Spiffing Up Brooks Brothers

Can Claudio Del Vecchio turn the venerable chain around?

On Dec. 1, just a week after he snapped up Brooks Brothers Inc. for a song, Italian entrepreneur Claudio Del Vecchio toured the clothier's flagship store on Madison Avenue in Manhattan, checking out the merchandise, the staff, the shoppers. He was especially heartened to see an Austrian diplomat being fitted for a tuxedo. "Brooks Brothers still makes great suits for presidents and ambassadors," says Del Vecchio, who over the past four years has assembled a portfolio of specialized fashion companies in the U.S.

Indeed, Del Vecchio has long wanted to get his hands on Brooks Brothers, which has outfitted powerful and famous men from Clark Gable to John Kennedy. He nabbed the chain for only $225 million, less than one-third what British retailer Marks & Spencer paid for it in 1992. Brooks Brothers profits have dropped as a foray into casual clothing blurred the brand's identity and product quality slipped. Del Vecchio is convinced that its classic cachet can be revived. Brooks' traditional line of button-down shirts, suits, and ties never lost its appeal for this 44-year-old Italian, who landed in the U.S. in 1982 to help boost exports at his family's $1.6 billion eyeglass business, Luxottica Group.

CASUAL FRIDAYS. Still, Del Vecchio agrees that the 183-year-old American menswear icon needs an overhaul. That means a renewed focus on classic clothing. "Brooks Brothers forgot about the suit guy--the one they dress five days a week," says Del Vecchio. He plans to invest heavily in technology to replace outdated logistics systems--a vital factor in increasing efficiency that Marks & Spencer neglected. "Brooks Brothers has been sliding for years," says Kurt Barnard, president of Barnard's Retail Trend Report, a U.S. trade publication. In the first half of fiscal 2002 (ending Mar. 31), it reported an operating loss of $1.1 million, compared to a profit of $3.6 million last year. Retail analyst Tony Shiret at Credit Suisse First Boston in London forecasts flat sales of $639 million for the year as a whole.

Yet Brooks Brothers' new owner cannot ignore the trend toward casual wear, which has penetrated even such bespoke bastions as investment banks and law firms. The retailer must draw new and younger customers into its 160 U.S. shops with relaxed clothing that is fresh but doesn't clash with its traditional image. Managers at Retail Brand Alliance, Del Vecchio's Enfield, Connecticut, holding company, say a new line of sportscoats made from lighter fabrics and an all-cotton, no-wrinkle shirt are a good start. "Brooks Brothers is about style, not fashion. It's about always looking right in classic garments instead of boring," says Lois Huff, vice-president at Retail Forward Inc., a Columbus (Ohio) retail consultancy.

Del Vecchio's ace is his talent for managing production, logistics, and suppliers--skills honed during his years at Luxottica. He now checks on factories that supply his other fashion companies during quarterly jaunts to Europe and Asia and maintains a staff of 70 in the Far East, mainly to monitor quality. "He is intimately involved in sourcing. Very few CEOs of specialty retailers work closely with suppliers," says Mark Shulman, chief operating officer of Retail Brand Alliance.

Del Vecchio's hands-on style, along with a $100 million investment in technology to upgrade supply-chain management, were key factors in his overhaul of Casual Corner, the midprice women's-clothing chain that he bought from his father in late 1997. Casual Corner posted a $50 million profit for the 2001 fiscal year.

Del Vecchio figures that turning around Brooks Brothers will take at least two years. If successful, he will expand abroad. Italian shoemaker Diego Della Valle plans to open a Brooks Brothers store in Milan next July under a preexisting agreement. "There's a huge passion for the Brooks Brothers brand in Italy," says Della Valle. Through another licensing agreement, the company already has some 70 shops in Japan and Hong Kong. Given the sales slump in traditional menswear, "the only way to grow is to take Brooks Brothers international," says Retail Forward's Huff. For Del Vecchio, that just means coming full circle.

By Gail Edmondson in Rome

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