Profitable and with its own flock of sheep, CombatGent adds denim alongside suiting aiming to own the men's closet

By Michael Carney , written on July 18, 2014

From The News Desk

You know you’re serious about delivering fine menswear when you go out and buy a flock of sheep.

Irvine, California-based CombatGent is more than a year into this vertical integration experiment and now owns 67 sheep, which are managed and sheared four to six times per year by one shepherd. The wool is then spun into fine thread, woven into fabric, and sent to the company’s factor for cut and sew production.

CombatGent now sells more than ready-to-wear 10,000 suits and tuxedos per month. It crossed “serious” long ago.

Founded by the two cousins, Vishaal and Mo Melwani whose parents are multi-generational Versace tailors and retail shop-owners, suiting is in their blood -- and in their bank accounts: At $160 per suit, CombatGent is running at better than a $1.6 million per month run-rate on this product line alone.

Since its earliest days, the brand has also offered men’s dress shirts and ties. But recently, the company has upped the pace of product development, rolling out Japanese selvedge denim and modern chinos in back-to-back months in Q2. Each line was years in the making, with products sourced from around the world and manufacturing relationships established and optimized.

The Melwanis had chosen to move at a deliberate pace, for fear of confusing their customers about what the CombatGent brand stands for. This is still a fine menswear company. Nonetheless, CombatGent sold out of its first production run of 1,800 pairs of denim in just three days. Having tested a pair myself, I’m not surprised. These jeans are fantastic. And at just $70, they’re not a hard decision for the company’s customers to make. Nevertheless, the Melwanis stuck to their look before you leap ethos.

“We took one of our denim samples to [our investor] Tony [Hsieh*] early on and he was like, ‘Take your time, it’s all about having people understand your ethos. You have to hone in on who your customer is, what they want, and prove out the value proposition,’” Vishaal, the company’s CEO says. “We decided to become the kings of the suit world and see how fast we could grow that SKU before expanding.”

Unlike many of its direct and indirect ecommerce competitors, CombatGent has been cautious with paid marketing and what Vishaal describes as irresponsible growth. Instead, the company has installed brand advocates in Wall Street investment banks and throughout the wedding industry, and pursued B2B relationships providing hotel uniforms. As a result, the company’s suiting line has taken on a life of its own. This spring, the two-year-old company decided it was finally ready to branch out.

“The denim sold so well well because people were waiting for it – we told them it was coming – but also because we mastered one of the hardest outfits of all – suiting. They believed our denim would have to be just as good,” Vishaal says. “We’re not trying to ‘disrupt denim.’ Levis will slap you in the face if you do that. But we’re positioning this as an add-on. The same customer who buys our suits and workwear, will buy these additional products to complement their wardrobe. We think of them like sub-markets that we’re getting into. But we haven’t forgotten why we created the brand.”

Repeat buying activity is healthy, according to Melwani, but most of the company’s growth is coming from new customers who generate some 65 percent of all revenue each month.

“That was one of the big reasons to hold back on introducing new products,” Vishaal says. “If we’re still teaching the brand, we have no right to start introducing new confusion. But that said, our LTV [customer lifetime value] is increasing.”

There’s more than farm animal innovation going on at CombatGent. The company has also developed a proprietary order management and enterprise resource planning (ERP) system which it’s rolling out to its factories. Six of its 13 factories are already using this Tower system, which allows the company to send live order data to its supply chain, making just-in-time manufacturing a possibility and reducing the amount of inventory it needs to keep on hand. The company is also moving its pick, pack, and ship operation from Southern California to Kentucky later this summer in an effort to shore up its logistics as growth continues.

CombatGent also introduced a companion app called Haberdash in February to help men find and order on-demand tailoring to their home or place of business. The platform is limited to San Francisco, currently, but should expand nationwide over time. “We’ve seen a 22 percent lift in CombatGent sales in SF since launching Haberdash,” Vishaal says. “There’s no question it’s working. It’s just a matter of us focusing our limited resources.”

CombatGent is looking to be the modern answer to Nordstrom, JCrew, and Men’s Wearhouse all rolled into one. It’s decidedly not fast-fashion, so don’t expect monthly discovery boxes or personal stylist-powered showrooms. The company just wants to become the brand that men know and trust, around which they can build a versatile, quality wardrobe.

Profitable today on just $1.8 million in Seed funding – expect news of a follow-on round in the next year – the Melwanis are still competing with a number of larger, more well-funded brands like Bonobos and Indochino, not to mention the traditional brick-and-mortar crowd. Remaining efficient and thoughtful in the way the company pursues growth is of paramount importance.

“Too many ecommerce brands fall in love with their logo and want to see it on everything,” Vishaal says. “It ends up being confusing to the customer and the business ends up with a warehouse full of unsold stuff. We would much rather focus on having our customers fall in love with our logo.”

There are a number of big product innovations slated to come out of CombatGent over the next year. At the top of the list is made-to-measure suiting, which will cost roughly twice the company’s extreme value priced ready-to-wear. The company is also getting a ton of requests for shoes and professional luggage, Vishaal says. They’re evaluating both categories as we speak, but in the meantime refer customers out to friendly brands like Jack Erwin. Just don’t expect the Melwanis to lose sight of the big prize that is suiting.

“It’s very easy to get wrapped up in irresponsible growth, but the little problems get big fast at scale and can break you,” Vishaal says. “We’re still growing faster than most of the brands around us.”

[*Disclosure: Hsieh is an investor in Pando.]

[image via CombatGent]