Lemonis my name is marcus lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change. Everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. Chuck lets take a look at this because this fits well. Mary ellen yeah, this looks great. Lemonis swim by chuck handy is a familyrun Swimwear Company focusing on plus sizes. Mary ellen how does that look . Chuck yeah, i like it. Lemonis chuck founded the company in 2010 when his wife, mary lou, complained that plussize swimwear was hard to find. Chuck i love the cut. Its very slenderizing. Lemonis chuck was one of the leading salespeople in the swimsuit industry for decades. But when he started this company, he appointed himself a designer. With his son and daughter at his side, swim got instant traction by focusing on plus sizes. Mary ellen how do you feel . Charlie i feel good. Mary ellen yeah . Lemonis but success was shortlived. Chucks colorful suits werent connecting with consumers. Mary ellen our traditional customer is a lot more conservative. This is just so leftfield. Lemonis . Leaving the business with even fewer dollars for inventory. Charlie im gonna have to tell her that were gonna be able to do business. So what the freak am i going to do . Lemonis today, with debt piling high and their life savings on the line, this Family Business is in danger of evaporating. Mary lou thats piss. Chuck bull[bleep] lemonis the u. S. Swimwear industry generates more than 5 billion. And with their focus on plus sizes, i see a giant opportunity, so im headed to their office in miami to learn more. Chuck how do we have a print like this, and someone is sending us this . Mary ellen i think youre barking up the wrong tree, trying to buy us out. Young male okay. You say, tomato. I say, tomahto. Lemonis whats happening . Im marcus. Mary ellen hi, im mary ellen. Lemonis mary ellen. Mary ellen nice to meet you. Mary lou mary lou. Lemonis mary lou. Chuck call me chuck. Lemonis chuck, nice to meet you. Chuck pleasure to meet you. Charlie charlie. Lemonis okay, so you guys are brother and sister. Mary ellen yes. Lemonis is this your dad . Charlie correct. Chuck c. E. O. , designer. Charlie when i go home, at the dinner table, hes my old man. Hes my dad. I love him to death. In business, its chuck because im going to get a little emotional. Lemonis and whos in charge . Charlie i kind of run the show. Mary ellen i mean, the loudest person usually does. Lemonis the loudest person. Charlie i think everyone can agree. Mary lou no. Mary ellen [ scoffs ] charlie everyone comes to me. Im the one person that you all communicate to. Lemonis and whose names on the door . Chuck oh, my name. Lemonis okay. Just wanted to clarify that. It doesnt say, swim by charlie handy. Chuck no. Lemonis do you have a Business Card . Charlie yes. Lemonis Vice President , thats you. And then. Mary ellen fit, tech production, and sometimes sales at the trade shows. Lemonis how about yourself . Mary lou im a teacher. Lemonis okay. Mary lou fulltime teacher. Lemonis this is a side job. Mary lou this is nights. Lemonis and so how did you get into the swim business . Chuck great question. Mary lou chuck got a job with another company to do their sale. They wanted to expand to their swimwear. He was there 20 years. He made a lot of money doing really well in sales, so he came up with a concept thats a swimwear with a matching coverup. And they didnt want that, so hes always had this dream to have his own company with his children working with him. Im overweight, and i always used to lament, theres not fashion suits for larger women. Chuck recognized that, so he said, lets focus on this because our idea, everything has a matching coverup. Chuck ive always been designing for her. Lemonis very cool. So is this everything . Charlie this is it pretty much, this is the office. Lemonis and what happens in here . Who works here . Mary ellen i live in new jersey. My dad, my mom live in new jersey. Lemonis were in miami. Mary lou were from miami. Chuck and i met in high school. Were high school sweethearts. Lemonis okay. Mary lou chuck, in 1976, went to new york because his family had a swimwear business, and then, i moved to new york. And we always thought we would come back here. Lemonis and why havent you . Mary lou because i have the job. I have the income. I have the health insurance. Lemonis so why doesnt the business move to new jersey if you guys cant move . Mary ellen my brother was here. He went to college here. He stayed here. It just was convenient at the time. Mary lou and we just kept it here. Chuck yes. Lemonis okay. Any time you split the operations in different cities, youre potentially gonna have a high level of