STAR-BULLETIN / 2006
Colorful merchandise is shown in the Hilo Hattie store in Iwilei. The 35-year island company is seeking investors.
Hilo Hattie’s move on hold as it searches for investors
The company's CEO says that there are no plans to sell
STORY SUMMARY »
Hilo Hattie, best known for its aloha shirts and visitor souvenirs, is seeking investors to help it expand.
John Reed, president and CEO of Hilo Hattie, said yesterday there are no plans to sell the company at this time, but that the company has been in discussions with potential investors for the past few months.
The anticipated move of the store from its Nimitz Highway headquarters to the Royal Hawaiian Center in Waikiki, meanwhile, has been delayed to November.
Hilo Hattie originally announced that the two-story flagship store would open in early summer of last year.
Reed said Hilo Hattie has been in a restructuring mode for the past year, with an emphasis on streamlining its operations.
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STAR-BULLETIN / 1999
The Hilo Hattie store at Ala Moana Center is shown here.
Hilo Hattie, the store famous for making the world's largest aloha shirt, is talking to investors about bringing additional capital into the business.
John Reed, president and CEO of Hilo Hattie, issued a written statement yesterday saying that despite rumors, there are no plans to sell the company.
"There are no plans to sell the company at this time," Reed said. "However, Hilo Hattie wants to remain competitive and, toward that end, has had discussions with potential investors who will bring additional capital needed to further grow and expand the business."
Reed said the company has been in discussions with potential investors for the past three to four months, and is primarily seeking minority investors.
"Hilo Hattie has been in a restructuring mode for the past year, with an emphasis on streamlining operations and right-sizing the company to make the company more efficient and more profitable," said Reed. "Hilo Hattie is now a stronger, better company as a result of these changes."
The opening of the company's planned flagship Hilo Hattie store at Royal Hawaiian Center, meanwhile, has been delayed until November, according to Susan Todani, director of assets for Kamehameha Schools, which owns the Waikiki center.
When first announced in February 2006, Hilo Hattie parent company Pomare Ltd. said it hoped to open the two-story, 29,000-square-foot store in early summer of 2007.
Currently, Its headquarters, including a showroom, manufacturing center and warehouse, are still at 700 N. Nimitz Highway.
Hilo Hattie, which opened as Kaluna Hawaii Sportswear on Kauai in 1963, has evolved into an icon for sharing Hawaii's culture, warmth and aloha spirit with the world, said Reed.
The company, which took the stage name of a popular entertainer, Clarissa Haili, eventually expanded out of state and became the official retailer of numerous festivals in Hawaii.
"Today the company is committed to continuing to be a retail leader in Hawaii, and to ensuring Hilo Hattie remains the favorite place to shop for locals and visitors alike," he said.
However, times are tough for those in the retail business, according to retail analyst Stephany Sofos. The economic dampening has caused people to shop less and to focus more on basics than on fun shopping.
This has hurt retailers specializing in Hawaii apparel, she said.
"Traditionally, people go into the more conservative look," said Sofos. "The Hawaiian style and bright colors are not selling as well because people are looking for a more conservative, muted look."
On top of that, visitor traffic is off its peak, while construction costs have gone up significantly.
Earlier this year, Reyn's, a longtime Big Island family business best known for its signature reverse-print aloha shirt, sold the majority ownership of the company to private equity firm Wedbush Capital Partners of Los Angeles.
Steve Abdalla, president of the Hawaii office of VR Business Brokers, said there is a movement away from acquisitions by private equity firms that rely heavily on debt financing.
While that might have been the trend last year, more foreign corporations are investing in U.S. companies this year due to the weaker dollar.
Retailers are not doing worse than the general market overall, according to Abdalla, though credit has tightened for companies valued above $5 million.
The best investor sources for Hilo Hattie might be in Asia, he said.
"I would certainly approach foreign investors," said Abdalla. "The prime targets are China, Singapore and Japan. The trend is to corporate, synergistic buyers -- they're in related products, markets and supplies -- particularly overseas buyers, because the dollar is so weak."
Hilo Hattie has seven stores on all four major islands of Hawaii, including Oahu's Ala Moana Center, and two in Southern California.
A Hilo Hattie store in Orlando, Fla., closed in March of last year, and a store in Las Vegas closed earlier this year.
Reed, previously an executive of DFS Group Ltd. and most recently the CEO of California-based BriteSmile Inc., took the chief executive post of Hilo Hattie in November 2006. He replaced Paul de Ville, who left to pursue real estate investments.
Hilo Hattie's history
Founded: 1963 on Kauai
Origin of name: Stage name of entertainer Clarissa Haili
President and CEO: John Reed (since 2006)
Parent Company: Pomare Ltd.
Headquarters: 700 N. Nimitz Highway
Stores: Seven in Hawaii, two in California
Plans: Flagship Waikiki store slated to open at Royal Hawaiian Center in November
Source: Hilo Hattie