Women’s apparel pros refused to recognize the riskier side of the fashion world when they went to work for themselves To hear Richard Hirsh and John Paul Beltran tell it, starting John Paul Richard Inc. was a snap. They just called a few suppliers they had known in former jobs and rang the doorbells of some old customers. And oh, by the way, they also hocked most of their belongings, borrowed a few million and went more than six nail-biting months without any revenue at all. However, much of that dark side of the startup has faded from memory in the four years since the two co-chief executive officers launched John Paul Richard. Then too, the partners say, there’s another reason they never dwelled on the riskier aspects of the endeavor. Launching John Paul Richard may have been nerve-rattling, “but we had a lot of fun,” said Hirsh. And success. Since its launch in 1996, the Calabasas-based women’s apparel maker has elbowed its way into a market dominated by far larger suppliers and grown to a $120 million business selling to some of the largest retailers in the country. This year, the company landed in the No. 6 spot on the San Fernando Valley Business Journal’s list of fastest-growing private companies, having boosted revenues 140 percent since 1997. “Robinsons May was one of the first department stores to carry John Paul Richard,” noted Milinda Martin, a spokeswoman for the store. “We like the fact that they understand our customer.” Industry veterans who ran their own apparel company before selling it to St. Louis conglomerate Kellwood Co., Hirsh and Beltran decided to strike off on their own after 10 years on Kellwood’s management team. “The corporate culture got to us,” said Hirsh. With a $2.6 million loan, the two set up their new company, calling on longstanding relationships with factories around the world to manufacture their designs and with retail stores to sell their products. But while their experience in the industry helped find the best suppliers and open doors to the largest customers, those relationships alone weren’t enough to get the company off the ground. “You have to be online with (customers). You have to have the computer systems. They check your financing, your shipping capability,” said Beltran. “We did all that up front.” Before they ever accepted their first order, the partners set up a full-scale operation with computerized shipping and inventory control, quality control and all the other functions they needed so that customers felt confident the company would perform. “In the first six months, we lost $1.2 million,” Beltran said. John Paul Richard went without revenues for six months while the principals set up their systems and hired a staff. Then, with everything in place and its first line, sold under the labels Uniform, Studio JPR and Outfit JPR, orders began to pour in. In the first full year of operation, John Paul Richard’s sales reached $46 million. By the third year, sales had grown to $112 million. And this year, the partners expect to hit the $120 million mark. Far larger companies like Sag Harbor and Koret were well entrenched on retailers’ floors, but chains like Federated Department Stores Inc., The May Department Stores Co., Mervyns’s and Kohl’s Corp. made room for the new supplier because of the combination of fashionable styling and low prices it offered. “John Paul Richard provides updated, yet moderately priced clothing perfect for the woman who understands fashion but wants a value price,” said Martin at Robinsons May. “If you look at traditional moderate lines, those businesses have been around for anywhere from 50 to 80 years, and the customer who buys those labels is fairly old,” said Beltran. “Her daughter doesn’t want those looks.” Designer labels operate with a 50- to 60-percent gross margin, the difference between the cost of making the goods and the selling price. But in the segment of the business that John Paul Richard operates in, margins are more likely to be in the teens. “You can only do that by doing large volume, and you’ve got to be able to keep your costs down,” said Hirsh. Hirsh and Beltran attribute much of their success to their employees. The company set up shop in Calabasas rather than downtown L.A., where most apparel operations are based, to make it easier to attract top-notch talent, and it gave senior managers partnership positions in the company. That way, “they’re very concerned about how the company is running,” said Hirsh. John Paul Richard also gives employees room to manage their personal lives. One manager whose husband was relocated to New Jersey continues to work at the company, traveling from her new home to Los Angeles several times a month. And all employees are discouraged from working into the night and on weekends. “We learned what gets people burned out and frustrated in a large corporation and we set out to make a company where the best people in the industry would like to work,” Beltran said. The partners say they did not start out to build a company that would get larger and larger and their goals continue to be modest. While they are pleased that the business provides them with good incomes, their real satisfaction comes with the ability to take pride in their work and the environment they have built for the company’s 98 employees. “What’s going to keep us successful is to stay focused on our business, but not any more than we stay focused on our personal lives, and make sure the people who make this place sing are happy and stay here,” said Beltran.
FASHION—Dressed to Sell