Brooks Brothers Filing for Bankruptcy

man the retail industry. I feel like every every day it's something new. And you know, here's an iconic company tailor to the president's Brooks Brothers done bankruptcy, Yeah, bankruptcy um. Yeah. This follows several other big names, Juicy Penny Um being one of them. You know, Brooks Brothers, Historic Brand Um. Anybody sort of in the business world probably knows the name.

But you know, they were struggling before Covid UM. And with what we see with a lot of retailers is that covid really accelerated some of their faults and sort of if they were headed down a bad path, this really accelerated. UM. Them even further into that into that path. And um, but this is going to say that Brooks Brothers is going away and they go in to bankruptcy

with a loan to help them get through bankruptcy. You know, they have a plan to you know, shift more to casual wear, to kind of they still believe the brand has a lot of value in it. Um. But what will likely happen is they'll clean up their balance sheet and hopefully find a buyer that will come in and by the by the company and the brand and take

it from there. That's that's the goal right now. Yeah, And so what happened with this specific name, Matt, I mean Brooks Frothers, I have to say, I mean, I agret this is going to be a shocker to you, Carol Master, But I grew up a little preppy. In fact, I believe my mother can keep me honest. Some of these I believe quick flex. I was in a Brooks Brothers fashion show when I was about six years old. And um, Debbie, if you're listening, I would like a picture.

I want I want proof and I just want the picture to tweet out. Um So, but I mean, this is this isn't as Carol said, a you know tailor to the President's. I mean, this is a really well known name that had been doing well for a long time until it wasn't. Yeah, he gone through a couple different owners. It's always been a private company. UM. And you know the current owner is Italian. It comes from a sort of fashion family. And you know, he he

had realized there was an issue. Try to make the brand peelmore to younger people, younger men, be more fresh and vibrant, go after some of the sportswear category. But at the end of the day, the big problem is men just aren't wearing as many suits as they used to um, even in sort of once formal settings. UM. And and then and on top of that, lots of new competitors UM come up with you know, custom suits

for a couple hundred bucks. Um, you know, when you're much less than you've got a Brooks Brothers suit for So it's a combination of just yet nimbore, nimble competition coming in the floor prices and good quality and just the category itself is just in decline. Well, let's bring in courtesy of Matt. He brought along a friend, Matt Rubel, he's former CEO and chairman of Collective Brands, former chairman presidency of Khan, also CEO of Pepe Jeans. Um someone

who understands the retail world like Matt. Um just so well, Matt, nice to have you here with us. You know, we kicked off our conversation talking a little bit with Matt just to give us a low down on what happened with Brooks Brothers. But it does feel like we said at the top that every day, you know, there's a new retailer that's filing for bankruptcy. Um, we know we're overstored. How do you see it? Where does the retail world go?

And what does Brooks Brothers, you know, closing or bankruptcy, I should say, you know, tell us, Um, well, first of all, Hall high grade to be with you, Um

and listen, you've got to find it. There are about a million there are a little over a million stores in the United States today and they sell anything from need based product you know, like Walmart and things like that, you know, to aspirational products UM war trend related consumer products like apparel and and and it is the general consensus that we will lose between a hundred and fifty and two hundred thousand of those stores over the next

twelve d eight eighteen months. And that was a momentum and a movement that was in place because of, you know, the ability to have brands come to you via your phone and via your computer, via your iPad, etcetera um that was accelerated during COVID, as well as the fact that when your doors are shut, you have no cash flow and you have no customers, and so they have to do it. So let's bring it down to the trend related consumer products versus supermarkets and and you know

things like that. Um, I would just say the way customers are engaging as different and and Brooks Brothers ended up with you know, Claudio is a great um, a great long time business friend and a wonderful, wonderful guy. But what happened here is that you have a traditional brand in a slow moving category. I amend that did not evolve as quickly with the change in tape, and in conjunction with that, when the door shut, and also

everybody goes and starts to be even more casual. So the movement toward work at home, the movement toward different consumer behaviors, and how people will be will just chop their marketplace UM by a tremendous amount, and they can't support the overheads that are in place. That doesn't mean it's not a great brand. That doesn't mean it can't sell product going forward. UM. It can, but just not in the structure. And that's why you see the chapter

