Ted Poulas is holding his breath.
Not because his cummerbund is too tight, but because after 28 years in the formal-wear business, he’s seen how a weak economy and a world at war can put the squeeze on his industry.
“Everything could be perfect, then you have a weakened economy and what happened on Sept. 11, and that has a triple effect on a business like this,” says Poulas, president, CEO and owner of Ohio Tuxedo, a long-established enterprise made up of 23 stores in Ohio and providing jobs for, on average, about 100 people.
Poulas relives what happened in 1991 when America went to war in the Persian Gulf.
“Ohio is about the third-largest Reserves state in the nation, and when they called up our men and sent them overseas back then, a whole lot of weddings were cancelled,” he recalls. “When they came back, instead of having the big wedding they’d planned, they went to the justice of the peace.”
When weddings account for 72 percent of your sales, that’s quite an impact, he says.
“Besides the war we’re in now, there have been so many layoffs and downsizings, and people are ambivalent to get married when they’re not employed,” Poulas says.
The current state of the nation gives many CEOs, especially an entrepreneur in the formal-wear industry, cause for great concern. Ohio Tuxedo claims 60 percent of the market share in the Akron/Canton area, 35 percent of the Cleveland market and 40 percent in Columbus. (American Commodore has some influence in the Akron/Canton market; in the Cleveland market, there’s Ohio Tuxedo, American Commodore and Tuxedo Junction. In Columbus, Ohio Tuxedo competes with three other big chains.)
Although economic and other factors have constricted the immediate purchasing plans of Poulas and his competitors, this entrepreneur has brainstormed new ways to keep his black-tie business in the black.
From the ground floor up
Poulas had just graduated from Ohio University when he joined Ohio Tuxedo as a sales clerk in January 1974. Back then, he never imagined he’d help build the business to an enterprise he’d one day own.
The company sprouted in 1954 as Ohio Cleaners, a dry-cleaner and furrier founded by Earl Broida of Akron. Spotting a rare market opportunity, Broida introduced tuxedo rentals a year later and changed the name to Ohio Tuxedo.
“It all came about when a friend of Earl’s asked if he knew where he could rent tuxedos for his daughter’s wedding,” Poulas says. “Earl couldn’t find any place that did, so he purchased some tuxedos from a manufacturer in New York, rented them to his friend, then decided to buy more tuxedos and market that as a sideline business.”
By the late 1960s, the Broida family had expanded the company to two stores in Akron and one in Canton. Ohio Tuxedo crept into the Columbus market in 1973, and a year later, Poulas started part time there. A year-and-a-half later, he became store manager.
From the start, he had a passion for the business and a fondness for his employers, who capitalized on his ardor and work ethic, teaching him every aspect of the business. Making his way up in the company, Poulas rose from store manager to district manager, and was promoted to vice president in 1984.
At that time, he was 33, and Ohio Tuxedo had grown to eight stores.
Five years and four more stores later, the company moved its hub of operations from North Main Street in Akron to the current offices and plant off Pershing and West Market streets. That’s when Poulas relocated his wife and two sons to Akron.
“Until then, I was commuting at least three days a week between Columbus and Akron,” says Poulas, now single.
In 1990, Broida passed away, and his son, Mark, stepped in as major stockholder. Within a few years, the son decided to sell the business to Poulas.
“I second mortgaged, begged and borrowed from everyone I knew,” Poulas says, revealing that, rather than taking out a business loan, his brother, a successful Sandusky architect, was his greatest financial backer in the five-year buyout plan.
When Poulas bought Ohio Tuxedo in June 1997, the company had 17 stores and sales of about $3 million. Today, it’s a 23-store operation with $5.2 million in sales. There are three locations each in Akron and Canton, one each in Kent and Medina, five in Columbus and 10 in Greater Cleveland, Elyria, Mentor and Wooster. This summer, he made the final buyout payments to both his brother and Mark Broida — one year ahead of schedule.
“The final payment was supposed to be next year, but our business has been going in such a nice direction that I was able to pay out the final installments this year,” Poulas says.
And then, the economy happened.
Man with the plan
Considering Christmas is the No. 1 engagement season of the year, followed by Valentine’s Day, the period between Dec. 26 and the end of February will in large part determine how much Poulas can expand his inventory for 2002.
“That will give us an indication of how many weddings we’re booking on paper for next year, and whether we’ll spend more money on different product,” he says.
Despite the current economy, Poulas has found ways to stay competitive in an industry that’s greatly impacted by numerous factors.
“In the formal-wear business, we operate at a high degree of fixed expenses, the largest of which is salaries, rent and costs of goods,” Poulas says, “so there’s not a lot you can do to control your costs.”
One way manufacturers are doing that is by capitalizing on labor costs overseas. Poulas says that in his industry, even designers such as Perry Ellis and Ralph Lauren have gone that route.
