South Moon Under, the Berlin, Md.-based fashion retailer that got its start as an Ocean City surf shack in 1968, has new owners that plan to turn the small regional chain into a national brand.
A management team that includes the founder of White House Black Market, a Baltimore-based retailer that was sold to Chico’s in 2003, bought a majority of South Moon Under in March along with private equity group JPB Capital of Columbia. South Moon Under’s founder, Frank Gunion, remains a member of the retailer’s board of directors.
The chain will move its headquarters from Berlin, outside Ocean City, to Annapolis in August.
Michael Smith, the new CEO, said management plans to grow from 24 stores and $50 million in revenue to 60 to 80 stores and $100 million in sales over five to seven years, with the first new stores slated for South Florida next year. The chain now has locations mostly in the Mid-Atlantic region, from Westport, Conn., to Richmond, Va.
“The growth trajectory has been a very slow one,” Smith said. “We came in and saw this as a very strong brand with a loyal customer base, and it has the potential to become a national brand. … We’re uniquely positioned in the fashion business with our women’s assortment. We have a very strong relationship with our customers.
“Retailers run into trouble when they lose track of who their customer is,” he said.
Smith expects to increase online sales from 10 percent to more than 25 percent. The retailer, which now employs more than 300 at its stores and 75 at headquarters, will hire a design team and increase its private-label fashions. The company plans to hire executives, mid-level managers and staff in merchandising and marketing.
South Moon Under’s target customers are women in their early to mid-30s who want trend-appropriate fashions, Smith said.
Smith is joined in the management team by his wife, Patricia Darrow Smith, chief creative officer, who founded White House Black Market in Baltimore in 1985. The chain was sold to Chico’s in September 2003, and the Smiths stayed with that business until 2008.
Gunion, who was studying international relations in college in 1968 when he decided to open a shop at the beach, started South Moon Under selling handmade surfboards and swimsuits. The company has grown into an upscale chain known for sophisticated fashion.