eleven that came across. Yeah, Matt, you've run brands, You've analyzed brands, UM, you've talked to investors about brands. Given what you know about Brooks Brothers, would you be a buyer of the Brooks Brothers brand or company at this point, um, given that they're going to be, you know, going through a bidding process. And if so, what would you do with the brand? Um? The answer is yeah, I think that the brand Again, it's all the matter of you know, uh,

you know, at what price. But the brand has tremendous awareness. UM. It stands for something very classic UH with it twist in uh in a long long terradition and has a great international appeal. So UM, what I would do is, you know, kind of bring it back to its route. I would upgrade its UM product content to really move to a higher level. I would UM refocused it. I

would have a very very few stores. I would have international stores as well as the others, and then I would kind of create an engaging, you know, website that deals with UM a reinterpretation of how that consumer, the conceptual consumer that you know thirty years ago was relevant, how that consumer addresses today and how you bring him to life in his lifestyle through great tailoring and through great high quality product delivered vertically. There were being able

to do it at better, better value. So you know, that's what I would do. But it's more likely gonna get fought by a licensing company or a brand you know company that's going to go out and chop it up into different categories and and it'll get massed out. So that's that's my perspective. UM. Just follow about the broader retail landscape. UM. You mentioned, you know, the extect for all the store closings, given what is happening with the virus now and that you know many states are

going back into shutting down parts of the economy. UM.

Do you think there's room for that? UM? I think you said something like two stores to being even bigger, that this could be even a larger fallout for the industry previously, it really depends on the real estate UM marketplace and how pungible that they are, meaning how flexible they'll be with working and then ultimately how the banks will be with the real estate UM groups as well, you know, because the current rent structure would not allow UM stores to on the diminished demand that one is

going to see in certain categories UM work. That being said, there's helping wellness concepts. There's other concepts that are you know out there that are doing fine UM. But you know, restaurants, there's about six hundred and eighty thousand or restaurant locations around the United States. You know, fast casual and you know quick QUSR is going to be fine, but you know casual and fine dining there in trouble and they've

got some real issues. And so you're gonna see you know, of those UM go away and a lot of the creativity that's come to bear here. You know, you live in Brooklyn, so you get to see all the great creativity here in more than May. We have some great, great restaurants too. They're going to go out of business and it's UM, it's just a shame that the creativity

that's been layered into this marketplace is going to go away. Yeah, we're gonna check out at Danielle Blue a little bit later on to to just talk about because he's slowly reopening. But you know, everybody's learning to pivot UM. Matt, We've just got about seconds left here. You know, who wins ultimately in this and what's the biggest consumer trend that comes out of the virus? Just quickly? Who wins? Uh?

Quite honestly, it's going to be bar belled. Is the people with capital who can really go out and you know, kind of work their way through this. And then it's going to be the creative new businesses UM that are really close to their consumers and they're fast, so they have to be you know, what's the best supply chain, the fast one. What's the best way to deal with your customer as closely as you possibly can to make

it a personalized experience. You know the Chanel group at the luxury end, peopleould say, oh my god, they're gonna have a hard time. Well, they're developing technologies that are helping UM. There are all sorts of companies that are developing unique technologies. So people who can pivot UM and be fast and then those who have capital in scale makes sense. Well, we're gonna leave it there. Thank you

both so much. What a great conversation. Chairman of the executive board at mid Ocean Partners of long history in the retail business, which you just proved with some great insights, and our own Matt Towns and editor for Bloomberg joining us from Brooklyn. The two mats really delivering here. You're listening to Bloomberg Business Week with Carol Masser and Jason

Kelly on Bloomberg Radio. So I'm going to go back to a story Jason I mentioned it before because I do want to get um Jimmie Metzel's thoughts on this. It was a Bloomberg News story. It was covered by Nick Wadhams. We talked about it yesterday. It's covering how the US is inability to handle the pandemic is basically hurting its economic might and ultimately as a result of that, it's geopolitical influence. At the same time, we know President Trump there's a lot of stuff going on between the

