Stella McCartney in rent row over Stanley Gibbons’ Manhattan store

Woke world: Designer Stella McCartney is the green queen of British fashion

Stella McCartney is the green queen of British fashion, a designer who sells her corporate brand and her expensive clothes on the alluring concept of glamour with a conscience. Father Sir Paul was on the front row at her label’s fashion show in Paris this week, sitting next to French actress Isabelle Huppert.

Hollywood star Demi Moore was also among the guests, who cooed with delight over bags made from mushroom skin grown in a lab in eco-friendly conditions. A passion for the environment is exactly what one might expect from the vegetarian daughter of the former Beatle and his late animal rights activist wife Linda.

Stella has had some less welcome publicity, however, as the company that bears her name has been embroiled in a dispute with Stanley Gibbons.

The world-famous coin and stamps company has been left out of pocket after a rent dispute with McCartney’s business, which had been sub-letting a shop from Stanley Gibbons on Manhattan’s swanky Madison Avenue.

Under an agreement in the summer, McCartney’s firm paid part of the bill.

Nonetheless, Stanley Gibbons said last month that the shortfall had pushed one of its subsidiaries in the US into administration.

Each of the two businesses bear the names of their founders, but they have little else in common. This is a clash between two very distinct commercial cultures.

Stella – a 50-year-old mother of four whose friends include Gwyneth Paltrow, Madonna and Kate Moss – is the archetypal celebrity entrepreneur. Her image and her famous name are key selling points for her high-priced wares.

At her flagship store on London’s Old Bond Street, the atmosphere is – literally – rarefied.

A special ventilation system developed by a team of atmospheric chemists, airflow engineers and sensor developers from London and Copenhagen has been installed, lest customers inhale any noxious fumes. Such eco-pampering does not come cheap and neither do the outfits.

This season’s offerings include small shoulder bags costing more than £1,200, trainers for just under £500 and the Magnolia Dress, a cobalt blue and black creation in sustainable viscose with a cut-out in the midriff area.

Then there are the £950 Over-The-Knee Duck City Glitter Boots, which with their round toes and flared high heels resemble something Slade would have worn in their 1970s pomp.

This exquisitely cool, woke world could not be further from the rather fusty aura of stamp-collecting that permeates Stanley Gibbons – though what that company lacks in modernity and gloss it makes up for in affection.

Its much-loved store on The Strand in central London, opposite the Savoy Hotel, has been a site of pilgrimage for generations of collectors, from schoolboys to serious philatelists.

First-class feud: Stamp dealer Edward Stanley Gibbons (above left) and a Penny Red stamp – one of only five in existence

Stella, as an individual, is separate from the business and cannot be held personally responsible for paying its bills.

But a settlement was reached between Stanley Gibbons and the fashion house in the summer over the unpaid rent on the sublet Manhattan store. The terms are not known.

The stamp company executives, however, might well be wondering why the McCartney firm did not simply pay its bill.

After all, it is backed by the multi-billion pound luxury conglomerate LVMH, which has a stake of just under 50 per cent.

Back in April, before the settlement, Stanley Gibbons said acidly in a statement to the Stock Exchange that ‘despite being backed by one of the largest and most profitable businesses in the world,’the Stella McCartney company was attempting to ‘walk away from their lease commitments without making any form of restitution.’

Stella McCartney declined to comment. Her camp, however, would no doubt take issue with the idea her company simply ‘walked away’. They could justifiably point out that they in fact engaged in negotiations that led a deal to settle part of the lease obligations.

McCartney’s company was certainly not the only one to be entangled in rent wrangles. Many businesses found themselves in a similar situation due to Covid-19.

She opened her first New York store in Manhattan’s then super-cool Meatpacking District in 2002 and subsequently moved to nearby SoHo. 

In 2016, she took on the lease of the store at the centre of the row on Madison Avenue from Malletts, an antique dealer owned by Stanley Gibbons, that ran until 2027.

This Upper East Side branch was supposed to showcase her clothes to New York’s moneyed and conservative ‘uptown girls’. 

The property sits just north of an elegant shopping corridor between 57th and 72nd streets that estate agents call Manhattan’s ‘Gold Coast’. 

A Stella McCartney model with a mushroom skin bag

Stella’s company took over 4,340 sq ft of space, comprising the ground and first floors of a five-storey Victorian terraced building and lost no time in embarking on a lavish refit.

Inevitably, the focus was on ‘sustainability’ with decor in ‘handmade and organic materials’, including fluted ceramic tiles and reclaimed farmhouse timber. 

But when Covid-19 struck last year and the store was forced to close, her business stopped paying the rent.

The settlement with Stanley Gibbons is understood to have been significantly less than the full liabilities over the lifetime of the lease, which runs to 2027 and not enough to satisfy the stamp company’s liability to the ultimate landlord, the wealthy Goldman family. 

As a result, Stanley Gibbons had to put its American offshoot into a bankruptcy protection arrangement known as Chapter 11.

To the relief of its loyal devotees, it is only the US subsidiary Malletts that has been hit. 

The main UK business of Stanley Gibbons is not going under. That firm is listed on the London stock market and is backed by asset manager Phoenix, which owns a controlling stake.

But the rent affair has raised some tricky questions for McCartney. What price her business’s ambitions to create an ethical brand if the company does not abide by the most basic of commercial principles, namely to pay its bills?

It, like many fashion retailers, has suffered in the pandemic. Her company was making a loss prior to Covid.

In 2019, the red ink at Stella McCartney Ltd hit nearly £32million.

Despite this, she still paid herself just over £2.4million – though in fairness, that was less than the £3.6million she received the previous year and she did not take a dividend of £531,000 that had been awarded in 2018.

In a very unusual move, its auditor has raised a red flag over the most recent accounts.

Accountants Mazars, who were appointed in June last year, slapped a ‘qualification’ on the figures. Basically, the bean counters issued a warning that they were unable to verify that the accounts gave a true and fair view of the financial position. 

Qualifications are rare and only happen when auditors have very serious concerns. These centred around stock, which the company said was worth nearly £4million.

Mazars said they could not vouch for the valuation, as they had not been present at the stock-checking, which took place before they were hired. 

The qualifications appear to relate to the transition to LVMH but it would certainly be very concerning if they were repeated in the next accounts.

However, LVMH, which bought a sizeable minority stake in 2019, is a French behemoth valued at more than £270billion.

The accounts of parent company Anin Star, which was set up in July 2019 when McCartney embarked on her partnership with LVMH, were also qualified.

The auditors said they ‘were unable to determine whether adequate accounting records had been kept’. Previously, Stella’s business was in a joint venture with rival luxury group Kering, which owns the Gucci and Yves St Laurent brands.

Stanley Gibbons, with a heritage dating back to 1856, has survived bigger threats than wayward tenants. Philately has not been immune from the pandemic, and the company made a £4.1million pre tax loss in the year to the end of March.

But having traded through innumerable recessions, not to mention a bomb blast in the Second World War, it has survived worse.

To some, the decision to stop paying rent will seem a sound, though hard-nosed commercial judgment. For Britain’s most famous green fashionista, however, it’s not the best look.

This post first appeared on Dailymail.co.uk