Brooks Brothers nears bankruptcy as talks heat up with potential buyer
David Jackson's Solitaire Partners considering bid if oldest US clothing retailer goes bankrupt
Sources tell FOX Business’ Charlie Gasparino potential bidders say a Brooks Brothers bankruptcy filing could come as early as this week, prompting even more bids for the clothing company.
Iconic clothing franchise Brooks Brothers is nearing a bankruptcy filing that could take place as early as this week, sparking a possible bidding war for the troubled company, FOX Business has learned.
Private equity firm Solitaire Partners is in talks with the haberdasher to make a bid once a possible Chapter 11 bankruptcy filing has been made, according to people close to the matter. These people say Brooks Brothers has signaled to potential bidders it is likely to file for bankruptcy in the coming days.
Brooks Brothers would not comment on whether the company would file for bankruptcy. In a statement to FOX Business, the company said: “In the ordinary course of business, Brooks Brothers consistently explores various strategic options to position the company for growth and success. The company has nothing to announce at this time.”
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Founded in 1818, the fabled brand is part of the fabric of American retail history — outfitting 41 of the 45 U.S. presidents from James Madison to Barack Obama. Most recently, President Donald Trump wore a Brooks Brothers suit on his Inauguration Day. Despite its storied reputation, Brooks Brothers is in a slump — with company sales hovering around $1 billion since 2017. And analyst estimates suggest sales will be down 30 percent this year as the recession continues. Even the company’s most optimistic efforts don’t show it making a profit until 2022.
A Brooks Brothers Store at the Atlanta airport. (iStock)
And the recent economic downturn has exacerbated the company’s woes. But that doesn’t mean that it can’t be sold, particularly as a distressed asset in bankruptcy. In addition to Solitaire Partners, other potential bidders include Authentic Brands Group LLC and Simon Property Group.
Solitaire Partners is run by David Jackson, who notably was chief executive of Dubai-based Istithmar World, which owned high-end retailer Barneys from 2007 to 2012. Jackson also attempted a bid when Barneys was up for auction again last year.
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People close to Jackson say his plan is to keep the Brooks Brothers franchise intact and continue to manufacture clothes independently of other brands; this differentiates him from other PE firms that may plan to fold it into another brand while still using the Brooks Brothers label. Jackson’s interest in keeping Brooks Brothers’ legacy and maintaining quality may endear him as a buyer.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPG | SIMON PROPERTY GROUP INC. | 181.80 | +0.89 | +0.49% |
Details of how much equity Jackson, or others, are willing to place in a bid are unclear but a group of investors valued the entire outfit, which includes more than 250 retail and factory stores in the U.S. and more than 250 stores internationally, at around $350 million. The company recently announced it would be laying off workers at its U.S. factories in an effort to reduce costs.
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Jackson is also in talks to bring in an additional major investor to his group, including a possible private equity executive through who would invest through his family office. Jackson declined comment. A spokesman for Solitaire declined comment. Authentic Brands Group LLC and Simon Property Group Inc. declined comment.
Brooks Brothers joins others in the troubled retail sector. Neiman Marcus, J. Crew, and Lucky Brand have filed for bankruptcy since the outbreak of coronavirus and the lockdowns that followed.