Strategic Resource Group Managing Director Burt Flickinger says companies with a good online business and food-related retail can thrive during the coronavirus outbreak.
The race to buy Brooks Brothers out of bankruptcy is about to get a little more crowded with a group of Italian investors planning to bid for the quintessential American clothing brand and introduce some European flair.
Continue Reading Below
Milan-based Giglio Group SpA, which helps fashion companies improve online sales, is spearheading the group of investors. If successful, Giglio plans to install Italian managers with fashion-industry experience and close stores to free up funds to invest in digital. Brooks Brothers’ three U.S. factories, which are slated to close next month, would remain open and overseas production would be consolidated in Italy.
“We want a fusion of the American DNA that defines Brooks Brothers with the Italian experience and know-how that we can add,” Giglio Chief Executive Alessandro Giglio said in an interview.
A pedestrian wearing a mask walks past a Brooks Brothers store closed during the COVID-19 crisis in Vancouver, Canada. (Photo by Andrew Chin/Getty Images)
Brooks Brothers, which is currently owned by Italian businessman Claudio Del Vecchio, collapsed under the weight of the coronavirus pandemic that dealt a knockout blow to a company already suffering from a general shift in tastes away from formal apparel.
After two centuries in business, with a raft of illustrious clients including several former U.S. presidents, Brooks Brothers filed for bankruptcy on July 8.
BROOKS BROTHERS, HURT BY CASUAL FRIDAYS AND CORONAVIRUS, FILES FOR BANKRUPTCY
Interested bidders include Sparc Group LLC, an apparel company backed by Authentic Brands Group LLC, which is providing financing to Brooks Brothers to get it through the bankruptcy, and WHP Global Inc., according to people familiar with the situation.
“It’s going to be a tough fight, but I like our chances,” Mr. Giglio said. “We normally help brands rather than buy them, but the opportunity to remake an iconic brand like Brooks Brothers from zero was too appealing to pass up.”
TALKS WITH POTENTIAL BROOKS BROTHERS BUYER HEAT UP
Giglio and other suitors need to submit formal bids by Aug. 5. A spokeswoman for Brooks Brothers declined to say how many expressions of interest the company has received.
Giglio, which is listed on the Italian stock exchange with a market value of about €49 million ($56 million), builds and manages e-commerce websites for fashion and design companies, and helps increase their revenue by getting the products placed on online marketplaces. Its clients include Armani and other Italian brands such as Max Mara, Colmar and Kartell.
Giglio is flanked by Luciano Donatelli, an Italian fashion-industry consultant who brought the idea of buying Brooks Brothers to Mr. Giglio. Mr. Giglio said other Italian companies were backing the bid, and that Chinese investors also had expressed an interest. While some funding for the deal might come from China, the soul of the group would be Italian, he said.
BARNEY BANKRUPTCY: WHERE IS LUXURY SHOPPING GOING?
Mr. Del Vecchio, Brooks Brothers’ current owner, is a low-profile Italian businessman who isn’t particularly well-known in his home country. His father, Leonardo Del Vecchio, is one of the country’s richest people and founded eyeglass company Luxottica, which merged to become the Franco-Italian giant EssilorLuxottica. Mr. Giglio and Mr. Del Vecchio don’t know each other.
Despite Brooks Brothers’ American pedigree, Mr. Giglio said keeping the brand under Italian ownership was critical for his plan to move it upmarket.
CORONAVIRUS LEADS NEW YORK & COMPANY INTO BANKRUPTCY, CLOSING MORE STORES
Brooks Brothers’ annual revenue, which was $971 million last year, could reach $3 billion in five years with the right investments, Mr. Donatelli said.
While details of the bid by the Giglio-led consortium still need to be defined, a key component will be closing many of Brooks Brothers’ 500 stores — 200 of which are in the U.S. — and increasing the brand’s online sales. A Brooks Brothers spokeswoman declined to say what percent of sales is online.
Mr. Giglio said he won’t be able to estimate how many stores would be closed under his group’s plan until he has had more time to study Brooks Brothers’ financial situation.
“With the coronavirus, there was a Copernican revolution, and there is no going back,” said Mr. Giglio. “Stores were the focal point, and e-commerce played a supporting role, but we have to get our head around the fact that it’s now completely flipped. Having a store on Madison Avenue [in New York] and in other large cities around the world isn’t sustainable anymore for most fashion brands.”
GET FOX BUSINESS ON THE GO BY CLICKING HERE
In addition to scaling back the number of stores while focusing on e-commerce, Messrs. Giglio and Donatelli want to boost Brooks Brothers’ presence in Asia. They think the brand’s long history could be leveraged in China to increase revenue. They also plan to increase Brooks Brothers’ clothing lines, while developing the accessories business, including footwear.
Law firm Dentons is advising Giglio and its partners on their bid for Brooks Brothers.
