How Dickson Poon Made Fashion Pay
Bringing business savvy to an industry known for excessBy Susan Berfield and Alexandra A. Seno
DICKSON POON IS NO slave to fashion. This is unusual for someone who makes millions selling style to the well-heeled in emporiums like Harvey Nichols, his oh-so-posh London store where Princess Diana prowls the racks of Dries Van Noten and Vivienne Westwood. This is odd for a guy who owns branches of Seibu, the trendy Japanese department store for wealthy Chinese, not to mention someone who hopes to buy Barneys, ground zero for America's avant-garde. Poon, the 40-year-old head of Dickson Concepts, sells a roster of luxury brands such as Hermés, Bulgari and Escada. (List of Poon's companies) His $979-million company trades on the notion that wearing a pair of Ralph Lauren pants does not just make you look good -- it makes you feel good. Poon's business is about image and imagination. And yet, you wouldn't know it from talking to him. Nor, for that matter, by visiting his office.
Company headquarters occupy two floors (one in the basement) in a building that few taxi drivers know. It's not in the main business district; it's not even on that side of Hong Kong's famous harbor. The office itself is decidedly unglamorous: the ceilings are low, the lights fluorescent, the hallway cluttered with boxes. Poon recently lured Escada from Hong Kong's Lane Crawford, which had (very profitably) represented the label for nearly a decade. Some might have adorned the office walls with photos of Escada-clad women. Or handsome men flaunting gold-trimmed lighters from S.T. Dupont, a subsidiary that Dickson Concepts successfully listed on the Paris bourse in December. Not Mr. Poon. His walls are bare.
Let the Pressman brothers bicker over office space in the Barneys Manhattan headquarters and burn enough money to create a store of immense style but scant profit. Poon prides himself on discipline in a business that often expects extravagance. His stores are refined, but he wouldn't insist on 17 types of wood (as Gene Pressman did for Barneys' Madison Avenue emporium). Poon doesn't have a corner suite or a view. On the sunny Friday afternoon that we visit, his blinds are closed. The furniture is basic, though his fish tank is well appointed. When we politely ask about his art collection, he brushes off the question. Later we discover the paintings are the work of his daughter, now 14.
Poon is renowned for being cagey about his personal life and careful with company finances. He has brought a pragmatic, almost technical, approach to a notoriously impractical industry. Poon snaps up businesses -- at bargain basement prices -- that are losing money but not status. He and his executive team make them over and, so far, make them profitable. It is financial re-engineering with style. "Usually entrepreneurs go wild," says Marc Faber, an investment consultant who has known Poon for a decade. "Dickson doesn't buy things just for the prestige. It always has to make sense." If he buys Barneys, though, the cachet would be considerable: Poon would expand his empire to the last frontier, America. That would make him Asia's first global retailer (well, the first Asian west of Japan). But bankrupt Barneys is unwieldy; America's status shoppers are fickle. Barneys could secure Poon's fortune, or unhinge it.
Poon is a quiet talker, but he is an aggressive retailer and a tough negotiator. He knows how to value a label, but he has no interest in defining style. If you want an interpretation of the buying impulses of our time, best ask someone else. Poon is more comfortable discussing the company creed than snob appeal. "We have one responsibility and one responsibility alone," he says. To push Asians to the cutting edge of fashion? No, "to Dickson and its shareholders."
If Poon weren't wearing a cream-colored turtleneck he could be just another shrewd businessman with an eye for the bottom line and a thing for karaoke. But he is wearing a turtleneck, with corduroy pants and a tweed jacket, an alligator-skin belt and brown loafers. It's not an outfit most Hong Kong executives would wear to work. Even on Fridays. And there lies a clue to the surprising contrast between the man and his company. Poon is fit, fresh-faced and wears his clothes well. He maintains stylish homes in Hong Kong, London and Los Angeles. He owns a white Bentley. He sends out engraved invitations to the most intimate dinner parties. This is the stuff of which lifestyle ads are made. In short, Poon could fashion Dickson Concepts in his own image. He could be a tastemaker. But he is not -- by his own admission. "It is not a question of my taste. It is the market," he says. "It is the taste of the consumers that is important. My taste is unimportant."
If you think this takes away from the company's allure, you're right. "Dickson doesn't set the tone for what people are wearing," says a close observer of the retail industry. "He hasn't done anything significant for fashion in Asia yet." But if you think this takes away from his success, think again.