inefficiency. Also, typically, the fashion world is either east coast, based in new york, or west coast, based in los angeles. And so one of those two choices isnt miami. Can i see the product . Is there a warehouse or something . Mary ellen yes, yes, yes, yes, yes. This is the warehouse. Charlie this is where we bring all the merchandise in from china. Lemonis and then, in new jersey, are there offices . Mary lou in our home. Lemonis so this is the only office. Mary lou correct. One of the things we set up here is a trade show booth. Charlie you see this tradeshow booth . This guy does it. I do it with oneday laborer. I bought it all at ikea. I picked it out myself. Lemonis okay. One of the ways that you can differentiate yourself from your competitors is by having a tradeshow booth that really elevates the brand. It creates an environment for the buyers to visualize it in their store. But when i see lawn furniture and lattices and poor lighting, well, its no wonder why theyve struggled. Lemonis do you guys have anybody that could try this stuff on . Id like to see how it fits. Charlie were gonna show you this one sample. Lemonis how are you, maam . Chuck the nice thing about this suit is that its more towards atleisure wear. Lemonis how comfortable is it . Be honest. Woman oh, i like it. Its very sporty. Lemonis theres two things that i wanted to think about when i looked atswimsui what the fit and the shape and the material was gonna be like. Mary lou were very proud of our fit. Lemonis is it comfortable . Model yes, very. Lemonis . And then what the prints and the colors would look like. Do you like this suit . Model i like that its highwaisted. Lemonis the prints, in my opinion, they were hideous. The Color Palettes seem somewhat outdated, and when you look at current designs, it looks like these prints are from 10 years ago. Honestly, the beautiful model saved the bathing suit. Which one of you determines the print . Mary ellen dad. Lemonis and which one determines the Color Palette . Mary ellen dad. Lemonis and what do you use to determine your Color Palette . Chuck i do a lot of shopping. We shop neiman marcus. We shop bloomingdales. We shop nordstroms. Lemonis but youre a season late because those trends are now. Chuck gets inspiration by visiting a retail store. Well, whats on the shelf now is from a year ago. Colors change, styles change. Whos going to want to buy last years print . Nobody. This is a traditional swimsuit. All right . What does this cost to make . Chuck now, thats cost us 9 landed. Lemonis 9 landed wholesaling for . Mary ellen 23. 50. Lemonis what does Something Like this sell for retail . Chuck 109 . Lemonis 109 . Are you selling for too little . Mary lou he sells it too cheap. He gives them a deal. Lemonis if a retailer sells a bathing suit like this one for 100, they would expect to buy it wholesale for around 50. Instead, chuck is trying to create this firesale atmosphere, luring them to the product by selling it for 23. 50, essentially walking away from an additional 26. 50 of gross profit on every single unit he sells. While im in favor of the retailer making more money, im also in favor of the company that im considering investing in being profitable as well. So where is the rest of the inventory . Charlie right over through here. Lemonis but its in this warehouse. Charlie yes, everything is kept here. Lemonis so that, on the wall, is the entire Company Inventory . Charlie mmhmm. Lemonis so how much should be in here . Mary lou oh, a lot more. Lemonis how much should be in your inventory . Chuck normally, 25,000 pieces. Lemonis 25,000 minimum. Chuck normally, yeah. Lemonis and how many pieces are in here . Charlie 800 pieces. Lemonis and you cant afford the inventory to make it work. Charlie correct. Lemonis if you want to clearly see the consequences of poor margins, just look around this room. This company has virtually no inventory. This scares me. Why are you here, ultimately . Mary ellen im here to help my dad, and i want to be cuttingedge in design. Lemonis whats your professional background prior to here . Mary ellen i was a tech associate, technical designer for dressbarn. Lemonis you were designing. Mary ellen yep. And i went to school to be a designer, and thats kind of where my heart is. It was sad it was sad to leave that because i really did want to try and lemonis why did you leave . Mary ellen i wanted it for him. Im the one thats in new jersey. I see my parents struggle. Financially, my parents have no money left to put into the company. Its really hard. Lemonis it is hard. Mary ellen you can ask any of my family members. My dad always picks up the tab. Hes the most generous