Posted on: Friday, May 10, 2002

Island-chic clothing line expanding

By Anne D'Innocenzio
Associated Press

Larry Ross of Miami Beach, Fla. looks at a pair of shorts while shopping recently at Tommy Bahama's in West Palm Beach, Fla. Since its inception 10 years ago, Tommy Bahama's has developed a loyal following. Associated Press

NEW YORK — If Ralph Lauren helped popularize the world of country club chic, Tommy Bahama is bringing the tropical island lifestyle to Main Street.

Since its inception 10 years ago, Tommy Bahama has developed a loyal following, particularly among men, for its $95 island-themed silk shirts and other casual sportswear.

Now the brand is muscling to be a $1 billion business during the next five years from its current base of more than $300 million, which includes sales from its own stores and its other retail accounts, but not licensing.

Its privately held parent, Viewpoint International Inc., operates 20 free-standing stores under Tommy Bahama and is slated to open another eight to 10 stores this year. It plans to increase its women's business and is expanding overseas.

Tommy Bahama is also looking to add fragrance, skincare products, and food to its licensing portfolio, which already ranges from footwear to bed linens.

Tommy Bahama hotels and Tommy Bahama tropical island tours are also in the offing.

"I don't think we found the halfway mark," said Tony Margolis, 59, president and chief executive, who oversees marketing, advertising, licensing and finance. "The brand is still in its infancy. There are so many things to tap into."

He said the brand is about "showing there is another way to live, and it's more casual, less glamorous but very sophisticated."

Margolis acknowledged there are similarities to Polo Ralph Lauren, now a $1.9 billion business, but he and partners Lucio Dalla Gasperina, 45, and Bob Emfield, 60, said they are not trying to emulate the American designer.

In any case, retail consultants caution that Tommy Bahama, based on a fictitious character, is reaching a critical point, and its partners need to carefully balance growth with staying true to the brand's spirit. Otherwise, it could well become a victim of its own success, falling in the same trap as such apparel brands as Tommy Hilfiger, which got too big and too diverse and was forced to retrench.

"Tommy Bahama has a great future — if they extend the brand within the lifestyle," said Harry Bernard, partner at Colton Bernard Inc., a San Francisco-based apparel consulting firm.

Venturing into the hotel business, which is not included in the company's $1 billion sales forecast, could be risky because it is vulnerable to the economy and is costly, according to Neil Johnston, a partner at Lippincott & Margulies, a brand image consulting firm. Emfield, vice president of sales and marketing, is pushing to open a hotel as early as 2003.

The three partners insist they are well aware of the challenges ahead, particularly that of keeping its breezy culture intact as the company gets bigger, and expanding its own stores without hurting its department store and smaller retail accounts like Bloomingdale's.

"We're a crawl, walk, run company," said Margolis. "We're very cautious."

For example, he said, the company didn't rush into the denim fad, spending six month developing the fit for its men's jeans before shipping them to stores nine months ago. Women's jeans will be in stores for holiday 2003 — at the earliest.

Margolis made it clear they won't add children's wear as well as heavy winter apparel like down jackets. The company is also choosy about picking its licensing partners. Company officials declined to offer a total sales figure for licensing, but home furnishings, a $100 million business, is its largest category.

It is also limiting the number of its own stores to about 60 to 70. Currently, six of the company's stores are attached to island-themed restaurants, which serve tropical drinks and island fare like black bean and chorizo soup.

As for rivals trying to copy Tommy Bahama's tropical printed shirts and other island-themed merchandise, the partners remain unfazed.

"We are not about selling a shirt, but selling a brand," said Gasperina, who oversees product development and design. He said it was important "to not cut corners."

The partners say they're not interested in taking the company public, but are not averse to selling the company someday to a partner that understands the business. Last year, the company sold a minority stake to Saunders, Karp & Megrue, a private equity firm in Stamford, Conn.