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His parents owned a coconut plantation in the Bahamas but instead of the family manor house, he opted for an apartment above the boat house. He’s got a perpetual tan, drinks margaritas and collects cabernets, smokes Cuban cigars and drives a 1973 Volkswagon convertible with its top rusted down and his surfcasting rods poking out the top. He speaks nine languages and once caught a 200-pound yellowfin tuna using a coconut shell, broken sunglasses and the drawstring from his swim trunks.
This story first appeared in the July 18, 2012 issue of WWD. Subscribe Today.
His name? Tommy Bahama.
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The fictitious character that 20 years ago sprung from the imaginations of friends Bob Emfield and Tony Margolis, and was brought to life with the help of designer Lucio Dalla Gasperina, today represents more than $450 million in sales and encompasses a portfolio that includes everything from Hawaiian print shirts and swimwear to barware and bicycles. There are nearly 100 Tommy Bahama stores, several of which include restaurants, and the brand just tested international waters with store openings in Macau and Singapore. A New York City flagship is slated to open in November and the brand has a thriving e-commerce business.
It has also been the catalyst for the reinvention of its parent, Oxford Industries Inc., a venerable Atlanta-based corporation whose history was based on manufacturing private label and branded apparel as well as men’s tailored clothing.
Pretty impressive for a guy whose motto is “Relax — Life is one long weekend.”
“Who in the world doesn’t want to relax, be comfortable and get away from the pressures of life,” asked Terry Pillow, chief executive officer of Tommy Bahama Group Inc.
Tommy Bahama has been part of the Oxford family since 2003, when it was purchased for $240 million in cash, $10 million in stock and an additional $75 million if certain performance targets were met. But the brand was on Oxford’s radar well before the deal was struck.
RELATED STORY: Tommy Bahama and Oxford Industries, Lessons in Good Parenting >>
As far back as 1999, J. Hicks Lanier, ceo of Oxford, started putting a plan into motion to transform his company, moving away from the production of commodity and licensed product and toward a branded model. He started looking for labels to add to its portfolio and immediately homed in on Tommy Bahama. The founders were looking for an exit strategy so the timing seemed right. They came close to a deal, agreeing on a price and terms, but the financial markets shifted and Oxford couldn’t pull off the deal. Instead, a minority interest was sold to Stamford, Conn.-based private equity firm Saunders Karp & Megrue in mid-2002.
That marriage didn’t last long and the brand was put back up for sale in 2003. Oxford was still “the buyer of choice,” Lanier said in a rare interview, and this time, the company completed the acquisition.
“The courtship lasted two years before we drug it across the finish line,” said Lanier in his signature Southern drawl. “But we knew each other well and it was a cultural fit.”
Although, on paper, the two companies couldn’t have seemed less alike, Lanier said Tommy Bahama “fit the strategy we were trying to accomplish at that time — moving away from licensed brands and private label. It was exactly what we were looking for. It was a strong brand that was not run down but was on the ascent.”
Doug Wood, president and chief operating officer, who has been with the brand since 2001, said working under Oxford is “like a great Harvard Business School case study. Hicks lets you operate your own business. We set objectives and work toward them, but he has never imposed Oxford on us. It’s a terrific marriage.”
Even in 2008 “when the wheels came off the economy,” Lanier didn’t intervene. “He said he knew we’d come out stronger, he just said not to hurt the brand,” Wood recalled. So with Oxford’s blessing, Tommy Bahama cut inventories by 40 percent during the recession so the brand wouldn’t be forced to dump product to clear stock.
“Hicks has a long-term view,” Wood added. “We talk about three- and five-year plans. That’s a real breath of fresh air in a public company that still has quarterly demands.”
Although the brand had its roots in men’s woven Hawaiian shirts, Lanier believed there was potential to roll out additional product categories and expand the Tommy Bahama retail footprint.
