LONDON — After a challenging 2016-17 fiscal year, Paul Smith Group is back with a leaner structure, a focus on retail and the return of Sir Paul Smith, the founder and majority owner, to the creative helm of the company.
In the 12 months to June 30, turnover was up 3.5 percent to 184.9 million pounds, while profits plummeted 74 percent to 2.1 million pounds, dented partly by extraordinary items, according to the company’s latest filing on Companies House, the official register of U.K. businesses.
It was a year of change: The company shouldered restructuring costs; shut its New York press office, which had been operating for more than two decades; let go employees, and streamlined its various secondary lines and denim collections into just two labels, Paul Smith and P.S. Paul Smith. It also shifted to a coed show format in Paris, quitting the London runway altogether.
“We knew we had to go backwards to go forwards, and we did. Nobody likes to go backwards — which we did for a couple of years — but the reorganization has just come to fruition now. You have to be brave to do it, and you can’t be so arrogant to think that that these things don’t apply to you,” said Smith from his perpetually cluttered conference room that’s packed with toys, ephemera, homemade gifts and random objects from his fan base around the world.
The designer said his business had changed drastically over the years, shifting to online and retail and moving away from wholesale. Indeed, the changes his company made were no different from those that fellow British brands like Burberry and Mulberry were forced to make in order to cater to a new consumer.
“We were selling to lots of independents, and a lot of independents have closed down across the world because of the large groups moving into their cities. They don’t survive. It’s just been a general readjustment, but now the sales are coming back,” he said.
Smith said since the end of June, the company has continued to grow, with fall 2017 sales up 14 percent year-over-year, and 11 percent on a like-for-like basis. Retail sales — which generate the lion’s share of annual turnover — were up 18 percent overall and 11 percent like-for-like. Smith said it was his best season at retail for the past five years.
While wholesale sales decreased 11 percent in fiscal 2017 to 74.1 million pounds, dented by weak demand in the company’s core markets of the U.K., France, Russia and Asia, the channel is showing new signs of life.
Forward orders for spring were up 7 percent on the previous season, while fall pre-collection sales increased by about 30 percent, with the U.K., Europe and the U.S. all growing once again.
Smith is also back at the helm of the creative studio, having unpicked an earlier decision to appoint the company’s first creative director. He had named his head of men’s wear, Simon Homes, to the top role as part of a wider studio refresh, one that was meant to enable Smith to focus on other brand-related and creative projects. But it didn’t work out.
“I am totally involved in every aspect of design again, whereas I’d eased out a bit to readjust and see whether we could do things in a different way. We thought we could do things in a different way, but it worked out that it was better for me to do things the way I’ve always done. Now I see absolutely everything like I used to do. The spirit and the design aesthetic of Paul Smith is well and truly back. The boss is back,” said Smith.
The boss is also back on the shop floor. Smith, whose brand began as a tiny shop in Nottingham, England, works at his Albemarle Street store in Mayfair on Saturdays — and he loves it. “It’s fantastic. You meet so many people from around the world and on a Saturday you can have somebody from Athens, Paris, Milan, Beverley Hills, Tokyo and Denmark,” said the designer, who’s also happy to lap up compliments about his eclectic interiors, which are filled with lots of art, photography and midcentury modern furniture.
As the company returns to growth, Smith is also planning more store openings. In the past year units have opened in Paris and Birmingham and Manchester, England, while this year, stores are set for Berlin on Potsdamerstrasse and in London at Coal Drops Yard, a new development near King’s Cross Station. The former will open in March and span 1,022 square feet, while the latter is set for October and will measure 2,917 square feet.
There are other openings planned for Korea and South Africa, while the brand will also be refurbishing its 70 shops in Japan.
Even as he’s restructured the business, some things will never change for Smith. At a time when men’s fashion is going looser and more laid-back, Smith has become an even more passionate advocate for tailoring.
“I purposely did not put any sportswear at all in my [Paris] show [in January]. There was not one trainer and there was no sportswear. I thought that what I should do is show Paul Smith, which is about beautiful tailoring and coats for men and women, very nice fabrics, and a lot of British fabrics.”
One of his all-time top sellers is A Suit to Travel In, which uses a quick recovery, crease-resistant wool cloth that snaps into shape. He said he’s also doing well with tailored pieces made from technical wool fabrics from mills like Ermenegildo Zegna and Loro Piana.
Smith believes there are so many brands and designers going into sportswear and so many “brilliant sportswear brands” already in the space, “it’s instantly a very crowded market. If you look at a lot of the main labels in Milan, they honestly look like sportswear shops now.”
On this day he’s dressed in a soft and faded vintage Paul Smith denim shirt, which he’s paired with a dark blue English herringbone wool suit and a pair of leather sneaker-style shoes that he refers to as his “posh trainers.” He believes men’s wear needs to strike a balance between the easy and the tailored. “Sometimes you need to drink your coffee out of a china cup,” he said.
Smith was quick to point out, however, that his label still sells lots of zip jackets; down-filled, windproof, waterproof, outerwear; washable merino wool jogging pants and knits, and even a brogue made for travel that’s light and very flexible, but in traditional leather.
Another thing that won’t change is the pride he takes in making and selling clothing.
“So many people, if you look at their businesses, sell some clothes but they don’t sell a lot of clothes. So even a lot of the big ones will sell scarves or hats as well as bags, but they don’t sell a lot of clothes. Paul Smith sells clothes, lots of them, thousands of suits a year. The bulk of our business is clothing — and especially tailoring.”