Paul Smith comeback under way as strategy shift powers men's and women's sales

By

Sandra Halliday

Published
May 14, 2018

Sir Paul Smith said his business is on the comeback trail after six years of shaky performance with the designer admitting that he made mistakes but is now putting them right. The result is that orders are rising, his suit sales are bucking the casualisation trend and womenswear sales are rising strongly.

In a Sunday Times interview, to coincide with his 24th appearance on the newspaper’s annual Rich List, the 71-year-old said that the brand lost its “sense of surprise” and “fun’ after he ceded design control three years ago to the label’s first creative director, Simon Homes. The former head of menswear was given the job by Smith “partly because of my age,” he said. 

He also said that the company over-diversified with too many sub labels such as Paul Smith itself, Paul Smith London, Black Label, Jeans, and PS.

Sir Paul, whose net worth this year puts him and his wife in 480th place on the Rich List with £480 million (£22 million down from last year), may have kept his place on the list but the strategy saw net profits in the 12 months to June 2017 last year freefalling down to just £2.1 million, even though turnover was up 3.5% to £184.9 million.

He said the collections became too minimalist and he was also paying “silly rents” for some of his stores. But refining the offer down to the Paul Smith and PS labels, closing some stores and cutting a number of jobs in both London and Tokyo was the right thing to do for the company’s future. He also took back design control.

“It was a brave thing to do. I knew I would muck up the turnover for a while and the profits would go down,” he said. “And they did. But anybody who’s honest with themselves, not a bullshitter, knows that you’ve got to be brave. Sometimes you have to go backwards to go forward.”

But he said the company also suffered as the industry itself changed with fewer independent retailers as giant retail chains grew (and continue to grow) at speed, to spread around the world “and kill [independents], sadly.”

RISING SALES

However, the changes seem to be working and orders for the next two seasons are up 10%-11%, while sales are 10% up,” he said. And despite the move towards more casual dressing, he said suits are doing particularly well.

“Yes, the suit around the world is in decline, except for Paul Smith. Suits are great, but you have to show them in a different way now,” he said. “A tailored jacket with a casual trouser. Fashionable tailoring, I call it.” 

Importantly too, womenswear sales are up 20% and he’s now opening new stores in Germany, Denmark, South Korea, South Africa and in the UK.

Smith said that this new expansion phase isn’t just about a new strategic approach but is also a reflection of new customers switching to the brand. He said Millennial shoppers are increasingly drawn to labels with a unique signature and a USP, but a more evolutionary approach to fashion rather than trends changing every season.

They like labels “like us that have a consistent style and [are] independent, British and personal. A lot of people seem pleased that Paul Smith is still owned by somebody called Paul Smith who’s here every day,” he explained.

The company is 60% owned by Sir Paul and there appears to be no intention to ever make it part of a giant conglomerate. But despite returning to the design helm, he’s starting to think about succession plans. “I’m not going to be around for ever. I’ve learnt my lesson about stepping aside, but what I can do is slowly give away aspects of my job,” he said. “I’ve got a very good marketing team, a very good head of retail, a very good financial director and managing director. I’ve got two or three designers that I’m very confident with. At the moment, it’s helpful that I direct. But if I wasn’t around tomorrow, the company could keep going.”