“I can buy the same product for 40 percent less than what I used to buy it for in America,” he says. “So about the only way we’ve been able to cut expenses is to look for offshore goods.”
With few other options to control costs, he has found ways to generate greater revenue. One way is by expanding his market share.
For example, he decided to enter the career apparel business a few years ago. He negotiated a deal to provide the blazers, skirts, shirts and ties for front-desk employees of hotels including Cross Country Inns (all 24 of the hotels in Ohio), as well as the Holiday Inn at Rockside in Independence and the Radisson Inn at Montrose, among others.
Ohio Tuxedo also provides coats, trousers, shirts and hats for security personnel of The Cleveland Clinic’s parking unit.
“Because of what’s happening with our economy now, we’re brainstorming with our district managers, trying to find ways to bring in new types of business,” he says.
Poulas isn’t just beating the paths on career apparel. He’s approaching banquet facilities, restaurants and hotels to diversify into table linens.
“For us, this is horizontal integration,” he says. “We already have the facility to do all this cleaning, so we’re not incurring additional costs.”
Poulas has also broadened his horizons by dry-cleaning marching band uniforms for area high schools.
“Dry-cleaning the band uniforms doesn’t generate a lot of income, but it does create goodwill and brings us exposure to the high schools,” Poulas says.
And where there are high schools, there are proms. Poulas says his sales (formal-wear rentals) pie chart is made up of weddings (72 percent), proms (25 percent) and other social events (3 percent).
The king’s new clothes
Considering the cost to rent formal wear for just a few hours, quality and service are crucial.
“We emphasize to our employees that when a customer pays $80 to $110 to rent a tuxedo for a few hours, we have to make sure everything is impeccable and we must treat the customer like a king,” he says. “That’s especially important because we want our grooms’ ushers to be our future customers.”
Although Poulas provides constant training and offers incentives for quality production in the plant and excellent customer service in the stores, his greatest challenge is that times have changed.
“We can preach service until we’re blue in the face, and not to discredit any of our employees, but it’s a sign of the times that some workers don’t have the same drive and work ethic we had when we were younger,” he says. “So we try to find seasoned people to run our stores.”
In addition to experienced managers who supervise the two to three employees at each store, Poulas looks to his three district managers and a regional manager who oversee the locations. At his manufacturing facility, he relies on his plant manager, who has 24 years tenure there, and the office manager, who’s been with the company 14 years. Together, they supervise the 35 people who work at the plant and in the office. Still, the challenge to manage employees intensifies during busy season, when payroll swells to about 120.
In contrast, quality is something that’s more easily controlled at Ohio Tuxedo.
“In tuxedo jargon, we use a term called ‘turn analysis’ — how many times you can rent a tuxedo before you should take it out of inventory,” Poulas says. “To keep our stock looking great, if a manufacturer suggests that a jacket can be worn and dry-cleaned 50 times before it’s pulled from inventory, we take it out of circulation after 40 or 42 dry-cleanings.”
Poulas owns his entire stock of about 15,000 tuxedo coats, 20,000 pairs of trousers, 25,000 to 30,000 shirts and thousands of accessories — quite an inventory to maintain. In addition to purchasing only tuxedos of superior material, Ohio Tuxedo assures quality by way of its 22,000-square-foot warehouse, dry-cleaning and repair facility.
“We assemble all our tuxedos here and dry-clean everything on site so we can inspect our own garments for quality without relying on a third party, to make sure there are no spots or stains,” he says. “If we get a piece back that has a tear or hole, we replace the whole front panel of the tuxedo.”
Men in black
Poulas says his memberships and ties to trade and business associations have also been beneficial for business. For example, he’s president-elect of the International Formal Wear Association, composed of hundreds of tuxedo companies and formal wear manufacturers, and president of the Stow-Munroe Falls Rotary. Those associations have cemented alliances with industry entrepreneurs such as Frank Simone Jr., owner of American Commodore.
“Even though we’re competitors, if either of us has a problem or we need something for our customers, we’ll call each other,” Poulas says, emphasizing that the affinity is good for the industry itself. “If we’ve already booked a wedding and can’t deliver on something, we don’t want to compromise someone on the most important day of his life — because that will give our industry a black eye. So we help each other out.”
Poulas says that at some point, his older son will step into his shiny shoes and take over Ohio Tuxedo. Now 19 and a freshman studying business and marketing at The University of Akron, Gregory Poulas knows those shoes won’t be easy to fill. (Perhaps 17-year-old son Stephen knows that, too, because he’s aiming instead for a career in filmmaking.)
“It won’t be easy for Gregory, because he knows that if he wants to take over this business, he has to raise the bar to a level I’ve not been able to reach,” Poulas says. “I’ve told him he has to look at it like, ‘What works today may not work tomorrow.’ Because in this business, he can’t come in with the same business plan I’ve laid out.
“You must be ever-changing to top your competition.”
How to reach: Ohio Tuxedo, (800) 968-5199