U S and China. They are looking to ban TikTok in the US as one way to retaliate against China. Over its handling of the virus. Meantime, China is moving full steam ahead. So once again we want some insight on what's going on between the US and China and where China is headed back with us. Is Jamie Metzel Senior Fellow at Atlantic Council Technology Futurist. He's former director on the U. S National Security Council at the State Department and on the Senate Foreign Relations Committee. Any wrote

Hacking Darwin, Genetic Engineering, and the Future of Humanity. We've talked about him about so many big macro issues, and Jamie's back with us on the phone and near How are you? I'm you know? Would I always say? Is I am good? But this is a sure crazy world? So what can you do? Well? So where do we start when it comes to US and China? Because I do feel like there's a ton of stories already on

the Bloomberg um today. But we've certainly seen the momentum pick up over the last couple of weeks, in the last month or so. So what are you watching, Jamie? Well, certainly U S China relations are bad and they are getting worse, and after so many decades of coupling, we're

seeing a pretty aggressive and rapid decoupling. And the really hard part is that while China is really getting its act together, even though as you know Carol and Jason I have a huge criticism of China and the origins of the pandemic in terms of responding, they've done a pretty great job in their economy is starting to come back.

And the United States, with our spectacular failure to respond to the pandemic, this is a country that if the pandemic wasn't enough, um, having a leader who's hitting us against each other is just adding fuel to that to that fire. And so we all live in this world created by our parents and grandparents and great grandparents who fought in one two world wars when the Cold War, and now we are America is kind of falling apart. And it's not just the future of America the mistake,

but the future of the world. Yeah, I mean, we're losing this war at the moment, Jamie. Isn't that fair to say? I think we are and and you use the word war, it's a very strong term. But there's a there's a competition, and we have all grown up in a world where the United States in many ways set the terms of that competition, whether it's free trade, open markets, free speech, and the United States was always imperfect um. But now the world is is America is

not playing the traditional role that it's played. We feel just things are falling apart, and China is moving very aggressively to make the world look and feel a bit more like China. That's we're seeing now in Hong Kong. We're seeing now with the um with the Chinese national security laws applying in Hong Kong apply to people all around the world, um, at least according to Chinese law. So that that's what's at stake is what does the world look like that we want to live in? And

the United States is losing influence by the day. Well, and you know we're Bloomberg, right and we care about how things impact us, certainly on a social level, but on an economic level, on a business level, what does this mean for US businesses who have been since I began my career in business news, it was all about tapping into the Chinese market and their billion plus at that time population and consumer base. So what does it

mean for American businesses? Well, American businesses are going to have to really think hard about what's their right relationship with China. And that doesn't mean no relationship, It just means, um that a lot of the old assumptions will no longer be true and certainly will be very difficult for American companies to operate in China if they do anything other than what the Chinese government wants. And that's true for small companies, but even for big companies like Apple.

Um And it's certainly the case that uh that American companies will have less legal protection in in China because the United States government just has less and less leverage. And I think that over time, um, it's not just decoupling between the United States and China, but the world is going to more evolve into two broad competitive ecosystems, the greater US competitive ecosystem and the greater China competitive ecosystem.

And that doesn't mean that everyone will have to be the other countries and communities will have to be all in with one or the other, kind of like in the Cold War. You're gonna it's going to be a really important strategic decision that every company and every country makes, is where do you fit in relation to those two poles? Well,

and speaking of decisions. I mean, Jason Wright, we came on air and one of the headlines that crossed was Google scrapping its cloud initiative in China, and specifically in Part two, concerns over geopolitical tensions and the pandemic, according to those in the know. So you know, Jamie, we're already seeing companies make decisions about kind of where they want to play. It's true, um, and yet companies liked what we'll use. Going to this Google example, there are

now some really strong Chinese competitors. So in the early days it was, well, China is ripping off source code and that's this whole Huawei. I mean, there's a lot of Cisco that's in Huawei which is just stolen code. Um. But now there are these national champion Chinese companies that

have huge advantages because they are back. They're essentially in many ways arms of the state, backed by massive resources, by a captive consumer base, and the next staff of this global China, which is what the Chinese leadership wants is for China to be the leading country in the world by And that doesn't mean it's leading like they have bigger companies. It means that we're all in many ways living in China's world, like for the last seventy

