THE NEWEST KNIGHT SIR PAUL SMITH
Byline: James Fallon
LONDON — Paul Smith has a new knighthood but not a new owner.
The designer was knighted by the Prince of Wales at Buckingham Palace last Friday for services to British fashion. The honor, which was awarded in the Queen’s birthday honors list in June, came as Smith continues to explore options for future funding and expansion of his company.
“It’s exciting,” the designer, who can now call himself Sir Paul, said of his knighthood. “The only problem is that I had to wear a morning suit and I looked like a monkey.”
The irrepressible joker in Smith then added: “But at least the sword didn’t slip and cut off my head.”
As reported, Smith appointed Morgan Stanley Dean Witter this summer to identify the possible alternatives for the future of his company, including a partnership, joint venture or even an outright sale. Since then, he’s spoken with most of the world’s leading luxury and fashion groups, including LVMH Moet Hennessey Louis Vuitton, Gucci N.V. and Texas Pacific.
A Smith spokeswoman Wednesday denied published reports that the designer is close to selling 25 percent of his company to LVMH. “It’s absolutely not true,” she said. “No decision has been made. Paul announced that he’d appointed Morgan Stanley and they still are looking at the possibilities.”
The designer told WWD in early September that he expected Morgan Stanley to issue its conclusions this winter. However, it now looks unlikely that deadline can be met, sources said.
Smith, 53, is the U.K.’s most successful designer with annual sales of more than $275 million. (Dollar figures are converted at current exchange rates.) The bulk of his sales are in Japan, where he operates more than 200 stores under a licensing deal with Itochu. His women’s wear line is sold under license with Onward Kashiyama. Smith also has 10 freestanding stores in the U.K., one store in New York, one in Paris and soon will open a freestanding store in Milan.
He’s repeatedly stated that his company would make an ideal investment for one of the world’s luxury groups since it has no debt, owns all the freeholds of its stores and is underdeveloped in the U.S. Smith’s New York store sells only his men’s wear, which he also wholesales in America. His women’s wear is sold in only a handful of U.S. stores, including Nordstrom’s in Chicago and Bellevue, Wash., and Kirna Zabette in New York. Smith hopes his brand will be boosted by the launch this fall of women’s and men’s fragrances under a licensing deal with Inter Parfums. The fragrance also has been launched in the U.K., where it has sold more than $5 million at retail in the last four months — six times projections, sources said.
Smith, who owns his company with his wife Pauline, has repeatedly stated he’s eager to guarantee its future for when he might retire. His goal is to find a company willing to take a minority stake in his company, while providing it with the backing and expertise needed to open more stores in the U.S. and continental Europe plus expand his women’s, children’s and jeans collections as well as accessories. The investor would then gain financial and management control once Smith retired.
But industry observers believe this model might not be attractive to a group like LVMH or Gucci, which would be eager to gain full control as quickly as possible to maximize the return on their investment.