Costa Mesa-based Paul Frank Industries Inc. said it wants to clear the air.
Rumors that Mossimo Giannulli, founder of the clothing company that bears his name, bought a one-third stake in Paul Frank from namesake founder Paul Frank Sunich aren’t true, according to spokeswoman Nancy Carlson.
The company is not sure how the rumor got started, she said.
“Maybe because (Paul Frank president and cofounder) Ryan Heuser used to work at Mossimo” as the company’s former head of public relations for men’s clothing, Carlson said.
Not to mention that Giannulli is a buddy of Sunich, former chief designer who left Paul Frank in 2005 and later sued, claiming to be fired unfairly and for other reasons.
As Paul Frank refutes claims that Giannulli has a stake in its company, it did confirm that Sunich has sold his shares after settling his lawsuit.
Terms weren’t disclosed. Some sources have estimated the settlement was around $5 million.
So who bought Sunich’s stake then?
Carlson only said it was an undisclosed group of people and was mum on any further details.
Heuser also declined to comment on that issue.
He answered some other questions via e-mail and skipped one asking about Giannulli’s involvement. A follow-up question sent to him on the matter wasn’t answered.
Carlson said Heuser was in meetings for the rest of the week and had nothing else to report on the company.
“We are in the thick of getting ready for our summer sales meeting,” Carlson said.
Paul Frank is trying to move ahead and refocus on its brand after spending the past two years squabbling with Sunich over claims the company called meritless.
It recently restructured, including laying off some 20 or so workers across divisions.
The company now has about 108 employees.
“At some point in any business there comes a correction phase,” Heuser said.
The company had “geared up for 100% increases in yearly sales over the past few years” and “staffed accordingly in every department,” he said.
But sales growth didn’t meet expectations.
“Although we are still growing we have not been growing to the extent we are currently staffed,” Heuser said.
During the past 10 years, Paul Frank took a “bit of a shotgun approach” to go after “many types of business opportunities,” Heuser said.
The company sells clothes for men, young women and kids, accessories, bedding and more. It also has its own stores.
Some of the collection features the brand’s iconic Julius monkey character, which continues to give it cache and worldwide exposure. This summer, the company came out with iPod cases with Julius on them.
The company has tried to move beyond the monkey. A lot of the tops and pants in its Small Paul kids line for 2- to 7-year-olds are sans Julius.
Heuser said he’s currently re-evaluating “core strengths and values” and “shedding any areas of inconsistency.”
“Less is more,” he said.
That includes Paul Frank’s headquarters.
The company’s lease is up in November 2008.
“It’s possible that we may relocate our shipping and warehousing to a more financially friendly location,” Heuser said. “Or perhaps use a fulfillment house that also has e-commerce capabilities.”
Paul Frank’s headquarters will stay local, he said.
The company also is looking to build its name and sales through licensing deals, Heuser said.
That way the company can expand without having to worry about raising cash to do so, he said.
Julius is a prime example. Paul Frank has spent years “carefully cultivating our beloved character Julius to be a generational perennial icon,” Heuser said.
“Now that Julius is firmly entrenched we can apply his likeness across a wide range of products,” Heuser said. “Much like Sanrio and Disney have done with Hello Kitty and Mickey Mouse.”
Paul Frank already licenses its name out to make some wares, such as sunglasses, watches, bicycles and bedding.
Paul Frank is also getting ready to launch infant and “tween” clothing for babies and kids ages 7 to 16. The collections include pajamas, accessories, T-shirts, tops and bottoms.
Until now, the company had only offered garb for children ages 2 to 7 under its Small Paul line, which is a hit, Heuser said.
The company recently discontinued its Julius and Friends collection, which features a lot of the characters, and plans to use the characters as part of other lines or for licensing.
“That area of our business is our best and biggest growth opportunity,” Heuser said. “With the success of Small Paul came a flood of retailer requests that we couldn’t ignore.”
Other plans: Paul Frank continues to expand its retail division outside of the U.S. The company has about 12 stores overseas, including in Dubai and Bangkok.
Heuser said his international business partners have “really stepped up our store presence.”
Paul Frank’s Japanese partner plans to open 30 stores within five years, Heuser said.
The company also has eight stores in the U.S., including in Costa Mesa and New York. At one point, the company was looking for a minority investor to help fuel its retail growth. But Heuser said that’s off the table.
The company plans to focus on “maximizing sales in each of those locations” and does not plan to open any more for now, he said.
“It’s time to really get into the black,” Heuser said. “We don’t just do retail for branding purposes. Our stores are profit centers first and yet have the ability to tell a story to our customers.”
As far as the future goes, Heuser said anything is possible for Paul Frank.
“If we walk in the footsteps of giants then anything is possible,” Heuser said. “We look to great companies like Disney, Sanrio and Apple to apply their methods directly to our business model.”
