises,” he said.
Overall, Marks & Spencer reported a 29.9 percent drop in profits after taxes and exceptional charges to $383.8 million on a 0.3 percent drop in sales to $12.13 billion for the 53 weeks ending March 31. This compares with profits after taxes and exceptional charges of $547.6 million on sales of $12.17 billion in the 52 weeks the previous year. Dollar figures were converted at current exchange.