person youll ever meet. Like, i dont want that stress on them anymore, you know . Its hard on me because i just. I want it to work so bad. Lemonis yeah. Mary ellen brings a high level of process and understanding of what it takes to be in the fashion world. Chuck doesnt have a process. His idea is that hes gonna go to a Department Store and copy ideas that are hanging on the rack and then go try to peddle them to the same buyers that bought the product six months ago . Wrong process. Your brother seems like hes got some energy. Mary ellen [ laughs ] thats a way to put it. Lemonis how do you guys communicate . Mary ellen not as effectively as id like. He doesnt understand how much work goes into what we did. I mean, hes in miami, in south beach. I dont know. Lemonis maybe going back home would be, not only good for business, but it would be good for him, potentially. I want to sit down and go over the financials. Okay . Mary ellen yep. Lemonis so lets look over 2015 first. Lemonis 2015, you made 759,000 in sales, 253,000 of gross profit, which is 33 , which is terrible. The total expenses are 289,000, which leaves net income of negative 36,000. 2016, you made 777,000 and lost 40,000. I mean, you guys are essentially out of business right now. Chuck its immeasurably hard, and it isnt that its hard on me. I know its hard on her. Mary lou no, its not. Chuck and thats what hurts me the most is that i know im letting her down. Mary lou no, its not. Chuck it is, and thats what hurts me the most. Mary lou its very hard for a man not to be the main provider. You know, he does everything for us, and im just very upset about that. If he didnt work, then itd be one thing, but he works 24 7. Lemonis i just need to dig into the numbers. Im going to take the numbers with me. Mary ellen of course. Lemonis it clearly is a family effort. I leave here inspired by your story. Chuck thank you. Mary lou thank you so much. Lemonis nice meeting you. Very nice meeting you. Thank you. The Financial Health of the company is definitely a red flag, but i love the space that theyve identified in the void in the market, and you cant buy or teach passion. What i have to determine is what do i think the business is really worth and what do i want to get for it because the risk here is high. But if it works, the payoff is huge. I was originally attracted to this business because i saw a company that is familyowned that decided to enter the plussize market. But the business doesnt have any working capital to speak of. Its done 3 4 of a Million Dollars two years in a row, and its lost about 40,000 each year. Theres no inventory. Theres no real design process. What is here other than a fantastic idea with a proof of concept . Mary lou [ sighs ] this has been his dream. It is very hard. Chuck its not easy for me taking you down. Believe me. Mary lou youre not taking me down. I took myself down. Chuck no. Mary lou i made choices. I made decisions. Mary ellen they have put their finances into running this company, and im not gonna stop until something finally breaks. You cant just put everything and then have nothing to show for it at the end. I dont want to see you guys lose everything. Mary lou i dont want you to worry about me. Mary ellen it just cant all be for nothing. Chuck its a struggle just to survive to pay bills. Lemonis thats a lot of pressure on you. Chuck oh, its insurmountable. Lemonis its not insurmountable. Its overwhelming. I do think the Business Needs structure. Who is the boss of the Business Today . Chuck well, thats its really me. Lemonis you are . Charlie i think so. Mary lou [ laughs ] mary ellen i respectfully disagree. Charlie i have to. I bear the brunt of a lot. Mary ellen i respectfully disagree. Charlie you mary ellen no. Sorry. Charlie okay. You can respectfully disagree. Mary ellen the boss is the person whose name is on the door. Charlie that, luckily, its my name, as well. Lemonis coming up. What do you thinks gonna go wrong . Mary lou i dont want them to screw up so much. And im afraid. Im afraid. Lemonis listen, listen. Listen. Mary lou and im afraid. They dont understand. Im afraid. Charlie okay. Mary ellen all right. The calming scent of lavender by downy infusions calm. Laundry isnt done until its done with downy. Why do wrinkles happen at the worst times . With new bounce rapid touch up spray, you just spray smooth and youre fresh and ready to go wherever you are. New bounce rapid touch up spray. Bounce out wrinkles anywhere. Charlie you can respectfully disagree. Mary ellen the boss is the person whose name is on the door. Charlie that, luckily, is my name as well. Mary lou [ laughs ] chuck i disagree. Lemonis whos