Brooks Brothers Inc. Business Information, Profile, and History
New York, New York 10017
History of Brooks Brothers Inc.
Brooks Brothers Inc., a subsidiary of the British firm Marks & Spencer PLC, operates a chain of clothing stores in the United States. A traditional source of suits and accessories for conservative businessmen, Brooks Brothers is also a traditional choice for sportswear. Both for business and leisure, its classic styles derive from English models, often dating back to the 19th century. In the last years of the 20th century, however, its sportswear, in particular, took on a more casual, contemporary look. Brooks Brothers also carries merchandise for women and children. The chain included almost 100 retail stores in 1996 and at least 26 outlet units selling merchandise at a discount. Most of its goods were being supplied by outside sources.
Clothing the Elite, 1818--1945
Dating from 1818, Brooks Brothers was one of the first stores in the United States to offer ready-made clothing. Henry Sands Brooks bought a building and lot on the corner of Cherry and Catharine Streets in New York City for $15,250. After the founder died in 1833, his sons Henry and Daniel H. carried on the business, which they named H. and D.H. Brooks & Co. Henry subsequently died, and by 1850--when the name was changed to Brooks Brothers--control of the business had passed into the hands of Daniel and three younger sons of the founder. A new building replaced the original store in 1845.
Brooks Brothers opened a second store farther uptown, at the corner of Broadway and Grand Streets, in 1857. Both stores offered custom and ready-made clothing and a variety of piece goods, including cashmeres, velvet, silk, and satin. During the Civil War the company's patrons, for both uniforms and civilian wear, included Union generals Grant, Hooker, Sheridan, and Sherman. President Abraham Lincoln was a regular customer. He wore a frock coat bearing the Brooks Brothers label to his second inaugural, and it was said he was wearing this coat on the night of his assassination. Perhaps the identification of the firm with the Union cause accounted (if mere greed was not sufficient) for the looting and sacking of the Cherry Street store during the draft-protest riot of 1863 that ravaged the city for three days.
The Cherry Street store was rebuilt but was closed in 1874. The Grand Street store moved to the south end of Union Square in 1870, but this was only a temporary location, for it moved back downtown to Broadway and Bond Streets in 1874. Ten years later the store moved uptown, to Broadway and 22nd Streets. Daniel Brooks, the last survivor of the founder's sons, retired in 1879. Several former employees, as well as two of Daniel's nephews, then became partners in the firm. Two more nephews later became partners as well. The company was incorporated in 1903. A Newport, Rhode Island summer office was opened in 1909 and a Boston branch was opened in 1912. The flagship store made its last move uptown in 1915, when it opened in a new building constructed for it at Madison Avenue and 44th Street. Through it all, Brooks Brothers continued to clothe the nation's leaders, including Grant, Theodore Roosevelt, and Woodrow Wilson, all of whom took the presidential oath of office in the company's suits.
Brooks Brothers based its clothing on London styles and did most of its own manufacturing. Introduced about 1900, its standby "Number One Sack Suit" was loosely constructed, with straight-legged cuffed trousers and a three-button jacket that hung straight, without a tucked-in waist, and natural, unpadded shoulders. This suit style, imported from England, became popular among prep schoolers and Eastern college undergraduates, although the company also made a two-button model.
In 1900 Brooks Brothers introduced to the United States shirts with button-down collar tabs, adapted from the shirt worn by English polo players to keep the collar wings from flapping during play. The polo coat, originally designed to throw on over the riding habit following a match and white rather than camel, was introduced about 1910. The company also introduced from England the polo shirt, foulard tie, and deerstalker cap beloved of Sherlock Holmes. The Shetland sweater was brought over in the 1890s. Its pink shirt made its first appearance in 1900. India Madras for shirts and beachwear began to be displayed at this time. Brooks Brothers also may have introduced to America the seersucker suit, a staple in tropical parts of the British Empire.
Women began casting a hungry eye at Brooks Brothers furnishings about this time. The Shetland sweater was the first to fall into their hands, in 1912, and the polo coat followed in the early 1920s. Hollywood actors and actresses were among the company's best customers. Fred Astaire bought 50 foulard ties at a time; Maurice Chevalier bought its hats; Rudolf Valentino was a steady customer; Katharine Hepburn bought seersucker slacks; and Marlene Dietrich purchased silk dressing gowns. Tank-style bathing suits for women--daring in the 1920s--were borrowed from Brooks's swimwear, and many a pink shirt found its way into a woman's wardrobe. By the late 1940s a corner of the first floor had been set aside for women shoppers.
As a privately held company, Brooks Brothers did not disclose its financial condition, but it was reported to have earned more than $1 million before taxes in 1923. After that date earnings dropped steadily for ten years and by 1935, according to one account, it had an operating deficit of more than $1 million. (According to another account the company lost money only during 1938--40.) It was believed that the company needed to take in $3.6 million annually to break even at this point.