Poon started out in 1980 with one watch store. Today Dickson Concepts operates more than 240 boutiques and outlets throughout Southeast Asia and in China. He markets merchandise from Ralph Lauren, the best-selling designer in the world, and has secured the rights to more than 100 other brands. Since the company went public in 1986, turnover has grown 1,500%. Dickson Concepts' share price has nearly tripled since July 1995, from HK$10 to nearly HK$30 last week. Profits have climbed 19% since 1995 to $51 million on sales of $509.7 million. Poon stopped taking a salary in 1995. His official $1,288 annual director's fee can't even buy him a suit from Ralph Lauren's Purple Label collection. But Poon owns the majority of the company's shares, and last year earned nearly $15 million in dividends alone. He is worth more than half a billion dollars. You don't have to be a trendsetter to be successful in retailing. But unless you are, you'll never be considered more than an operator in a world full of supposed visionaries. And that seems just fine with Poon.
"Dickson is a very good businessman. I admire what he does," says Joyce Ma, the elegant founder of the ultra-chic Joyce emporiums in Hong Kong, Taipei and Bangkok. "But Joyce is a business of the heart. It is not just about making money, money, money." Joyce is about catwalk fashion; she is unlikely to sell a well-worn brand like the all-American Perry Ellis. She and Dickson are the two faces of Hong Kong fashion. They are not really competitors, but everyone compares them anyway. "I take more risks," Joyce tells us at the opening of an Emporio Armani boutique. "Joyce has been the first to bring in new designers over the past 25 years. The brands are a Joyce choice, a reflection of how Joyce lives."
Poon prefers not to respond to others' comments about his business. But he probably wouldn't be hurt by Ma's. Joyce reported an operating loss of $1.5 million for the first half of 1996. "I know which one I'd like to invite for a dinner party, but I also know which one I'd like to invest with," says an analyst at a European brokerage. "It is very easy to get carried away in retailing. With Dickson it is only business." With Poon it is all business. Corporate excess is frowned upon (though he reportedly hired topless dancers for the company's tenth anniversary bash). "None of us is encouraged to entertain in the Hong Kong nightclub style," says Raymond Lee, Dickson Concept's chief financial officer. There are no corporate accounts; employee discounts range from 20% to 30%, below the industry standard. Guests at Dickson Concepts' boutique openings usually leave empty-handed; most other companies offer small gifts. Poon even uses his own executives in some advertisements. "We are parsimonious," says Lee. "It makes people trust us."
Poon takes himself seriously, and he likes everyone to do the same. He is a demanding boss. "We have to be very quick-minded," says his legal adviser Kevin Ching. "He can make you feel stupid." His top executives, Ching and Lee, have buzzers on their desks linked to one on Poon's desk. Ching says that during his first days in the office he used his to call Poon. "Dickson sounded a bit startled. At the end of the week, a colleague said 'you don't buzz him, he buzzes you.' Dickson was too polite to tell me to stop." Poon's public relations manager prefers not to carry a mobile phone and to maintain her office four floors below his.
And then there is the story of how Poon fell out with a head hunter in Hong Kong. Apparently the company placed a high-level Chinese executive at Dickson Concepts. During the first week, so the tale goes, Poon yelled at him in front of others, and the new recruit walked off the job. The head hunter apparently will no longer work with Dickson Concepts, but declined to discuss, or confirm, the incident saying, "It's too sensitive to talk about." No other associations seem to have ended so badly, and, in fact, many of Poon's senior staff have been with him for years.
Poon's ambition is a family trait. His grandfather was a rice farmer in China, his father moved to Hong Kong and reaped a bountiful profit from watches. Poon's mother was ahead of her time: she established her own stockbroking firm in the territory. She, perhaps alone among the trophy wives and well-tailored ladies at Dickson Concepts' boutique openings, describes herself as a retired businesswoman. Poon's father had a tracheotomy a few years back and doesn't often leave home. According to his mother, Poon makes the effort to eat with them a few times a week. Apparently he is not one for business lunches. Poon says his parents are his "mentors." He is the sole contributor ($400,000 a year for 10 years, beginning in 1990) to Hong Kong University's management institute and named it after his father, Poon Kam Kai. But Poon is quick to remind us that Dickson Concepts is not a family-run operation. "Dickson is one of the few sons of rich families who has gone his own way and been very successful," says Faber.
Even as a teenager, Poon set himself apart. He wore white silk shirts, flared pants and long hair at St. Joseph's College, then Hong Kong's most prestigious high school. It was 1971, but everybody else made do with cotton shirts, regulation-width trousers and short hair. Poon seemed to get away with flouting the rules because he didn't try to influence the other boys. He attended the school for just a year, but several classmates remember him as a mediocre student, a polite, quiet, rich kid who shot hoops alone.