five years, most everyone has lived in America's world. And if we don't want that, we better get our act together here at home. Jamie. We're so happy to have you here, in part because so much has happens. Is the last time we talked to you, uh, and it wasn't that long ago. To be honest, I want to talk to you about sort of social protests, uh. Injustice. We're seeing it globally, we're obviously seeing it uh in an amazing way here domestically, but we also can't forget

what we've seen go on in Hong Kong. Talk about Hong Kong first and then maybe bring it back to the United States. Yeah, So what we're seeing in Hong Kong is connected to the conversation that we had in the last block, in the sense that China has its view of the world. It's how it has its sense of how everybody should be and behave in the level

of control that China should have. The United States has a very very different view, and that's why for so many decades, the United States and the role of the United States has countered in many ways the ambitions of countries like China, Soviet You and and and others. With the United States now on its knees, UM, there's a lot of maneuverability for other countries like China and Russia

that have designs that are different from ours. So China, as you, Jason and Carroll, No, they signed of their own accord the basic law in and it afforded the people of Hong Kong is certain this one country, two systems model with basic rights for fifty years until un

and this national security lot just strips it away. And in in a different time, the United States would have played a very active role in the United Kingdom saying hey, wait a second, there's an international agreement that's been registered with the u N you signed it. This is a clear a clear violation of that UM. But now UM. But in this environment, it's kind of anything goes. And that's why China is moving so aggressively, and the people of Hong Kong don't really have a place to appeal

to UH. And that's that's what's so magic. I mean, their basic rights are being stripped and there's nothing they can do. And that's how that's how people have always felt within oppressive societies. But now that that spaces is growing, and and that's the issue, is that that in our world there are the structures, there are the superstructures of

laws and and sovereign states, and then there's there are cultures. Um. And it wasn't coincidental that in the is we had more and more fascist states because that was a trend, and then in the nineties we had more democratic states because that was a trend. And now we're seeing a return to a much more dangerous world. Um. And it wasn't that the old world was so great. They were all kinds of cracks and breaks and crevices and shortcomings

in the old world. But if you had a problem with what was before, you're really going to have a problem, in my view, with what's what's coming. So is it it's not just the US withdrawing though, like you said, who's going to keep China in check? Right, Jamie, It's not just the US kind of withdrawing. It's other countries as well. Absolutely, But at least since and even before that, the United States has had a special role as kind of the rally er in chief that we have all

these allies and partners and friends. The United States played the leading role in creating the United Nations, supporting the concept of human rights and international law, and then the other countries played in many ways, and they played a very critical role, but the United States was the leader. And now with the United States pulling back and with China very aggressively stepping up, there's this period of disarray

um where there's not a systemic response. There's not a systemic response here in the United States where we have such deep problems, and there's also not a systemic response to these big issues globally. And it's it's not just Hong Kong. It's we have three billion people on Earth who are living in extreme poverty, and now under covid UM, those people are going to be in much had much greater threat. Who is leading the charge to help those people?

And and traditionally the United States would rally everybody else, And now we're in disarray, and it's it's unclear whether we will or we can or will do that. I have so many questions, Jamie, as I always do. You come on to two things. You said. You said the US is on its knees, and I just wish you could if you would just give a little bit more on that. And I also wonder, you know, what's changed.

Was this China's mission all along and shame on the rest of the world and not acknowledging it, or was it that China now is more established, as you said, they've got global competitors and global companies that they don't necessarily have to rely so much on the rest of the world. Pick one, pick up, so you know so so china It's mission was always mean. It didn't ever want to play a secondary role, even in this US

led world, And that was always China's ambition. After the two thousand and the old thing used to be um to kind of lay low and wait for your moment. And then there was the two thousand two thousand nine financial crisis, China became very aggressive. The US got its act together, and it turned out that that was a big mistake. But this is the time I think China recognizes that if they want to change the superstructure of

the world, this is the moment to do it. So that's changed, and the United States we are now doing to ourselves what our worst enemies have tried and failed to do to us for decades. And that's the tragedy. It really is amazing, Uh, everything and how it has continued to in many ways just spiral downward. And I know you are a hopeful and optimistic guy, Jamie, but these are these are difficult times. But we really appreciate

your insights, your candor. It's Jamie Metsal, Senior Fellow at the Atlantic Council, former Natural Security Council official, UM author Packing Darwin, which is a terrific book, incredibly timely. Really, I have to say, one of the smartest guys that that we know. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Well, he closed his restaurants in New York City, UM before the official

