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Orange County Apparel Maker Seeks Expansion

BY JENNIFER BELLANTONIO

Paul Frank Industries Inc., the Costa Mesa apparel company known for its trademark cartoon monkey and other cheeky designs, is at a pivotal point.

With sales expected to surpass $40 million this year, the company has taken a big step out of Orange County’s apparel breeding ground.

Others haven’t been so lucky. Many develop a buzz and a small amount of sales, but little else.

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But now Paul Frank Industries faces new, bigger challenges.

Chief among them: building up the company’s own chain of stores.

Paul Frank Industries has 14 stores worldwide, eight of which are in the United States, including one in Costa Mesa at the company’s headquarters and one in South Coast Plaza.

Frank, the company’s chief designer, and the company’s other founders, John Oswald and Ryan Heuser, said they’re considering bringing in a minority investor so they can expand their “very profitable” retail division faster.

In the next five to 10 years, Paul Frank Industries is looking to have 50 to 60 stores worldwide, with half in the United States, said Oswald, who serves as chief executive.

A more pressing issue: Paul Frank Industries has outgrown its 56,000-square-foot headquarters and is scouting around for something in the 125,000-square-foot range, even if it has to build it, Oswald said.

“We’re busting at the seams,” he said. “We’ll be moving again at some point in the next year or two.”

Expanding stores is a delicate move for any clothing maker. Stores that sell Paul Frank garb may balk as it gets deeper into retail.

Heuser, who serves as the company’s president, called that “a misconception.”

The company tested the waters, launching Paul Frank shops near existing sellers in fashion meccas such as New York, Los Angeles and San Francisco, even South Coast Plaza.

“We found (our) orders took a dip and then spiked,” Heuser said. “It’s actually increased business in neighboring retailers. It’s been a weird phenomenon.”

Paul Frank also has to move cautiously with possible investors. The three founders have kept a tightknit feel at the company, even as it has grown to 130 workers and turns 10 this year.


The Right Fit

The fit must be right, Oswald said. The company’s had people “coming to us with money” for years, but they were turned down, he said.

“It’s all about building the brand properly,” Oswald said. “I don’t want to be driven by the bottom line. You’ll start making bad decisions for money.”

Instead, he said Paul Frank Industries wants to be around for 50 to 100 years. It wants to be a brand “that our great-grandchildren know about,” he said.

Frank, who got the company started by sewing wallets and other items for friends out of scrap vinyl from Heuser’s garage, seems amazed things have gotten this far.

He points to a limited-edition bag he did a few years back with OC pop artist Josh Agle, better known as “Shag.” About 300 of them were frantically snatched up in boutiques and at art galleries.

They’re still smoking.

“On eBay those Shag bags are worth $500 or more,” Frank said. “Weird.”

Frank officially has turned a hobby into a budding fashion power.

There wasn’t a solid business plan early on, Frank said. He just followed his “gut.”

“I knew people liked whatever I made,” Frank said. “I knew I couldn’t sew fast enough to fulfill everyone’s request.”

Things grew from there. Accessories and T-shirts emblazoned with Frank’s signature Julius monkey made up the company’s first line.

Julius has become a global icon. Frank’s lines of clothes, wallets and T-shirts are sold in about 2,220 stores around the world, about half in the United States.

Hipsters coveted Frank’s designs. Julius and other Frank images are common sights on TV shows.

The company’s products are staples in Frank’s back yard. Specialty stores such as Becker Surfboards in Huntington Beach, the Closet in Costa Mesa and Otto in Fullerton carry the garb.

You also can find it at department stores such as Nordstrom, Macy’s and Bloomingdale’s.

The company has branched out to sunglasses, watches, pajamas, swimsuits, children’s clothes and bedding, which launched in the winter.

As with the Shag bags, the company has done a lot of collaborations. Among them: a beach cruiser done with Fountain Valley-based Nirve Sports Ltd., Elvis bags licensed from Presley’s estate and items featuring Andy Warhol’s art.

Frank now is designing pillowcases, sheets and more for licensee New York-based Franco Manufacturing Co.

Frank and his partners call themselves “control freaks” who are sticklers about doing things their way.