New Owners and New Styles, 1946--88
Brooks Brothers was sold in 1946 to Julius Garfinckel & Co., Inc., a Washington, D.C. department store operator that paid a little more than $3 million for 62 percent of the outstanding stock. (The minority shares were held by the department store John Wanamaker, which had bought them earlier from an old Brooks estate held in the custody of the Guaranty Trust Co.) With the sale, Winthrop H. Brooks, a great-grandson of the founder, stepped down as president, ending the family's guiding role in the business. Under Garfinckel's management, Brooks Brothers adopted more aggressive merchandising to boost sales and stabilized general operating expenses. The company's earnings rose steadily and reached $797,683 in fiscal 1955 (the year ending July 31, 1955).
Brooks Brothers also made a few concessions to changing times, such as adding synthetic fibers to some of its wool suits. These included a polyester-worsted blend (Brooks-Knit) and an all-worsted stretch suit (Brooks-Ease). The company also introduced wash-and-wear shirts in the form of Dacron and oxford cotton (Brooksweave). It began offering suit jackets with the suggestion of a waist and slight shoulder padding.
The 1950s were a very good decade for Brooks Brothers. After the wide, two-button, double-breasted suits and heavily padded shoulders of the previous decade, men seeking progress up the corporate ladder, especially on Wall Street and among Madison Avenue advertising agencies, turned in the early 1950s to the look dubbed "Ivy League." This style echoed Brooks Brothers by the adoption of natural shoulders and narrow lapels, with narrow ties the necessary accessory. (Brooks Brothers, however, refused to take this look to the "jivey Ivy" extreme popular at the time, keeping its lapels three inches wide and its ties 3
Also trendy during this decade were the Bermuda-length shorts the company brought to America, and shirts, jackets, and trousers of bleeding Madras. Women crowded the store to buy Bermuda shorts, pleated dress shirts, and sports shirts (with rhinestone buttons). In men's wear, by the late 1950s "Ivy League" was being challenged by the Continental Look, a chestier two-button style. After John F. Kennedy, wearing a two-button suit, outpointed three-buttoned Richard Nixon and won the presidency, Brooks Brothers, in 1961, unveiled a new two-button suit. It retained the company's natural shoulders, notched labels, and center vent, but was trimmer and more tailored, with a longer roll to the lapels and slightly more waist suppression.
The 1960s, of course, most emphatically was not Brooks Brothers' era. Even those young men who were following a conventional career path took to sporting longer hair and long sideburns and fostering what was called the "peacock revolution" by favoring European-styled or -influenced two-button suits. These were characterized by higher armholes, a more defined waist, wider lapels, and more shoulder padding. Brooks Brothers gave ground grudgingly, slowly widening the lapels until they reached 3
"We knew we were losing our young people during the sixties," company President Frank T. Reilly told Stephen Birmingham in 1978, "and we wondered what would happen to that generation of young men when they entered the business community. Well, we found out what would happen. They came back to Brooks Brothers for their working clothes, and they stayed back. In the end, our customers always come back." Even button-down shirts made a comeback. Custom tailoring, however, came to an end in 1976; this long-standing service was accounting for only some half of one percent of company revenue.
The Brooks Brothers chain grew from 10 stores in 1970, stretching from coast to coast and including a second Manhattan outlet in the financial district, to 13 in 1973. Gross annual revenues were in the neighborhood of $70 million, and the firm made a record profit in 1975. More than 40 percent of its suits were being made in its Long Island City plant in New York City's borough of Queens, with the rest produced by other manufacturers to its specifications. The number of stores reached 24 in 1980. Three of these were in Tokyo, where the company first established a presence in 1979.
Marks & Spencer Subsidiary, 1988--97
Garfinckel's (now Garfinckel, Brooks Bros., Miller & Rhoads Inc.) sold Brooks Brothers to Allied Stores Corp. in 1980 for an estimated $228 million. The company passed in 1986, along with the other Allied holdings, to Campeau Corp., which sold it to the British clothier Marks & Spencer PLC in 1988 for $750 million. At this point the Brooks chain had grown to 47 stores in the United States and 21 more in Japan. (The Japanese stores belonged to a 51 percent Brooks-owned joint venture that was separate from the Marks & Spencer subsidiary Brooks Brothers Inc.) Observers regarded the purchase price as wildly inflated. The firm was said to be poorly managed, carrying many slow-moving items while letting others that were selling briskly fall out of stock.
To reduce expenses, Marks & Spencer installed computer systems to monitor inventory and ensure timely distribution. It also closed Brooks Brothers' Paterson, New Jersey shirt factory in 1989 and subcontracted most of the other clothing from the Long Island City plant to a Syracuse manufacturer. By mid-1993 all manufacturing was being done by outside contractors, except for three factories making shirts and ties.