“My only surprise is that it exceeded our expectations,” he said. “It was the first and largest piece of our new strategy,” Lanier said, adding that the only elements left of the old Oxford are the tailored clothing and golf divisions that represent just 12 percent of the corporation’s sales. Tommy Bahama, along with Ben Sherman and Lilly Pulitzer, two acquisitions that followed, account for 88 percent of volume, with Tommy Bahama alone representing 60 percent.
“It’s been nine years since we bought it,” Lanier said, “and the brand has come a long way in that time.”
Under the terms of the deal, the three founders stayed on for five years to help the brand transition to Oxford’s ownership. When they finally retired, Lanier brought in Pillow — a veteran whose background included stints as president of Chaps and A|X Armani Exchange — at the beginning of 2008 to oversee the Tommy Bahama brand.
“I came in right when the economy started downtrending,” Pillow chuckled. The Arkansas native moved to Seattle, where the Tommy Bahama brand continues to be headquartered, and spent some time with the founders before they exited. “It was a seamless transition,” he said.
When Pillow first joined the brand, it was still primarily a wholesale-driven men’s wear firm, even though there were a handful of stores as well as restaurants.
“It was 70 percent wholesale, 30 percent retail then, but today it’s exactly the opposite,” he said. “We still have a healthy wholesale business, but we’ve emphasized the direct-to-consumer piece.”
There are currently 98 Tommy Bahama retail locations in the U.S., 13 of which are Islands — stores that include restaurants. The plan is to expand to a total of 107 stores by yearend. There are also the two international units as well as the successful e-commerce business.
Wood said the brand launched e-commerce in 2007 after he and Lanier had a conversation that this was “a channel we needed to get into.” By the next year, when the recession drove comparable-store sales at the company’s shops down 25 percent, the e-commerce business continued to grow.
“People were hunkering down, but our [customers] still wanted access to the brand and they were doing it online,” Wood recounted. “We don’t believe we have an online customer; We believe we have a Tommy Bahama guest who chooses to shop with us online, in the stores on through our wholesale partners.”
For retailers who bought into the Tommy Bahama lifestyle at the beginning, the evolution of the brand has made it as valuable today as it was 20 years ago.
“We’ve had it for 19-and-a-half years,” said John Allison of John Farley Clothiers in Newburyport, Mass. “I remember going to Vegas and seeing a grass shack with a big line of people waiting, and asking, ‘What’s this?’ Next season, I made an appointment.”
He ordered a few cargo shorts, polos and T-shirts and business immediately took off. “We’ve had increase after increase after increase,” he said.
Today, the store, which is in a resort community near the New Hampshire border, sells the Collection, Denim and Relaxed lines of men’s wear, and the jeanswear collection has grown to become 40 percent of sales.
“Their slogan is ‘Life is one long weekend,’ and this is one of a few companies that really delivers on that promise. They have huge staying power,” said Allison.
Scott Winterbottom, general merchandise manager of The Foursome in Plymouth, Minn., said his store has carried the line from the beginning as well.
“It’s the number-one sportswear line in our store,” he said. The store carries the Denim, Relaxed and Collections lines as well as its big and tall offering.
“The key for me is the staying power it’s had in the store,” he said. “It’s evolved from just an island-inspired camp shirt, and their broad approach to the business hits our target customer very well.”
Winterbottom expects the planned Manhattan store will help strengthen his business even more. “The softer part of their line has been the fleece and outerwear,” he said. “But when they open in New York, I will imagine they’ll have more to offer and that will be great for us.”
Through all these years, he said, the company has been a “great partner. And success comes at the register.”
For Pillow, Tommy Bahama’s success over the past 20 years has come from “creating a great brand and a niche in the marketplace.” When the “island lifestyle” brand launched, he looked at it from afar and remembers thinking, “This is good, this is really good.”
“I remember being a student of it at the time. It had great positioning. The product was different at a time when there was a lot of sameness. It had a point of view and differentiation.
