Private-label work had helped Viewpoint pass the break-even mark by the end of 1994. Flush for the first time, the company was finally in a position to advertise. Emfield pegs the number it had to spend at that time at roughly $2 million. But the partners needed to figure out how to spend it. Magazine rate cards made them blanch, and the cost for TV time was even more unnerving. The more they weighed their options, the more Margolis, Emfield, and Dalla Gasperina worried that they would spend a lot of money on ads and get nothing in return. Assessing the options, they did exactly what nobody would have guessed they would do: they decided to open a restaurant. It was a wildly dangerous decision. Reckless. And, as it turned out, a choice that perfectly suited Tommy. "It's the greatest advertising vehicle ever, and we made money doing it," says Margolis.
The restaurant scheme came about by accident -- "blind luck," Margolis says today. Initially, the company zeroed in on opening a retail store, not as an end in itself but as a way to promote its wholesale business. The partners had been unhappy with the way most stores were displaying Tommy clothing. "People would buy our product and then display it on a sterile steel-and-glass shelf," says Margolis. Viewpoint advocated using painted-wood or rattan display cases and hanging the shirts face out, rather than hanging them sideways, as in a closet. A company-owned retail store could serve as a model home that Viewpoint's wholesale customers could visit. The partners figured they could put wholesalers in touch with the same supplier that provided their retail store with nice display cases.
DISPLAY OF AFFECTION: Tony Margolis has pushed retailers to display Tommy clothes in a way that Tommy himself would applaud.
Not far from the Margolis and Emfield vacation homes, the partners found vacant commercial space in Naples, Fla., a gulf-side resort known for splendid golf courses. "When we pitched the landlord, she was so enthusiastic, she asked us what we would do if she made additional space available at a very good deal," Margolis recalls. "What would Tommy do?" the partners pondered. He might go to a juice bar. No, they decided, he would prefer a microbrew beer. And maybe a nice meal. Tommy's kind of restaurant was easy for everyone to imagine. "Steel drums, full moon, palms wafting in the breeze," Emfield says. "If you serve them a meal when they're on vacation, you've got them forever."
A retail store opened in November 1995, and an attached restaurant unveiled its tropical menu and white tablecloths three months later. The cost of the build-out was $1.2 million. Sales for the retail store alone were $2 million in that first year and have since grown to $7.2 million. While diners wait for their tables, they browse. Clothing sales stay strong as late as 11 p.m. "It's very casual but with a fun ambience," says Gabrielle O'Boyle, who works at the Ritz-Carlton Naples. "We send our guests there."
As much as the store introduced Tommy to the diners of Naples, it also introduced potential customers to Tommy, helping Viewpoint better understand which people were buying the brand and what they wanted from it. After cashiers at the Naples store noticed women buying extra-small men's shirts, Viewpoint ramped up a Tommy women's line. The company also reduced the use of cotton in favor of silk, since silk items sold briskly. In the past five years the company has opened 12 retail stores and 5 more restaurant-and-retail-store "compounds."
W.C. Wells, who heads the Tommy Bahama retail division, claims that sales range from $2.5 million to more than $7 million per store per year -- from $700 per square foot in Chicago, the chain's stinker, to $2,000 per square foot in Naples, the chain's star. He further claims that the operating profit per store ranges from 5% to 20%.
And consider those figures in light of the following: the stores never, ever mark down their inventory. All the company's retail stores are required to return unsold inventory to the wholesale division. Why? If Tommy retail stores marked down their merchandise, they could find themselves pricing goods lower than mom-and-pop stores that carry the line. And since mom-and-pops make up more than half of Tommy's sales, Viewpoint doesn't want to upset them.
The Naples compound's success jump-started the entire wholesale division. "Retailers that were selling us in 4 or 5 stores in a chain suddenly wanted us in 20. They wanted more depth in terms of how many products they sold, and they wanted us to build fixtures for them," Emfield says.
The opening of the first compound marked the beginning of the golden age of Tommy Bahama. The company doubled its annual sales for several years in a row, driven by the expansion of the wholesale business, the growth of company-owned retail, and a surge in licensing deals. Licensing revenues for apparel accessories like shoes, handbags, and ties now top $16 million a year, and the company has recently signed deals for eyewear and sunglasses, lamps, and rugs. For Viewpoint "that's pure profit because the royalties I pay them flow right to their bottom line," says Donna Dixon, president of Paradise Bag Co., based in Millburn, N.J., which manufactures Tommy handbags and luggage.
The gorilla of all Tommy licensees is Lexington Home Brands, a North Carolina company that signed on with Viewpoint in 1999. In only a year and a half on the market, Lexington reports its Tommy Bahama furnishings have brought in more than $100 million in sales. But the Viewpoint guys haven't let Lexington president Bob Stec get to nine digits in sales the easy way. "The integrity of the brand positioning is paramount to them," Stec says. "If they saw a design that didn't fit Tommy's lifestyle, even if they thought it would do volume, they didn't do it. From an upholstery standpoint, they had a very clear view of what the fabrics should look and feel like. To them, the definition of the brand was so clear."
Given that Tommy's founders live in three far-flung cities, I made arrangements to meet them when they would all be together. The occasion: Magic Marketplace, an apparel-industry trade show in Las Vegas that spread out over 2 million square feet. At Magic exhibitors that have brands both big (Kenneth Cole) and small (ManSilk underwear) proclaimed the superiority of their wares.
