Dhe New York investment bank Goldman Sachs and Sparkasse Dortmund may not have much in common. But one thing unites them: in the past few months, both have loosened the dress code for their employees. Many other companies do the same.
The suit, the gray or blue office uniform for decades, is about to lose its status from middle management at the latest.
When David Solomon, chief of the mighty New York billionaire jugglers, last year sent a memo to his employees saying that they should dress according to customer expectations and not according to any regulations, it was considered a minor revolution by stylish commentators.
That was before the corona crisis sent millions of office workers to their home office for months, where formal clothing is out of place from the start. Many people find a tie for a video conference in front of the shelves at home to be silly, and anyone who wears sloppy jeans with a jacket does not make a fool of themselves. Nobody notices.
Could it be that the change in clothing habits caused by working from home has undermined the formal outfit in the professional context for such a long time?
The trend description for Yves Müller would be exaggerated. The CEO of Hugo Boss prefers to speak of “changes of a structural nature”. But he has to admit that classic suit fashion is on the retreat.
Brooks Brothers filed for bankruptcy
“Today formal clothing is often combined with casual wear,” he alludes to the more casual, but not negligent, men’s fashion for the office, which is more inspired by casual clothing. A jacket and maybe a solid color of elegant jeans underneath – something like that can be done in many offices today, even with customer contact.
If there is a company in Germany and beyond that first comes up with consumers when it comes to “business suit”, it is Hugo Boss. Not least thanks to the formal suit, the textile manufacturer founded in the Swabian town of Metzingen in the 1920s owes its rise to the international group. To date, the company generates 90 percent of its sales with men’s fashion.
The business model of the classic men’s outfitters is crumbling. Others feel that too. It wasn’t until the beginning of July that the oldest and perhaps the most renowned men’s outfitter in the world, the New York company Brooks Brothers, had to go to the bankruptcy judge.
The company, with its last 500 branches worldwide, had already supplied Abraham Lincoln with well-fitting suits, as well as many of his successors from US President John F. Kennedy to Barack Obama to Donald Trump.
Actor legends like Cary Grant and Clark Gable wore Brooks Brothers jackets and trousers, a must for generations of bankers and insurers. But past glory doesn’t protect you from failure. It is not yet clear whether the business will have to be finally discontinued or continued.
Like Boss and other makers of classic men’s fashion, Brooks Brothers feels the social change in the high-quality segment. So Solomon’s announcement in terms of clothing is by no means an invitation to nonchalance.
Rather, it is important that customers feel comfortable talking to team members. “So,” the instruction says, “please dress in a manner that meets expectations.”
Grown up with hoodies and baggy pants
But they vary more than ever. Not only in the United States, for example, successful people from the tech industry are looking for investment opportunities, advice and sometimes an employer other than Google, Facebook or Amazon.
Classic companies want to avoid being perceived as dusty by an emerging young clientele who grew up with hoodies and baggy pants. This need drives fashion change.
Savings banks and banks extend “Casual Friday” to the whole week, as do corporate headquarters and trading companies. The insurer Zurich recently allows jeans in the office. CEOs like Oliver Bäte (Allianz), Joe Kaeser (Siemens) or Ola Källenius (Daimler) are leading the way with tie-free public appearances.
Brooks Brothers reacted too hesitantly to the nationwide fashionable relaxation exercises. Boss, although hit hard by the Corona crisis, feels better prepared. The classic suit is in the genes of the company, said Müller, but will be reinterpreted by the fashion designers: “We are fully in line with the trend.” With the two brands Boss and Hugo, the company is also trying to cover the entire spectrum in the high-quality area .
But the numbers have yet to justify optimism. On Tuesday, the share price did not find a clear direction on Tuesday after Müller’s presentation of the latest quarterly balance sheet. “As expected, the second quarter was very challenging,” said Yves Müller. The focus was entirely on ensuring the company’s financial stability.
However, the week-long closings of the stores in the most important sales markets, the USA and Europe, left deep marks on the balance sheet. For example, sales fell 59 percent year-on-year to EUR 275 million. The increase in online sales by more than 70 percent did little to help, and a four percent increase in China business could not compensate for the slump.
Newcastle United owners doubled boss stake
Earnings before interest and taxes (EBIT) plummeted to a loss of EUR 250 million, a deterioration of EUR 330 million compared to the second quarter of 2019. Cost reductions, deferred investments and higher credit lines secured further financing.
“The night is darkest before dawn,” analyst Jörg Philipp Frey from Warburg Research said in a quick analysis, words of comfort for the board. Frey expects continuous improvements. In addition to the corona turmoil, the board has to cope with the unexpected departure of CEO Mark Langer.
Langer had to go “by mutual agreement” at the end of March in view of the Corona challenges and is only temporarily advising Boss. Observers are also closely following the entry of British billionaire Mike Ashley, who doubled his equity stake to a good ten percent in early July.
Ashley is already a major customer of Boss through his trading group Fraser and also a football fan and owner of the Newcastle United club. The investor is considered assertive, ambitions for a supervisory board position would not be surprising.
A “very reasonable conversation about strategy was held,” said Müller. “I’m not worried about that.” Müller did not dare to make a business forecast for the year as a whole, given the uncertain Corona situation.