“It started with aloha shirts,” Pillow continued, “but as long as we stick with our relaxed island lifestyle, the customer is responsive.” In fact, he said, denim is one of the fast-growing categories and the five-pocket jean was the top seller for holiday 2011. “We knew we couldn’t survive on only short-sleeve aloha shirts, so we’ve brought that spirit into other products.”
Don Kerkes, president of the men’s division, who has been with the brand for a decade, said: “The company has evolved from Day One. We move that line in the sand every day. Our Tommy Bahama Jeans is a full collection with sweaters, outerwear and wovens that attracts a younger customer. We think it’s one of our strongest growth areas. Cotton shirts, cotton pants for a younger guy seeking a more fitted product. We just came out with a great new part of this line with a more fitted approach to camp shirts that are aimed at a younger customer. So every day we are adding more product to that category. The latest one is Paradise Tech, which is the most active group and all done in technical fabrics. That’s a whole new business for our company, [and it’s] doing extremely well.
“Our Heritage product is the classic signature styles, a little more relaxed and done in silks and blends.”
For spring, the brand is even jumping into the hot sport coat business by launching unconstructed blazers in linen and cotton. “We’ll never do nested suits, that’s not a place we can play, but we will do separates,” said Pillow. “There are some occasions when our guy wants to wear a jacket.”
Another area with great potential is women’s wear, which Pillow called “the fastest growing part of our business.”
Right now, women’s accounts for 30 percent of sales at the company’s stores and around 20 percent of its wholesale business. Tommy Bahama does well with sportswear, swimwear, accessories and shoes, and the goal is to eventually grow women’s to the point where the mix is 50-50. “But that’s hard to do when men’s keeps growing,” Pillow said. “We need to build bigger stores.” Until that time, the company will push women’s sales to its e-commerce site, where space is no issue.
“The brand resonates with women and helps reinforce the idea that we’re a dual-gender, couples brand,” Pillow added. “All our marketing is focused on that.”
Wood noted that with most other lifestyle brands, women’s outperforms men’s and he’s hopeful that under the direction of Stephen Cirona, whose background includes Tommy Hilfiger and Eddie Bauer, the women’s side can continue to gather steam.
Another significant growth area is retail, both domestically and internationally.
“We just opened in Singapore and Macau and we’re opening Hong Kong in October,” Pillow said. A unit with a restaurant will open on the Ginza in Tokyo in February.
“Our international expansion program is well on its way,” he said. “We’re very encouraged with what we’ve seen in Macau and Singapore. Perhaps the most exciting part is seeing that the brand translates across the ocean. We weren’t sure they’d understand the message, but they do.”
In Asia, Pillow said 50 percent of the sales “out of the gate” have been women’s merchandise, giving the company more confidence about its long-term success overseas. Wood said its top-selling dress, a long tambour printed knit, sold out immediately in Singapore. “This isn’t just a West Coast thing or an American thing,” he observed. “This shows we can move to other areas.”
Looking ahead, the company would like to expand further in Asia and enter the European market. “But Europe is not the most inviting place now,” Pillow said. “We were close to signing a lease in London a year ago, but it didn’t happen. We’ll get there, but it’s a matter of finding the right time.”
Besides the U.K., other areas of interest include the Italian coast, the South of France and Germany. “But we’ll let that part of the world stabilize first,” Pillow cautioned.
Lanier said expanding internationally is also a way for Oxford to “ensure we continue to have a high-growth business. We’ll invest for the first couple of years and then expect it to become a huge part of our growth engine. The brand has that kind of legs.”
Closer to home, the big push this fall will be the opening of a Tommy Bahama flagship in Manhattan in November. The 8,509-square-foot Island store location, at 551 Fifth Avenue at 45th Street in the Art Deco-designed Fred F. French Building, will span three floors and include a restaurant. It is being designed by New York-based Michael Neumann Architecture, which also created Ralph Lauren stores and the designer’s private residence, as an “urban oasis” intended to help shoppers and designers catch the island mojo.
