Why it matters:
- Tommy Bahama is a case study in cross-industry growth which can help companies flourish if one segment of its business softens (such as when physical stores were forced to close during COVID).
- With its ear to the ground, Tommy Bahama evolves with consumer preferences including a new restaurant concept called the Marlin Bar that offers casual food and libations. The presence in shopping areas boosts retail sales.
- Celebrating its 30th anniversary, Tommy Bahama’s CEO Doug Wood said the company isn’t even halfway to reaching its potential — proof that even mature brands can attract new business.
It is hard to go to a beach, lake, concert, or barbecue without seeing one of the two million Tommy Bahama beach chairs sold each year.
The ubiquitous beach chair is just one of the myriad licensing deals under the Tommy Bahama name that include everything from Airstream RVs to a complete home furniture collection from Lexington Home Brands. The Tommy Bahama licensing agreements combine to produce more than $700 million in retail sales per year.
Licensing is just one revenue stream for Tommy Bahama, which on its own produces sales of $875 million from apparel, e-commerce, retail sales, restaurants and a soon-to-open resort and spa. Adding in licensing deals and wholesale accounts, and that total stretches to $1.8 billion.
“We are a true lifestyle brand—not just restaurants or stores,” said Doug Wood, CEO, of the company, owned by Oxford Industries, which celebrates its 30th anniversary this year of bringing the island life to consumers.
Tommy Bahama has come a long way since 1993 when three apparel executives envisioned a men's sportswear line that captured a laid-back, island-inspired life. Two years later, in 1995, with sales gaining traction thanks to items like a silk camp shirt, the founders were on the hunt for a physical store in Naples, Florida.
"They wanted 2,000 square feet but the landlord offered 8,000 square feet. They looked at each other and decided it would be cool to have a restaurant," said Wood, who ascended to the CEO role in 2015 following 14 years in management roles at the company.
“That story set us up for who we are today,” said Wood, acknowledging that opening a restaurant without foodservice experience could have been disastrous. “Instead, it remains our No. 1 producing store and restaurant,” he said.
The gutsy decision exposed Tommy Bahama to the hospitality business and provided synergy with its retail arm. Today the 22 Tommy Bahama Restaurants & Marlin Bars produce over $100 million in sales. “How many restaurants can say they are still growing after 28 years?” Wood asked.
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When we look at our opportunity to show people what our brand is about, we have eight minutes online, 15 minutes at a store, and anywhere from an hour or two in a restaurant. And now we will have three or four days to really show people what the brand is about and inspire them to relax. What's more relaxing than a resort with a pool, a restaurant, and shopping?
Doug Wood, CEO, Tommy Bahama
Growing sales (and Tommy Bahama brand equity) via Marlin Bar spinoff: ‘This gives them a reason to come have a drink, hear live music, and shop’
In addition to full-service restaurants, Tommy Bahama has rolled out a new vehicle for growth called the Marlin Bar. In comparison to its full-service restaurants, customers at the standalone Marlin Bars place food and drink orders at the bar and the meals are delivered to their table by a server.
“It is[a] bar first,” said Wood, who said the Marlin Bar format offers a new way to enjoy the Tommy Bahama experience. The ninth Marlin Bar location opened in Palm Beach Gardens, Florida, with plans to open four to five a year.
"People are looking for something quicker — they don't want to always give us an hour to two hours. They can shop from their couches now. And I do love our business on the website, but the human interaction is important. This gives them a reason to come have a drink, hear live music, and shop. At first, we thought even if we break even on food and beverage and increase our retail sales by as much as 30%, it is a win,” he said.
Even Wood didn’t expect just how big of a windfall the concept could register —sales at the Coconut Point Marlin Bar in Estero, Florida are expanding at a 300% clip.
Emboldened by success in hospitality, Tommy Bahama is readying a sprawling 215-room, 35,000-square-foot spa and resort. The company is redesigning and rebranding the 30-year-old Miramonte Resort & Spa in Indian Wells, California, in partnership with Los Angeles-based developer Lowe. Reinventing as the Tommy Bahama Miramonte Resort & Spa, it joins a top-performing restaurant and retail door in the local market, Wood said.
“When we look at our opportunity to show people what our brand is about, we have eight minutes online, 15 minutes at a store, and anywhere from an hour or two in a restaurant. And now we will have three or four days to really show people what the brand is about and inspire them to relax. What's more relaxing than a resort with a pool, a restaurant, and shopping?”
The success of the brand’s restaurants has a halo effect on stores. Opening its own branded stores became a crucial component in Tommy Bahama’s portfolio after the recession of 2008, when wholesale accounts, especially department stores, cut back on their purchases.
During that period, Wood noticed e-commerce sales rising, giving him confidence consumers still wanted the Tommy Bahama lifestyle. "We made a hard pivot to shift our resources to our own stores. We took control of the brand and the messaging." The company shifted from 80% wholesale and 20% retail, to 80% retail versus 20% wholesale. Today, its 160-plus retail stores are on a path to achieving sales surpassing $900 million in 2023.
‘We realized we had a huge opportunity to speak to women and build that. It has been incredibly successful for us’
Continued growth in women's apparel sparked the idea to expand more deeply into the category. Attracting more women is on the front burner at Tommy Bahama.
Five years ago, our merchandise sales were 70% men’s and 30% women’s in our apparel sales. "We realized we had a huge opportunity to speak to women and build that. It has been incredibly successful for us and is the fastest growing part of our apparel business," he said. "Last year, we passed over $200 million in women’s sales, and this year it continues to grow double digits."
Those numbers are hard won in a women’s market that is saturated with competitors, he said. “I believe she has always wanted to experience the Tommy Bahama lifestyle as much as the men, we just didn’t deliver to her the right product. We are now. Also, our food and beverage business continue to be a factor because it brings in people who maybe haven’t shopped us in years,” he said.
‘Customers want to have a deeper experience than merely purchasing products’
Marie Driscoll, fashion retailing analyst and adjunct professor at New York City’s The New School, believes consumers will follow a brand that they like into other categories.
“Look at RH [Restoration Hardware] and Ralph Lauren. Both expanded from their original categories and extended their brands to sheets and towels and restaurants … and Ralph Lauren has a hotel in Jamaica. Armani has furniture, a restaurant, and a hotel. The point is these brands enjoy enough brand equity that their customers want to have a deeper experience than merely purchasing products—they want to live in a world created by the brand/designer.”
The caveat is that Tommy Bahama must execute on the brand’s promise as it spins into new businesses. “Designing apparel and running a spa/hotel are different skill sets, as is running a retail store and designing apparel. And the business models are different with varying working capital needs. The prize that Tommy Bahama has is its brand perception in shoppers’ minds of islands, balmy breezes, dresses wafting in the wind — obviously a piña colada or some rum concoction is the perfect adjacency,” she said.
Like many companies in the hospitality and retail business, Tommy Bahama took its knocks during the pandemic. Forced to furlough staff when restaurants were shuttered, Wood kept kitchens open with workers cooking and delivering food to those impacted.
Ultimately its diversified approach helps Tommy Bahama prepare for whatever is to come, Wood said. “As I look at our opportunities, I don’t even think we are at the halfway point yet.”
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