STAR-BULLETIN / MAY 2006 Hilo Hattie says that despite the sale of the company, all its retail operations and offices will remain open, and business should continue without interruption. Shown here is Hilo Hattie in Iwilei.

Hilo Hattie sold

A California company acquires the iconic 44-year-old merchandiser

Hilo Hattie, which has made a name in Hawaii for decades plying aloha shirts and souvenirs, has been sold to a California company.

Nelson steps in as the new CEO of Hilo Hattie, replacing former CEO John Reed, who stepped down yesterday. John Scott, formerly a senior vice president and general merchandise manager, will be president.

Hilo Hattie's seven stores in Hawaii and two stores in California will remain open, and business will continue as usual, the company said.

Nelson said he is interested in continuing to pursue the opportunity of opening Hilo Hattie's delayed flagship store at the Royal Hawaiian Center in Waikiki.

"We like what Hilo Hattie stands for," Nelson told the Star-Bulletin. "The company's been around more than 44 years, and it's an iconic Hawaii company. It has a great future, and we're hoping we can provide the stewardship to achieve its full potential."

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Hilo Hattie, the state's longtime retailer of aloha shirts and Hawaii souvenirs, has been sold to an investor group led by the owner of the Hawaii franchise of Fantastic Sams hair salons.

"We like what Hilo Hattie stands for," Ted Nelson told the Star-Bulletin. "The company's been around more than 44 years, and it's an iconic Hawaii company. It has a great future, and we're hoping we can provide the stewardship to achieve its full potential."

Nelson, who has operated Fantastic Sams in Hawaii since 1997, set up a California company, TOC Inc., for the transaction. He did not disclose the price or the identities of the other investors.

Nelson said he learned of the opportunity through business associates. He called Hilo Hattie a strong retail company with an incredible history.

All retail operations and offices will remain open, and business should continue without interruption, Hilo Hattie said in a statement issued yesterday.

But John Reed, who stepped in as president and CEO in 2006, resigned from his position yesterday.

Nelson will assume the position of CEO. John Scott, formerly a senior vice president and general merchandise manager at Hilo Hattie, will be president.

Nelson did not indicate any other personnel changes at the company.

He said TOC was committed to making sure the company has the proper capital structure.

Nelson acknowledged today's challenging economic times but said, "I believe in Hawaii, and I'm sure that Hawaii will make it through these challenging times."

As for the flagship two-level store slated to open at the Royal Hawaiian Center in Waikiki, he would only say, "We're excited about pursuing that opportunity."

The opening of the 29,000-square-foot store was originally announced for early last summer but had been delayed till at least this November.

Currently, Hilo Hattie's headquarters, including a showroom, manufacturing center and warehouse, are at 700 N. Nimitz Highway.

Retail analyst Stephany Sofos said the sale comes as no surprise.

"Hilo Hattie's been going through a transitional period for the last 15 years," said Sofos. "In the last 10 years they've had three CEOs, and it's expanded and contracted. So overall, it appears they've been going through some growing pains."

But she said Hilo Hattie has a good business model, serving the low-, middle- and high-price markets.

"Once you stabilize your cash situation, then you have the ability to go forward," she said. "You always need to have new ideas."

Chris Resich departed from the presidency of Hilo Hattie in January 2001 and was replaced by Paul de Ville. De Ville was replaced by Reed in 2006.

In March, Reed told the Star-Bulletin the company was in discussions with potential investors about bringing additional capital into the business.

Hilo Hattie currently has seven stores in Hawaii and two in California. A Hilo Hattie store in Orlando, Fla., closed in March of last year, and a store in Las Vegas closed earlier this year.

Nelson, a principal of San Diego-based FS Hawaii Salons Inc., which owns 21 Fantastic Sams hair salons in Hawaii, said he would be focusing more on the islands.

Jim Romig first founded Hilo Hattie as Kaluna Hawaii Sportswear on Kauai in 1963. 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.

"I have the utmost confidence in TOC Inc.'s ability to successfully grow the company," said Romig. "I'm extremely proud of the reputation Hilo Hattie has built in the islands -- as a favorite place for local residents and visitors to shop for aloha attire, gifts and made-in-Hawaii products. The company will continue to share Hawaii's culture, warmth and aloha spirit with the world."