Swim by Chuck Handy Before The Profit
Chuck Handy founded his plus size swimwear company in 2010 when his wife was complaining about the lack of fashionable + swimsuits available in normal retailers. He and his family run the business. Chuck had been in the swimsuit industry for decades and had done very well for himself. Once he started Swim by Chuck Handy he became the designer.
Once he started the plus size swimwear line, it really took off. Unfortunately, their success was short-lived. Chuck didn’t really understand how to connect with his core customer base. They began to lose money rapidly. There’s no money left for cash flow or inventory. The debt was piling up and their entire life savings was in the business.
Marcus was willing to help. He saw the swimwear industry as generating a bunch of money. He really enjoyed their needs of plus size swimwear and felt like he could do a lot with it. He decided to go to their office in Miami Florida in order to see what he could do for them.
Swim by Chuck Handy on The Profit
Marcus met the entire family at their office in Miami. He shook hands with Chuck, his wife, and his son and daughter in succession. Marcus asked who was in charge, and Charlie, the sun, said that he was kind of sort of in charge. He was the vice president of the company. Mary Ellen, the daughter, said that whoever was loudest was in charge, while their mother, Mary Lou, disagreed with all of them. Marcus ended up having to get the pecking order from their business cards. He found out that Mary Allen helped out with sales, as well as helping out with the fit. Mary Lou was a full-time teacher, only working in the shop at night.
Mary Lou let Marcus know that Chuck was originally working for another company doing their sales first swimwear. He made a lot of money, and he was very successful. He ended up getting the vision for Swim by Chuck Handy while working in that job. His main concept was swimwear that is sold along with the cover-up. So the children fashion suits for larger women that he is Chuck said that he was always designing with his wife in mind. His wife was overweight and was frustrated with the lack of swimwear for larger women. He ended up with his dream job, running a business alongside his children.
Marcus discovered that only Charlie and Chuck really worked out of the small office in Miami Florida. The rest of the family lived in either New Jersey or New York. Marcus requested to see the warehouse. There is a small amount of inventory in the warehouse, and then a large trade show booth set up. The trade show booth was run by Charlie. He informed Marcus that he does it all with one daily were. He purchased all of the pieces that IKEA. Marcus winced. In an aside to the camera, he said that one way that fashion brands can distinguish themselves from their competitors is to have a gotrade showhow booth. All he saw here was cheap lawn furniture and poor lighting.
Marcus met a model who was displaying their swimwear. He asked her how she liked it, and she said that it was very comfortable and sporty. Marcus stated that the two things that he looked for in a swimwear company was the fit as well as the prints. As for the prints, he thought that they were hideous. The suit seemed outdated at best. Marcus found out that Chuck was picking both the suit design and the color palette, which might account for the outdated collection. Chuck said that he got his inspiration by visiting stores, but Marcus informed him that he was a season late. By the time their designs were out, it was already too late.
Marcus next inquired about the margins. He found out that the traditional suit cost nine dollars to make and wholesaled for $23.50. It retailed for $109. Marcus wondered why they were selling it for too little. Maryellen informed him that Chuck likes to give the wholesalers a deal. The suits should be selling to the wholesalers for $50, at least. Marcus said that he was usually in favor of the retailer making more money, but in this case, he was seriously did devaluing the brand. Chuck was walking away from $26.50 every time he sold his suit. Marcus wanted to have the company he was investing in making more money.
Marcus found out that the inventory was sparse because they didn’t have enough money to buy more fabric. Normally Chuck would stock 25,000 pieces, but right now there are only 800. In an aside to the camera, Marcus said that you could clearly see the consequences of poor margins simply by looking around the room. Swim by Chuck Handy had no inventory, and it scared him.
Marcus pulled Maryellen asid and asked her what she was doing there. She informed him that she left her job as a designer for the Dress Barn to help out her father. She could see that her parents were struggling financially, and she didn’t want to watch that anymore. Marcus told Maryellen that her brother Charlie had a lot of energy. He asked how well they communicated. Mary and Ellen told him that their communication was not effective. He was enthusiastic, but he did not understand how much work actually went into the company. Marcus pulled her inside to go over the financials of the business.
Marcus discovered that Swim by Chuck Handy has lost $36,000 in 2015. The year after that, they lost $40,000. He told them that they were essentially out of business. Chuck said that was it upset him the most about that is that he was letting his wife down. Mary Lou told Marcus that she knew was very hard for a man to not be the main provider for his family. Marcus let them know they use going to take the numbers with him and think about his possible investment.
Despite the dismal numbers, Marcus was still interested. He saw potential in the plus size swimwear category. He also told the camera that you can buy or teach passion, and all of the family clearly had it. Marcus had to determine what he thought that the business was actually worth because the risk was high. The payoff is huge if he could get work. He let the family know that he was drawn to Swim by Chuck Handy because of the family run aspect. He told them all the problems that he saw with the business, but he ended with the benefits, with was the proof the process. Maryellen said that she wasn’t willing to break with the company until something finally broke for her. She was willing to put everything into it and have nothing to show for it.
Marcus offered them $650,000 in exchange for 55% of the business. He is taking such a large percentage because it was a giant risk. Marcus let them know that he would be 100% in charge. He wanted to use the money to make the company debt-free, and make sure that they had the cash flow to purchase inventory, and put money into product development. He let them know that the company could not only be in the women’s bathing suit business. He wanted to expand into men’s as well. He wanted to also install a showroom, and get more designers and there. The family decided to take the deal.
Marcus’s first step was to set up a focus group in his ML Fashion Group. He wanted to take the information that he gleaned from the focus group and put it into action. He wanted to make what women actually want to wear. The women that were polled basically said the same thing. They would not choose the same patterns. What they were mainly looking for were dark materials that would flatter their heavier bodies. Marcus asked if they like the fact that it was sold as a set. Many of the women said that they enjoy the option to mix-and-match. They told them that they would make more money by offering the ability to mix-and-match, and Chuck interrupted her and disagreed with her. He wasn’t handling it very well. Another thing the focus group brought up is the women’s swimwear with the man’s name. The name was sort of a contentious issue.
Next Marcus decided to focus on the marketing. He was butting heads with Charlie, who in a very different vision of what the marketing should look like. He needs to get some fresh ideas. Maryellen started to take over, and say that they need to really define their target customer. The woman that Marcus brought in to help them told the family that they need to get different types of messages and imagery for their e-commerce versus their retail sales. Marcus also wanted to consolidate the business, and get everyone under one roof. This meant ditching the Miami Florida warehouse and getting everyone into New Jersey. Surprisingly, Charlie agreed to it right away and they started packing boxes.
Swim by Chuck Handy started getting new manufacturers in New York City. Previously, they would manufacture everything over in China. Marcus said that while it cost more per piece to make it in New York City, there is less to worry about, and they were lower minimums. Marcus brought in several of his companies to help, including Printed Village. They developed their own prints that were made by a bank of artists. Each artist showed the family very innovative suits with interesting patterns, and Chuck pooh-poohed all of them. Maryellen told him that while he was very good at selling to the older middle-aged market if they are going to be targeting younger people he needs to be willing to try new things. Let’s see how they do when Marcus isn’t there to watch them.
Swim by Chuck Handy in 2018 – The After ‘The Profit’ Update
In the end, Marcus ended up changing the name to Siloett. They changed their manufacturing process as recommended by Marcus to increase their turnaround time. Charlie ended up moving to New York, where the new office is. They also have an office in Los Angeles, and they are part of the ML Fashion Group. The company now sells more than just swimwear, which increases their ability to make a profit. You can find t-shirts, accessories, and dresses on their website, which you can reach by clicking here.