COVID nineteen man dates from the state. That was just a few months ago, and now on the other side of the virus. He's finding his way back like the rest of us. We were welcoming back. Chef and restaurant tour Danielle Blue joining us on the phone from his restaurant in New York City. Danielle, it is so nice to have you back here on Bloomberg. This is a big day for you guys. Tell me, tell us how it's going. Thank you Carol, and thank you Jason for having me on the show. And well, it's a it's

a big day. Every day is a big day because I think every day we tried to really bring a little bit more improvement and also a little bit more hope to our businesses. And today we are putting a sidewalk cafe at restaurant Danielle. Which restaurant Danielle is twenty eight years old. Seven when it was on seventy six Street, he used to have a sidewalk cafe when I moved to sixty five and never really put a sideboard cafe

because we had enough room winning inside. And and tonight we are doing um because I've started the business of delivery and to go Daniel Bully Kitchen, so we're serving the menu of Daniel Bully Kitchen on the terrace of Danielle, so more casual and more approachable, but fun and and and and really it's an opportunity because I think we have a beautiful uh facade, we have a beautiful space, and that's the only place we can really serve our guests.

And we felt that it would be good to bring more staff and to bring new to bring guests back. I have to imagine Danielle, that your clientele, many of whom are our listeners, uh so well known across Manhattan and the world, they must have been clamoring for this, right. I mean, have you been getting a lot of calls to people saying, I want to come back in some former fashion, come cook for me, yea the ABSORTUNTEI So

we do that. We have to come cook for me by by sending them meal home, of course, and we also do package for destination the Emptons or other places. People drive miles from the strive state to come and pick up a box with all kinds of meals prepared for them to take home. But I mean having them at the restaurant and being able to again welcome, serve them, pamper them, and offer them something we feel, uh it makes us very happy and I think it will make

them very happy our guest. Yes. Well, you know it's interesting, Danielle, like we have been talking to a lot of folks, especially within your industry, that you've got to figure had had a pivot here, right, because it's not like you can flip a switch and go back to the way it was pre COVID and so it sounds like that's what you guys are doing. Yeah, very much. And we

also opened the West Side. I have a restaurant at sixty four Broadway, Bubb Blu and episode Bulue open yesterday or this morning actually this morning we opened a P three Blue, So it's a retail store where it's open all day from breakfast to early evening and people can have salads and sandwiches and things who are old, home baked and homemade. And then we bubbu as a huge There are some sixty four Broadway, so that's very very

convenient as well. And we took Cafe Bullou up in the Berkshire and we did a pop up there in a wonderful chateau called the bland Hire. So it really we find I mean, it's all this opportunity to try to bring back staff. I mean we were more than seven hundred and fifty staff and we went down to seven people and now we are back up two d and twenty total around the different businesses we have reopened, and we are pushing up and bringing more people. So wow,

that's yea. And in terms of capacity, danielle Um, what is the I mean, what can you do at at what you're opening tonight versus what you would be able to do inside? I think I think the terraus is only I will say for right now, it's and and because you know, if it's if it's beautiful weather, we might be able to extend more tables. But if it's a little bit greasily like tonight, we want to standder the canopy and we have a limitation of about thirty

five two foury seats, but that's pretty good. And then if it's nice weather, we might be able to double that size. But that's nothing compared to the size on the inside, where normally we have private dining rooms. We have the barn lounge, we have the dining room, which could almost bring seeds or more. Uh So it's a very different business model, and it's definitely not um a profitable model, but it's very It motivates us so much to do something with the whole concept of outdoor dining.