the boss . Chuck me. Lemonis okay. I want to, kind of, get to the point, okay . The business doesnt exist today other than a fantastic idea with a proof of concept. Im intrigued by serving a market that i think is underserved. I want to do business with you guys. Mary lou you do . Chuck im listening. Lemonis my offer is 650,000 for 55 of the business. And, to be crystal clear, ill be the boss. Charlie im okay with that. Lemonis . Not you. Charlie thats fine. Lemonis . cause i have no problem firing your ass. Charlie thats fine. Go for it. I would love it all day. Lemonis and i may even give your sister permission to fire your ass. Charlie hustle me as hard as you can with this. Lemonis so i see the 650,000 making the company debtfree and making sure the company has access to capital to buy inventory. And we want to make sure we have a good amount of money for Product Development cause this business cannot solely be in the womens bathing suit business. I think the company also needs to have an office not in miami, not in your home with a showroom of some kind, and you can show people things. Mary lou like you always did, honey. Lemonis you can have designers. Mary lou youre right on target. Lemonis so. We have a deal . Chuck we have a deal. Mary lou i do the hug. Lemonis okay. Mary lou mama hug. Lemonis okay. Mary lou thank you. Lemonis we have a deal . Charlie we have a deal. Mary ellen absolutely. Lemonis thank you. Chuck thank you. We wont let you down. Chuck, this is great. Lemonis ill see you guys in a little bit. Mary lou okay, thank you. Lemonis hi, guys. Mary ellen how are you . Lemonis how are you . Mary ellen good. Lemonis fashion happens both on the east coast and the west coast, so i wanted the family to come out to my l. A. Showroom where some of my fashion brands are. Its clear to me that theres a real flaw in chucks design process. His idea of roaming the aisles of a Department Store isnt exactly research and development. So the first step in getting this done is to have a focus group. Charlie hey, guys. Stephanie hello. Lemonis so this is really all about doing research. I brought in the president of my entire fashion group. Her name is stephanie menkin. Were gonna get some feedback from all of our participants. What i want to hear from these ladies is what they think of the colors and the fabrics and the sizes and the patterns. And then, i want to take that information and actually put it into action. All right, were going to bring the model. If the model can come in, that would be great. Chuck so this is a suit i designed. It has adjustable straps. Its a scoop front. It has a matching coverup that we ship with it. Lemonis what do we think of the print . Woman 2 for me, i would totally love that pattern with a full black suit. Woman 2 . Or that suit with a full black exterior. Lemonis do you like the fact that its sold as a set, or would you prefer it individual . Woman 2 i dont dig buying anything as a set, personally. I dont know. I like the option of being able to mix and match. Woman 2 i think you have an opportunity to make more money by offering mix and match. Chuck see, i would tend to disagree with you. Many major labels that are currently being sold right now on one website, were just killing them all because of the set. Lemonis lets bring in the next model, please. Woman 2 i have to say one thing about the matching prints. They dont really match perfectly. Its a little off. Woman 3 the color blocking, just a little hint of the blue right in, you know, that area. [ laughter ] stephanie yes. Lemonis so that, to me, is a design issue. Lets bring in the last model. How are you . Woman 4 good. How are you . Lemonis how does the bathing suit feel . Woman it actually feels really good, and it has full coverage in the back, which i do appreciate. Lemonis is there anything you dont like about it . Woman 4 the biggest thing would be maybe, like, the pattern because its just a little much. Lemonis who doesnt like the print . Woman 1 i think, right now, that the patterns are speaking to an older crowd. Woman 5 i agree. Maybe not a grandmother, but in someone in that age range, i agree, might like that. Woman 1 i agree. Woman 5 they like the brighter patterns. But someone younger. Lemonis on a scale of 1 to 10, how do you feel about the prints . Woman 6 im at a 3. Woman 1 5. 5. Woman 5 im agreeing 5. Lemonis 5 . Woman 7 4 or 5 for me. Woman 2 2. Stephanie im with you. 2. Woman 8 you said, swim by chuck, right . Lemonis chuck handy. Woman 8 so if i hear swim by a guys name, i might start thinking, why is he creating swimsuits . Mary lou what about michael kors . Woman 8 but michael kors is a purse versus a s