Editor’s Note: Ed Thomas, who has been in the retail industry for more than 40 years, retired in February as chief executive of Tilly’s Inc. (NYSE: TLYS), one of Orange County’s largest apparel companies. This Leader Board, as told to Executive Editor Peter J. Brennan, accompanies the Business Journal’s list of apparel companies based in Orange County, which begins on page 13.
In the 1990s, Wet Seal’s stock was flying high, and I thought it’d be cool to have our own corporate jet.
When I broached the subject to the chairman, he said it might be possible if the stock topped $40 a share.
The stock did fly past $40—for a few hours. I never did get that plane!
In my 40 years in the retail industry—particularly apparel—I’ve seen the comings and goings of numerous trends, witnessed the rise of online shopping and the importance of apps, the decline of certain retail outlets and worked with celebrities.
Despite all the changes, one thing hasn’t changed, which I will reveal shortly.
Accounting Start
I was born and raised in the small Massachusetts town of Norwood. My father, editor of local newspapers, edited my essays so I didn’t receive bad marks for grammar.
I attended Xaverian Brothers, a Catholic school, which opened my eyes to kids from a lot of different backgrounds. Academically, it is still one of the best in Massachusetts and I proudly list it on my LinkedIn profile.
My older brother advised me to get an accounting degree, correctly predicting it would open the doors to work in any industry. After graduating from Villanova University, I worked at Deloitte when the industry was known as the Big 8. That experience enabled me to view a lot of industries and got my career going.
I worked for a small publicly held manufacturer of infant toys before I was recruited to a company in the middle of a turnaround—a big specialty retailer in New York called Foxmoor Casuals, a chain of 600 stores that catered to teenagers.
Even though I was young, I started as co-president. Chain stores can be exciting because you’re operating all over the country with all different types of challenges with people and consumer tastes. The major operational advantages of chains are the ability to purchase in scale and the physical distribution.
The chairman of our company, Irv Teitelbaum, was also the chairman of Wet Seal. He recruited me to move to Orange County in 1992 and I became its chief operating officer while Kathy Bronstein was CEO.
Wet Seal went public in 1990 and we grew the chain like crazy. We started with 130 stores with one division, and we got to over 800 stores with three divisions. We made it to almost $1 billion in annual sales.
In 1995, I bought Contempo Casuals from Neiman Marcus. We turned it around and it helped us expand nationally, more than doubling the size of Wet Seal. That purchase and turnaround was my greatest achievement.
A lot of my career has been focused on turnarounds where you must be quick to make changes. You cannot procrastinate. The big play is real estate. Usually there are too many stores that are underperforming. Sometimes the merchandise is so bad that everything must be changed.
Wet Seal was known for its ability to pivot quickly to provide products with the latest trends.
The Forever 21 chain changed the formula because they were really fast. If we were designing and getting products within three to four months, Forever 21 could do it within three to four weeks. Their secret was they did not do as much internal design as other companies.
Teenage Girls
Our customers were teenagers. How do you order something for them four to five months into the future?
Previously, a lot of trends started in Europe or on the West Coast, so we watched those areas carefully. Our workforce was a big indicator. Your biggest fans are often your store employees. We watched them closely. Our employees were really engaged to help us identify trends. The best market researchers are your own store employees.
We also hired celebrities; we couldn’t afford the A-listers. Still, the right celebrity can be quite successful, such as when we hired Mandy Moore, the singer and actor. These celebrities liked working with us because they knew their names would be plastered over 600 stores nationwide and increase their celebrity status.
Orange County became known as the trendsetter for action sports brands like Quiksilver and Billabong. Of course, those companies have gone through many changes over the years.
Nowadays, Orange County isn’t as known for setting fashion trends.
Instead, trends are driven by social media influencers. A key metric is how many followers an influencer has on the internet. We can tell which influencers are driving online sales and traffic to the stores, particularly our grand openings.
Apparel companies have traditionally tried to stay away from Amazon for fear of diluting their brands. However, it isn’t the kiss of death as Amazon has tried to lure apparel brands to its site.
Amazon has such a huge customer base that you cannot ignore it anymore.
Online sales are important, but I don’t think they will kill retail stores for the simple fact that people like coming into stores. Omni channel, which are methods of integrating shopping online and in stores, has developed where customers buy online and pick it up in the store.
If someone wants to open a retail store, the first rule is that cash is king. I also advise them to get the right real estate agent for that store’s concept. The mall industry has changed dramatically. Definitely stay away from Class C malls. Economics are traditionally better at Class A and B malls. Off-mall stores can also be good.
Publicly Traded
I enjoyed being the CEO at publicly traded companies for more than 20 years. I liked dealing with investors. It’s obviously a challenge. If your results are good, the job is easy. If the results are bad, it’s not easy. The biggest thing is don’t overpromise.
Looking at my career, I’m proud that I ran Wet Seal three times and Tilly’s two times. It’s rare that you have the same person run the company at different times. At Wet Seal in 2014, I was asked to reorganize the company through Chapter 11; afterward, we sold it to a private equity firm which a few years later put it into Chapter 7 bankruptcy. It had been through too many changes and didn’t have the right management team.
Which brings me to the secret sauce in our industry.
The young adult teenage business has always been about change. It happens very rapidly.
The ability of your organization to adapt to the latest and greatest is the most important secret sauce. Neither the internet nor Amazon nor failure of some malls have changed that.
I thought I’d work forever. The pandemic made the industry much less fun. I just turned 70 years old, which was another reason I retired.
I’ll probably join some boards of directors. Now that I’ve been home for a few months, I’m going crazy. Maybe I will consider another CEO job.