Poon continued his education at Britain's elite Uppingham school and Occidental College in Los Angeles, where he studied philosophy and economics. He sharpened his retail smarts during an 18-month apprenticeship in watch-making at Chopard's Geneva factory. He still designs some of his watches; he wore a diamond-studded one to an Asiaweek photo shoot. Poon returned to Hong Kong in 1980 at 23 with a hint of public-school drawl, a collection of Polo shirts and a concept of space. Hong Kong retailers at that time didn't spare much thought for a store's layout. But Poon knew the nouveau riche were looking for something new.
"I felt there was a niche in terms of another style for how business could be conducted," he says. His father loaned him $1 million, which allowed Poon to establish himself at Hong Kong's best addresses. He opened the first Dickson Watch & Jewelry shop that year. He took on his first brand, Charles Jourdan, two years later. "Dickson was aiming high," says Joseph Wan, the managing director of Harvey Nichols and Dickson's ex-finance director. "He wanted to get big quickly, and to list as early as possible."
He was young, handsome and prominent. He ate at the best tables at the best restaurants and developed a taste for expensive red wine. He dated the town's most beautiful women, until he wed Marjorie Yang, the daughter of a prominent Shanghai textile family. It is said that she helped Poon win the right to sell Polo/Ralph Lauren in Asia. They had a daughter, Dee, but their union was brief. Poon's business, meanwhile, was developing nicely and he invested in Hong Kong's movie industry and began to mix with the stars. When he was looking for a woman to feature in a watch commercial with Jackie Chan, Poon came across a photo of Michelle Yeoh, Miss Malaysia 1983, at a friend's home. He offered Yeoh the commercial, a two-year film contract and, later, his hand in marriage. She accepted all three. Poon supposedly spent $125,000 on Michelle's wedding dress. They divorced three years later.
Yeoh, who has since become Asia's best-paid actress and was recently chosen as the new Bond girl, gave up her kung-fu movie career during the marriage. Hubby apparently preferred that she concentrate on being Mrs. Poon, a role that required lots of lunches and shopping. During a recent visit to Hong Kong, Yeoh wouldn't say much about the divorce. "There are no guarantees in life. We grew apart," she confided over coffee at the Mandarin Oriental. She is less reticent about the marriage. "It was the best thing that happened to me then," she says. "Thanks to Dickson I am here." She and Poon did not have children and do not have much of a relationship today. But Yeoh says she and Poon's first wife "are like sisters" and Poon's eldest child is her goddaughter. Yeoh was heading to America, where she planned to visit Dee at boarding school.
Poon has since re-married, in May 1992, to Pearl Yu. He was 36, she was 26 and a Harvard-educated retail analyst at James Capel. Pearl comes from a prominent Hong Kong family and reportedly traveled to work in a Rolls Royce. They met when Poon was invited to make a presentation at her firm. When they were engaged a year later, they issued no formal announcement. In an interview days after their marriage, Poon described the ceremony as "private and personal." Gossip columnists detailed a champagne dinner with 12 arches made of pink and white balloons, lots of pink satin, seating cards embroidered with pearls and an eight-tier wedding cake with a string of pearls attached. The bride changed from one Herve Leger couture dress to another before dinner.
Asked why his latest wife was the one for him, Poon replied: "Pearl understands my business requirements and ambitions. I'll remain committed to the business and she must know my life, my character, me as a person. She must support it totally." Pearl generally let her husband do most of the talking during the interview, though she did have this to say: "He is a little more serious than I thought." And apparently more extravagant in private life than at work. For Pearl's birthday, Poon sent her 99 red roses, booked an entire restaurant for the two of them, and there presented her with rose No. 100.
Poon has worn his divorces and his suits well. And maybe that's why people once second-guessed him. "The market perception was that he was a bit eccentric," says an analyst. In London, Poon would have had to do a lot more to prove he was an oddball executive; in Hong Kong he had to work hard to prove he wasn't. He decided to acquire his own label, and in 1987 bought the French company S.T. Dupont for $52 million. It is best known for its gold-trimmed lighters and fat-nib pens, the kinds of accessories the rich like to give each other.
"Everybody who was anybody was looking at Dupont," says Walter Wuest, an executive director of Dickson Concepts who has been Poon's partner since 1983. "Many felt Dupont was relying too much on the lighter business. But we thought it good to be No. 1 in any business." And so it was. Dickson Concepts restructured Dupont and introduced the brand to China with lucrative results. Poon, says an analyst, became known as someone with a talent for "resuscitating labels to suck the last bit of life out of them."
