What's Next, Grunge Bathrobes?

Brooks Brothers' hipper style seems to be doing the trick

For their 17th wedding anniversary last year, Hillary Rodham Clinton gave her husband a $395 jacket from Brooks Brothers. The President likes it so much that he often wears it at official events. Of course, gray flannel suits and oxford shirts by Brooks have clothed important men for decades, from FDR to Fred Astaire. Clinton, however, usually favors a different look. And his beloved present from Brooks is a chocolate-brown suede bomber jacket.

Elvis in the Oval Office is one thing, but bomber jackets at the temple of the sack suit? Welcome to the new-look Brooks. The 175-year-old clothier, acquired in 1988 from Campeau Corp. by British retailing giant Marks & Spencer PLC for $750 million, has been trying ever since to update its image. To reach more and younger customers, Marks & Spencer is emphasizing sportswear, expanding its women's line, and redesigning its displays. "We can't run our business on a 55-year-old man who wears a three-button Brooks Brothers suit and only comes in twice a year," says Sir Richard Greenbury, chairman of Marks & Spencer.

"GUSSY UP." Brooks's efforts have paid off. Even in a dismal retailing environment, it has made money--although profits plunged as low as $11 million in 1991. For the fiscal year ending Mar. 31, operating profits rose 16%, to $21.1 million, on a sales gain of 8%, to $338 million.

Brooks contributes only 3.4% of Marks & Spencer's total revenues, but the mass merchant has great expectations for its prot g . Brooks President and Chief Executive Officer William V. Roberti is formulating a strategy for opening stores in Britain by 1994 and in Continental Europe by the following year. Brooks currently operates in 54 locations in the U.S. and 44 in Japan. Meanwhile, Marks is expanding the chain in the U.S. The company plans to open three more Brooks stores by yearend and add 10 factory outlets to the existing 12.

Factory outlets, catalogs, and mall boutiques are among the ways Brooks is trying to get its wares to bigger crowds. And even in its conventional stores, it hopes to attract the next generation with a different merchandise mix. Jeans at $38 a pair share space with $175 wool trousers. Boxer shorts, once discreetly stacked in drawers, now lie blatantly in the open. T-shirts and golf shirts, priced from $38 to $52, hang next to the traditional button-downs. Brooks's mix-and-match Wardrobe Collection offers suits in the $295-$495 range. And at the flagship Madison Avenue store, women's clothing, once relegated to a corner at the back of the shop, is being expanded to occupy at least one entire floor. The company hopes that women's wear--still mostly suits and blazers geared to professionals--will account for 20% of sales this year, up from 14% in 1992. "Brooks has made heroic efforts to gussy up its grand old men's clothing and is attempting to get into the 1990s," says Alan Millstein, a New York retail consultant.

To be sure, some of the changes annoy traditional Brooks Brothers customers--and bear out the dire predictions of critics who thought the pairing of a Wal-Mart-style parent with an old-guard haberdasher was a bad idea to begin with. For example, to cut Brooks's costs, Marks & Spencer installed computer systems to monitor inventory and ensure timely distribution, but over the years it has also drastically reduced the number of floor personnel. So, while the store may always have lots of black socks in stock, the personal attention customers used to receive has all but disappeared.

Even more upsetting to veteran customers, Brooks no longer sews its own suits. Except for three factories that make shirts and ties, all manufacturing is done by outside suppliers, mostly in the Northeastern U.S. Although Brooks insists that it specifies materials and inspects all final samples before mass production, many customers think quality has fallen off. Hesh Wiener, president of publishing firm Technology News of America and a Brooks Brothers customer for 20 years, recently wrote directly to Sir Richard, complaining that he couldn't find a sales clerk without shouting and that suspender buttons he ordered for a pair of trousers were never sewed on. "The store is a disgrace," Wiener's letter began. "Please do something about it."

HAPPY ENDING? Brooks's earnings turnaround notwithstanding, some retail experts think Marks & Spencer paid too much for the struggling clothier five years ago and remain skeptical about its performance. Marks was widely criticized for paying more than two times sales, when InvestCorp got Saks and Dayton Hudson got Marshall Fields for a multiple of one. "Brooks is still not sufficient reward for the management time and money spent on it," says Georg Grodzki, senior analyst at Moody's Investors Service Inc. in London. Others believe Marks & Spencer may yet write a relatively happy ending. "Marks can never justify the price it paid for Brooks, but what it can do is make the investment look better," says Howard Davidowitz, chairman of Davidowitz & Associates Inc., a retail consulting firm.

Executives on both sides of the Atlantic stand by their strategy. Sir Richard thinks Brooks can keep most of its core customers while making its merchandise more appealing--and affordable--for a younger clientele. "We are not trying to change Brooks into a Marks & Spencer," he says. "There is an enormous amount of cross-fertilization between the two companies." Roberti, who joined Brooks from Zale Corp. in 1987 and has led a younger management team in reorganizing Brooks, sees no contradiction between making the clothier more customer-friendly and keeping its conservative identity alive.

Indeed, Brooks's next hurdle may be getting its message across, to old and new customers alike. "We have had a real communications problem in recent times," admits Paul P. D. Smith, executive director of Marks & Spencer's North American operations. While Roberti thinks Brooks should begin explaining itself through advertising, the parent company would rather put capital into opening more stores and broadening the merchandise further than spend money on ads. Maybe having a satisfied customer in the new-generation White House is all the advertising Brooks could want.