Brooks Brothers, clothier to Abraham Lincoln, JP Morgan and Clark Gable, will be bought by the owner of the Casual Corner women's clothing chain for US$225 million, less than a third of the price that UK parent Marks & Spencer Plc paid 13 years ago.
Analysts had expected Brooks Brothers to fetch US$400 million to US$500 million before the Sept. 11 terrorist attacks delayed the sale. Closely held Retail Brand Alliance Inc said it will pay cash for Brooks Brothers, the oldest US retailer.
Sales at Brooks Brothers have been flagging as rising unemployment and a slowing economy led US consumers to reduce spending. The business posted a loss in the six months ended Sept. 29. Retail Brand Chief Executive Claudio Del Vecchio is acquiring Brooks Brothers to expand into men's clothing, after buying Adrienne Vittadini and Carolee Designs for women earlier this year.
PHOTO: AP
"The price is low for the quality of the business," said Andrew Bell, who helps manage Euro $3 billion (US$4.2 billion) in equities at Carr Sheppards Crosthwaite, including Marks & Spencer.
"The brand value has been deteriorating under Marks's stewardship, and earnings have been depressed."
The shares of Marks & Spencer fell on Friday. They have surged 79 percent this year, the second-best performance on the FTSE 100 Index. Britain's largest retailer is selling stores and businesses outside the region after two years of sliding profit.
Del Vecchio is son of the founder of Italy's Luxottica SpA, and co-chief executive of the Milan-based maker of Ray-Ban sunglasses. He has formulated new designs and marketing for Casual Corner in the US, according to the chain's Web site.
"A purchase such as Brooks Brothers was too good to pass up," said Mark Schulman, chief operating officer of Enfield, Connecticut-based Retail Brand. "We've acquired a wonderful brand with a great image and an opportunity to expand the business."
In 1988, Marks & Spencer paid US$750 million for Brooks Brothers, founded in 1818. The US retailer started to struggle in the late 1980s when consumers tired of its clothes. In recent years, it has added more contemporary, casual lines for men and women.
In the first half of this year, sales fell to Euro $199.5 million from Euro $204 million, and Brooks Brothers had an operating loss of about Euro $800,000 compared with a profit of Euro $2.5 million a year earlier. The chain has 155 outlets, mainly in the US and Japan.
Marks & Spencer, led by Chairman Luc Vandevelde, blamed the loss on a ``difficult economic climate'' and the Sept. 11 attacks.
One Brooks Brothers store, on Liberty Plaza in New York, was damaged in the attacks and later used by rescue workers. Another, inside the World Trade Center, was destroyed.
Brooks Brothers stores in downtown Atlanta and San Francisco were decked with sales signs today, the first official shopping day of the holiday season. Sport shirts were buy one, get a second for 40 percent off at the Atlanta store, while ties were buy one, get a second for 30 percent off. Cashmere crew sweaters were US$199 at the San Francisco shop, regularly US$248, and shoes were 40 percent off the second pair purchased.
The Atlanta store also was offering 20 percent off of items purchased with a Brooks Brothers credit card until 11am on Friday.
The same discount was available from 8am to 11 am yesterday.
One shopper in San Francisco was surprised by news of the company's sale.
"I'm shocked," said Sandy Kearney, 48 years old. "What's going to happen to the quality of the clothes?"
Another, Jim Burke, has been shopping at Brooks Brothers since the 1980s for his favorite white oxford shirts.
"They've gotten more casual," Burke said. "I like things more traditional, but times change."
He said he had a hard time finding the white shirts today.
Proceeds from Brooks Brothers and the anticipated sale of Kings Super Markets, a 27-store US chain, mainly in New Jersey, will be used as part of a plan to return 2 billion pounds to Marks & Spencer shareholders by March next year, spokesman Louis Hill said.
"We're happy with the deal. It allows us to move on and concentrate on our UK retail business," he said in a telephone interview, adding the company is in advanced talks to sell Kings.
The chain will probably fetch about Euro $110 million, estimated Jeremy Richardson, a retail analyst at Schroder Investor Management, which owns about 510,000 Marks & Spencer shares.
Marks & Spencer last month agreed to sell and lease back 78 outlets in the UK to raise Euro $348 million and sold 19 shops in France. On Nov. 2, it said it would sell its nine Spanish stores for an undisclosed sum.
The sale of Brooks Brothers is subject to regulatory approval and is expected to be completed by March next year, the end of its fiscal year, Marks & Spencer said.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
RSS