I'm sure you've knew about it before, but you've probably learned more than you ever thought you would about outdoor dining given that that's how we're all eating out these days. How do you view it? What have you learned about it in terms of what you can and can't do, and maybe what the future is, given that we're going to be in this for some time, I know, and and and thanks God, I mean, we're in it in the summer right now, and the fall should be mellow

until at least November. But the the Mayor of New York has really up and up, and I think many city all over the country of up and up the opportunity for restaurate or to be able to put table outside in places we will have never been authorized before. And they are really helpful, um meaningful, I mean mindful of of course the security for the gas, but also um really give the chance for the restaurator to have a meaningful business outdoor for the time being, for the

time being, let's say. And of course the fine dining restaurant is more complicated, but not too many restaurants as outdoors there. As for cafe the small beast Row, we have like four or five tables outside. I've seen them taking half a block and going around the block with tables. So it seems like they have more tables outside and inside now. But but it's good, thank God, yeah, exactly, And that there is that opportunity to do it? You know, Um, we were talking with our k Crater who covers Um.

I think, as you know, we love we love talking with Kate and and you know we were wondering, you know, you were going I thought to talk to Lincoln Center about doing maybe big screens for events like the US Open, so that maybe diners could watch from barbarous Are you doing that? Are you moving ahead with that? Well? Uh, I am still convinced that we can do something, and

I am looking at sponsors. It's all about trying to find sponsoring to be able to create something for the moment, a little bit of a spontaneous things and for a short lived but at least we can do things to entertain guests. But I think, um, it is important that because the Open is happening, that we are able to show it all over town. Um. It's uh, it will be fantastic. I mean, I would love to be able

to show it. That Danielle is needed. But at Lincoln Center there is the huge esplanade where I'm sure people don't have to crowd than they have the entire War of the buildings where they could project the games and put some speakers, so I hope there will be you know, a trusted to do that of course. And no, no, no,

I didn't mean to cut you off. And I have the and and you know now with the to go business or the three, people can grab their little snack or sandwich or meal or lunch or dinner and sit down and and watch the games during the day. And I'm sure than the city can plan uh you know, social spacing. So there's really safety first, of course, very important. So Danielle, you know, the last time we talked to you, um, you know, the the pandemic was very much on in

in New York City. Unfortunately a very different time, um, but obviously not much, not too much has changed, although you know, little baby steps forth that we're taking in terms of outdoor dining. I do wonder for you because at the time you were rightly concerned. I'm sure you remain concerned about the future of your business and maybe more importantly, the future of fine dining all across the country. Where do we stand now? What do you think about

now when it comes to the future of fine dining. Well, for a while, it would have to be slightly recliber I mean slightly or strongly recaliber uh in in his um ambition of offering, I would say in his size, uh, you know, we find dining. When we think of fine dining, that means we're going to reopen our restaurant inside and um in its price. Maybe maybe more option to be able to have choice of not having to go for tasting manu only, but maybe some sampler option, maybe some

hours of operation. We may be shrunk down a little bit because of the cost of doing business, and so you know, less less days of operation will mean more control in in the cost of doing business. And uh and and slowly get back to where it belonged, because I think fine dining will not go away. But I'm hoping that restaurant Danielle I can do a pop up for the months to come where I create something very casual,

very disrupting, and very different than Uh. I'm basically covering the skin of fine dining and putting a skin of a casual place and and but something a little bit of a It's like a movie set where you are somewhere else for a minute for a time and and and I do that with sponsor, and we have some wonderful sponsor will want to support my idea and and

help the restart of fine dining. And I think everybody's gonna have to figure it out how to re stop, not to become what they were, but to restart something. And so that's an opportunity to do that. So I'm thinking of people who are listening and saying I want in um, is it going to be all reservations or reservations and walk ins? So right now, for the Sidewalk Cafe at Danielle, it's going to be a reservation some day starting at three o'clock in the afternoon until six o'clock.

And oh but it's at three o'clock. We opened the reservation, so we know exactly the weather, we know a mini table to put and all that, because there's nothing worse than coming to a restaurant and there is no table. But we will always keep tables up and with no reservation as well, so a portion of it will be reservation portion no reservation, so there's always an opportunity that a table could get available. All right, Well, we wish you only the best of luck and I look forward

to seeing you soon. Daniel Blue certainly a just one of the best names in the business, and so many people look to him for his leadership and and have and will continue to. So congratulations on taking that step forward. Cheff and restaurant tour of course, on the phone from restaurant Danielle there in New York City,