HONG KONG — Tommy Bahama, the travel and lifestyle brand best known for its men’s resort-themed apparel, is embarking on a worldwide expansion. Its first destination: Asia.
The apparel-maker projects that international sales will make up 10 percent of the company’s revenue within three to four years, up from virtually nothing right now, said Brian Pearce, managing director of Tommy Bahama, at a media event here. The company reported a 15 percent increase in net sales in the first quarter to $141.1 million.
Pearce, who oversaw 60 store openings in the U.S., moved to Hong Kong earlier this year and has been building the brand’s Asia presence. Tommy Bahama recently opened stores in Singapore and Macau and will open a retail-restaurant location in Tokyo next year. The company will also be opening a location in Hong Kong in the fourth quarter this year. The brand aims to open four to five more stores a year in Asia and Southeast Asia, he added. Tommy Bahama will directly own all of the stores.
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The luxury brand has been working with real estate brokerage Jones Lang LaSalle to find a suitable Hong Kong location. Details about the location and lease terms will be released soon, Pearce said. The executive did state that the location, on Hong Kong island, will be away from the most popular shopping areas where rents are prohibitive.
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“We’re taking a different approach. It’s not your typical retail location and thus [is] more affordable,” Pearce said during the event, which included a mini fashion show of the spring-summer collection featuring famous local models Rosemary Vandenbroucke and Irisa Wong.
Despite the unconventional location, it will be difficult for Tommy Bahama’s Hong Kong store to make money in the first term, he acknowledged. Hong Kong is a tough market to operate in, he said, noting that lease terms are generally only three years and rents are extremely high. He said he focused on locations where it would be easy to renew the lease for another term and aim to recoup costs and make a profit during the second term.
Tom Gaffney, head of retail at Jones Lang LaSalle Hong Kong who was also at the event, said that retail rents have gone up by 4.5 percent on average across all sectors during the first quarter of 2012. Jones Lang LaSalle expects retail rents to increase another 10 percent in the second half of the year.
Prices of apparel in Asia will be about 20 percent more expensive than in the U.S., Pearce said. Part of the reason, he said, is that garments will be sized differently. The brand is known for its generous cut in the U.S. Garments in Asia will have an “international fit” so that a U.S. XL will be equivalent to a XXXL in Asia. Pearce also said he expects that women’s wear and accessories will feature more prominently at Tommy Bahama’s overseas locations than in the U.S.
The smaller sizes might come as a surprise for expatriate customers who already know the brand in the U.S., Pearce admitted, but the brand’s primary target in Hong Kong will be Mainland Chinese and local Hong Kong people. Tommy Bahama is eyeing expansion in Mainland China soon and has been looking closely at Shanghai, Hangzhou and Hainan, known as the Hawaii of China.