That's not quite how Poon puts it. In December he spun off Dupont; the listing earned Dickson Concepts $50 million. When asked about Dupont's prospects, Poon said: "We have budgeted earnings to grow well in excess of 50% in the current financial year and expect double-digit growth to continue in the coming years." Maybe, but "Dupont was the division with the least attractive prospects," says Elizabeth Gouw, a retail analyst at Union Bank of Switzerland. "It is a mature brand."
Selling the right labels can make you rich; owning the right stores can make you famous. In 1991, at the height of Britain's recession, Poon bought Harvey Nichols for $96 million. The move was not widely applauded at the time. Here was a 178-year-old, down-at-the-heel establishment with an image best described as dowdy. Today it is one of Europe's most celebrated department stores. After all, the two main characters of the comedy series Absolutely Fabulous go on giddy binges at Harvey Nicks. Last April, Poon floated nearly 50% of the company, at slightly above $4 a share, giving Harvey Nichols a valuation of $224 million. Investors cheered.
If it sounds like a fantastic fluke, it isn't. "There is no magic formula," says executive director Lee, "just the efficient use of resources." Poon sent in as managing director a bean counter from Hong Kong, the 42-year-old Wan. "We look at how we spend every penny," says Wan. "If there is no benefit, then we save the penny." Wan and Poon presided over a $17-million facelift, introduced strict inventory and cost controls, and increased the number of independent concessions. Wan kept the store open later during the week so those who have to earn their money can shop. He made sure the air conditioning and lights were turned off after the doors were closed. Poon put a restaurant on the top floor. The decision defied conventional wisdom; surely no shopper worth her credit line would trek upstairs to lunch. Today the Fifth Floor is one of London's most fashionable eateries.
Though Poon kept a low profile in London, Harvey Nichols was quite another matter. One season a fish made of sardine cans filled the main display window. When a second store opened in Leeds in October, a print ad featured a woman on all fours with a pink ribbon around her neck. The caption read: "Leeds, not follows." Is it any wonder Poon was rebuffed when he brought the Harvey Nichols concept to conservative Asia? He wanted to open a Hong Kong department store, but couldn't find affordable space. So he settled on several Harvey Nichols boutiques. Before long, all were shuttered -- the clothes were too subtle, say observers, and the prices too lofty. It was Poon's most public and perhaps most expensive miscalculation. (An aggressive and unprofitable plunge into China was his other. The group reported a $2.3 million loss in 1995 from that venture.)
Never mind, now Poon has Seibu. He bought an 85% stake in the Hong Kong and Shenzhen branches for $23 million last year and has the right to open stores elsewhere. The Hong Kong Seibu was losing money when Poon took over and it won't be easy to turn it around. Lee, who is in charge of operations, is applying the Dickson theory of cost cutting: chop middle men; reorganize store space; introduce a data system that provides up-to-the-minute sales and inventory stats; and, oh yes, bring in more innovative products.
Since Seibu still requires a considerable amount of the group's managerial talent, some wonder if Dickson can take on Barneys too. Yet earlier this month Poon offered Barneys' creditors $240 million cash plus a minority stake in operations outside America for the four flagship stores and 18 outlets. A bankruptcy committee will review the proposal. But it will likely be months before a decision is announced.
Barneys is the kind of store that installs two huge aquariums and starts a trend in Manhattan. But its owners, the Pressman brothers, drained company finances. The Japanese department store Isetan was a partner; now it is either a creditor or a debtor depending on who you ask. The Pressmans declared bankruptcy last year, and the legal wrangling between them, Isetan and vendors owed money has been nasty.
Poon's lowball offer has not been well received; one group of creditors outright rejected it. Barneys' debt totals $350 million, and most expected Poon to offer about that. Others hope his initial bid will draw out companies willing to pay more for the prestige. Neiman Marcus Group and Saks Fifth Avenue have expressed interest in Barneys, but haven't revealed their intentions. Poon is unlikely to join a consortium with either of them. Nor is he likely to join a bidding war. "Dickson has great intuition for what the other side will accept," says Ching. "When we think the deal is going to fall through, Dickson always says push for more. Usually he's right." Adds Wuest: "Many people make good acquisitions, but they pay too much. Dickson knows the value of money."
And that is precisely how he built an empire that stretches from Hong Kong to London. Deep down, perhaps, he understands that he is no visionary, just a shrewd businessman who has yet to stumble badly. Poon is nothing if not consistent, even conservative -- certainly by fashion industry standards. Once or twice a month, Poon and his lieutenants go to a coffee shop in a five-star hotel near the Dickson headquarters. The seating arrangement never varies: The underlings sit on their side of the table, the boss on his. Poon orders the same dish every time. Don't let that turtleneck fool you.
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