The 1980s had not been kind to Brooks Brothers. The traders who thrived on Wall Street found the style wimpish and opted for a "power look" that included broadly striped shirts and strong shoulders. By 1990 this had given way to softer English-influenced clothing, but--unlike the sack--the suits had double vents (instead of a single center vent) and high lapels. Marks & Spencer introduced its own English-cut suits to Brooks Brothers, featuring a darted front with either two or three buttons, slightly padded shoulders, and pleated trousers (which Brooks Brothers had not carried since the early 1960s). The parent company was well aware that the standard three-button Brooks suit was accounting for only 38 percent of the chain's sales, compared with 55 percent in the past.
There were other significant changes: management installed escalators in the flagship store as part of a $7 million remodeling and put its shirts and sweaters out on the counter instead of locking them up in wood-framed glass cases. The second floor, traditionally given over to the sack suit, now presented an expanded sportswear selection. Women's wear, which was accounting for 12 percent of sales, moved to the third floor. For the growing number of men who spent spare hours in Manhattan's increasing number of health clubs, there were suits--including double-breasted ones--much wider in the chest than at the waist. There was a wide selection of leather and suede jackets and even sleeveless tank tops. Brooks Brothers also began opening factory outlet stores to market unsold merchandise, typically at 30 percent off. By the spring of 1994 there were 26, and they accounted for perhaps 25 percent of all U.S. sales.
To attract men not willing to pay $500 or more for a Brooks Brothers suit, the company developed what it called its Wardrobe Collection of "suit separates," consisting of jackets priced at $270 and trousers at $125. Separates also allowed a man whose waistline and shoulder proportions did not meet standard sizes to clothe themselves without major alterations on the jacket or pants. New dyeing techniques had allowed the company to match different bolts of fabric instead of having to use the same bolt to create a suit. And in 1993 Brooks Brothers introduced a wool-polyester suit that retailed for only $295 (compared with its top-of-the-line $895 Golden Fleece).
Brooks Brothers' sales grew from $277 million in fiscal 1989 (the year ended March 31, 1989) to $322 million in fiscal 1990, but operating income fell from $39 million to $23 million, in part because of frequent sales and promotions to eliminate slow-moving merchandise. In fiscal 1991 sales reached £163.2 million (US$300.3 million), but operating profit fell to £5.9 million (US$10.9 million). The company, according to analysts, was trapped by its image, caught between a new generation with whom the firm, because of its past, had no credibility, and long-time patrons who resented any change. A cost-cutting reduction in sales personnel, for example, inevitably meant less responsive service, and some customers maintained that the contracting out of manufacturing by the firm had resulted in a decline in quality.
But the company's management stuck to its strategy of keeping its core clientele while making its goods more appealing and affordable to a new generation. Sales rose to £180.7 million (US$314.4 million) in fiscal 1992 and £204.2 million (US$339 million) in 1993, while operating profits rose from £10.5 million (US$18.3 million) to £12.6 million (US$20.9 million). In fiscal 1994 sales came to £252.1 million (US$378.2 million) and operating profit to £14.8 million (US$22.2 million). Fiscal 1995, however, saw a sharp downturn in operating profit to £5.9 million (US$9.2 million) on sales of £258.4 million (US$403.1 million), leading to the resignation of company president William V. Roberti.
Under Joseph Gromek, the new chief executive, Brooks Brothers introduced its own eyewear frames and added such items as khaki pants and jeans to its clothing line, suitable for the "dress-down Fridays," adopted even on Wall Street. To deal with complaints that the firm was aloof and forbidding, it adopted a more open layout and better lighting for some stores and urged sales personnel to smile and greet visitors as they walked through the door. Musty window displays were updated. Above all there was a great deal more use of color, including royal blue sports coats, purple gingham shirts, yellow handkerchiefs, and ties in lime green, fuchsia, turquoise, and orange. Shirt color choices included burgundy, turquoise, and sea-foam green. In women's wear, Brooks Brothers introduced suede jackets and velour tops in pastel colors, Lycra knit tops, and even bright orange winter coats.
Long reluctant to market itself in any blatant way, Brooks Brothers introduced a $1.5 million in-house advertising campaign in 1997. It included the use of a 26-year-old model and Brooks Brothers clothing in fashion spreads. The Brooks Brothers credit card was reintroduced. The number of stores increased from 83 at the end of fiscal 1994 to nearly 100 at the end of fiscal 1996. Sales continued to rise and operating profits rebounded, from £286.1 million (US$446.3 million) and £10.7 million (US$16.7 million), respectively, in fiscal 1996 to £304.4 million (US$490.1 million) and £15.4 million (US$24.8 million) in fiscal 1997. (Sales and profit figures beginning in 1988 included the parent company's take from the Japanese Brooks Brothers joint venture.)
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