“At the end of the day, we have to stay true to the agenda we started from,” Heuser said. “The second you flick the switch and you become bottom-line driven, the consumer picks up they’re being sold and you lose your edge.”

The company has turned down offers from big chains, such as Target Corp., Starbucks Corp. and Staples Inc., to do Julius garb.

In January, Paul Frank Industries sued Target over products that it contends resembles its own.

The founders have been selective about taking on licensees and have only three to date, for bedding, watches and glasses.

Distributors run the company’s shops in Europe. But Frank said he still designs the lines and stores, half of which are company-owned.

“I actually design the fixtures,” said Frank, an architecture buff. “I choose what kind of flooring and wood.”

Frank’s working on stores in Germany and the Netherlands, which are slated to open in May. But since he doesn’t fly, he’s doing so from afar. He said he studies the space’s specifications so he can make sure everything fits perfectly.

It’s all in the details for Frank.

His characters, such as Julius and Clancy the giraffe, only appear on certain background colors in merchandising displays.

Clancy is all about light blue, brown, white and marigolds. Julius goes with sky-blue and red.

“You can’t go and stick him on navy,” Frank said. “He doesn’t want to be there.”

The company hasn’t had trouble spreading the word. It shunned traditional advertising until last year, when it ran a few print ads in underground publications.

“Our best form of marketing is the fact that we say no more than we say yes,” Heuser said. “We’re a brand that’s about discovery. It’s not about being in your face.”

Frank has done promotions himself , taking a road trip last year across the country to visit suppliers and historical landmarks, and stopping at college campuses for signings.

Some of it was “nerve-racking,” Frank said, like when he had just seconds to sew and chat on live news.

Around Orange County, Frank, who calls himself a “loner,” said he keeps to himself and hangs with his fianc & #233;e.

“I like to be low key,” he said. “My work speaks for me. I don’t need to be standing around at a party getting attention.”

His characters cause their own stir.

They’re featured in 26 animated shorts Paul Frank has on its Web site. The company is in talks with production companies to do an animated series or film , a dream of Frank’s.

“I definitely want to do that,” Frank said. “But until a contract is signed, I’m working every day making sure everything we do looks the best it can.”

Anything with Julius, Frank’s signature monkey, flies out the door, said Carol Nielsen, women’s buyer for Torrance-based Becker Surfboards, which also has a store in Newport Beach.

“For the most part, it’s still about Julius,” Nielsen said. “It’s been a hot trendy brand in juniors (girls).”

But Paul Frank Industries is looking to move beyond the monkey.

The company’s men’s line is more about fashion than Julius. And it continues to add clothes to its women’s collection, without characters.

“You don’t want to be a walking billboard,” Frank said. “It limits how much you can wear that piece. I’m more than a character.”

The move has its risks, according to Becker’s Nielsen.

“It’s their most recognizable thing,” she said of Frank’s characters.

Paul Frank said it has no intentions of abandoning its roots.

The company knows “the character portion of our business fuels and grows our business,” Heuser said.

“You have to know who you are and you have to own it,” he said. “It’s very dangerous to walk away from where you came from. We rely on our brand strength to transition to other categories.”

The company has had missteps. It came out with a more upscale, expensive line for women called Her House, which got a lukewarm response at stores and has been tabled for now, Heuser said.

Prices “were higher than retailers expected,” he said. “The fabrications were much higher quality. It didn’t translate to a lot of areas.”

Some stores want Paul Frank to make more clothes for girls ages 8 to 12, known as “tweens.” They’re the ones who mainly ask for it, Nielsen said.

“I think they’re missing the boat,” she said. “The huge group of girls they’ve captured isn’t who they’re building product for.”

Paul Frank has a different take. The company knows the core of its business is related to girls and offers them a variety of things, such as T-shirts, swimsuits and accessories, Heuser said.

But the company also wants to evolve and age its line a bit, so it can grow with its customers, he said.

“The younger sister always wants to dress like the older sister,” Heuser said. “But when you introduce a tween line, you risk your core market sliding further down.”

Frank said he lets his partners worry about the business stuff. To him, it’s still all about art.

“I still sew all the time and make gifts and art pieces,” he said. “I still get my satisfaction creatively whether or not a store buys it.”


Jennifer Bellantonio writes for the

Orange County Business Journal.

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