Mossimo Giannulli has big plans for Paul Frank Industries Inc.
Giannulli, known for his clothes sold at Target stores, took a stake in Costa Mesa-based Paul Frank last year, along with other investors.
The investment came as part of a lawsuit settlement with namesake founder Paul Frank Sunich, who left the company and sold off his stake.
The company denied Giannulli’s involvement,a public secret in apparel circles in late 2007,until the deal closed in January.
In March, Paul Frank made news when it said it granted rights to its designs to Australia’s Creata, known for its work promoting products from McDonald’s Corp., Kellogg Co., Nestl & #233; SA and Coca-Cola Co.
Giannulli, who started designing surf-inspired clothes in 1987 from Newport Beach, helped spearhead the deal with Creata.
The move has some parallels to Giannulli’s own deal struck in 2000 with Target Corp., which helped get his Santa Monica-based Mossimo Inc.,now part of New York’s Iconix Brand Group Inc.,out of hard times.
Van Nuys-based Cherokee Inc. brokered the deal between Mossimo and Target.
At the time, Mossimo shifted from making its own clothes to licensing designs, which is what Paul Frank intends to do with Creata.
“Through my dealings with Target, I immediately saw that product can be fantastic at a lower price point,” Giannulli said. “Just because something is more expensive doesn’t make it better.”
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Julius, other characters: company’s hallmark |
Giannulli also has helped Paul Frank restructure, including the company’s laying off some 20 workers last year after it missed sales targets.
“Paul Frank staffed up, expecting some things to hit that simply didn’t,” Giannulli said.
The company, which makes clothes and accessories featuring its Julius the monkey and other cheeky cartoon characters, has yearly sales of about $40 million and some 100 workers.
Julius “has global appeal” and “giving him the legs he needs to captivate a worldwide audience with a cache of products is an exciting business opportunity,” Giannulli said.
Giannulli and other Paul Frank executives spoke with several companies about licensing, he said.
Creata’s “design sensibility and successful history in branding stood out as being a great match for Paul Frank’s business strategy,” Giannulli said.
In an interview last fall, President Ryan Heuser said the company wanted to make a bigger play in licensing so it could grow without raising money to do so.
“We look to great companies like Disney, Sanrio and Apple to apply their methods directly to our business model,” he said.
Paul Frank already has 10 licensees that make a range of wares, including sunglasses, watches, bicycles and bedding.
Paul Frank plans to handle design and marketing and give licensees “creative direction and maintain the brand’s integrity,” Giannulli said.
The company is set to continue making clothes through late 2008, he said.
At that time, things will shift to licensees, he said.
“We are looking forward to better margins for our retailers, better quality and better deliveries,” Giannulli said.
The change means Paul Frank will downsize, keeping about 15 workers, according to Giannulli.
“But that could change,” he said.
The company is “working diligently with Creata to place Paul Frank employees” with new licensees, Giannulli said.
Heuser and the rest of senior management are expected to stay on.
The company also plans on keeping and running its own stores, Giannulli said.
Paul Frank has eight stores in the U.S., including one in New York. It also has 12 overseas, including in Dubai in the United Arab Emirates and in Bangkok, Thailand.
Giannulli, who has been a company director, said the “creativity generated at Paul Frank Industries is unmatched in the apparel business.”
“They’ve created a brand that has global appeal and (the company) has just scratched the surface of what they can achieve,” he said.
But Paul Frank has to strike a balance between expanding and flooding the market with products. It also has to be careful not to ruffle retailers.
Some boutique operators worry that if a brand gets too big it will dilute its appeal.
Alex Von Taube, general manager at Killer Dana surf shop in Dana Point, which sells Paul Frank products, has a different take.
“Paul Frank has a good following,” he said. “The girls who want it will buy it no matter what, whether it’s $50 or $250. Basically, it sells itself.”
Killer Dana has wanted to carry Paul Frank at its San Clemente store, but can’t because another shop nearby sells it, Von Taube said.
“If it grows, we can all carry it and we won’t have anyone bickering about it,” he said.