Pillow said the store will introduce a new design concept that will replicate the “lobby of a luxury resort in a resort location, but on Fifth Avenue.”
“The time is right for New York and things all fell into place,” said Pillow.
He noted the brand looked all over the city, including retail hot spots such as the West Village, the Meatpacking District, SoHo and Madison Avenue. “We couldn’t get our heads around where we belonged,” he said, “but 45th and Fifth just felt right. And the Fred French Building has fascinating architecture.”
He said that while the company knows it is a “bold move to open a restaurant, we felt we had to bring the whole Tommy Bahama brand to New York, not just retail. It gives the brand more context. And New Yorkers need to relax more than anyone.”
“We had been looking for a New York location for some time,” he said. “But first we had to be comfortable we had year-round merchandise. When we bought Tommy Bahama, it was really a spring-summer-resort brand. Now, we have outerwear, sweaters and jeans. And we have successful stores in the Upper Midwest and in the Northeast, so we’re comfortable.”
Lanier said he thinks the location is “excellent” and will draw visitors and residents alike. “It’ll have a restaurant and two bars, so there will be a lot of traffic,” he said. “It will be a flagship for us and complement our international efforts because there are so many tourists. It’s a good game plan.”
Pillow said that when Tommy Bahama started expanding its retail footprint, the brand stuck to resort locations. “But once it became a relaxed lifestyle brand instead of just a resort brand, we crossed that line and it now means more to more people. We’ve been surprised at how well we do in non-resort locations such as Kansas City and Chicago,” Pillow said.
Stores at the Garden State Plaza in Paramus, N.J., the Houston Galleria and other urban areas have performed well, Pillow said, noting that St. Louis and Columbus, Ohio, are on the drawing board as well for this year. “Now that we’re a four-season brand, it’s just as relevant in Chicago in December as Florida in August.” That said, the company’s most successful store continues to be its first, in Naples, Fla.
On Aug. 15, Tommy Bahama will open its first dedicated home store at the Fashion Island mall in Newport Beach, Calif. Wood said the store will be 5,000 square feet and offer licensed furniture and home furnishings. The store is being viewed as a test but the executive said others could follow if it is successful. “We said we’d give it a try and do one really well. We’d love to open a second, but this one has to work first.”
In addition to the items it manufactures itself, Tommy Bahama also has a thriving licensed products business, rounding out the brand with an array of merchandise from home furnishings and eyewear to fragrances and even rum. “For every extension we do, we turn down 50,” Pillow said. “People come to us all the time with some invention that they think should be Tommy Bahama.”
Wood agreed. “We don’t want to dilute the brand and take it to a place that doesn’t make sense. ‘I don’t see Tommy doing that,’ is the lens through which we look at everything. We’re never going to be in snow skis, but that doesn’t mean they’re not offered to us.”
But every now and again, a product does fit the criteria, which Pillow described as a quality item that “matches the lifestyle of the brand.” Last year, the company hooked up with Pedego for an electric beach cruiser bicycle that retails for more than $2,600. “We felt that a Tommy Bahama beach cruiser was appropriate,” Pillow said, “and we’ve sold a lot of bikes. But we can’t be everything to everybody.”
Whether it’s a beach cruiser or a woven shirt, it has to evoke the relaxed, laid-back vibe that has become synonymous with Tommy Bahama over the past two decades.
“This has been a fun brand to work on,” said Pillow. “Being in Seattle is the most unique thing. There’s a different pace and different talent pool, but I believe we have the best design group and most talented leadership team. People are passionate about this brand.”
Wood summed it up this way: “We know that for a percentage of the population, they see us as a printed Hawaiian shirt company, but our guy has really bought into this lifestyle. We’re about a sophisticated, upscale island lifestyle. If we want to go down market, we can run into Jimmy Buffett real easily — and we don’t want to put a parrot on your head. We know we have to keep looking up.”