Tommy’s Tough Reality: Hilfiger Struggles With Federal Probe

Tommy Hilfiger has maintained his cool persona, but the company that bears his name is under much pressure from a grand jury investigation.

View Slideshow

The Hilfiger logo.

Photo By Thomas Iannaccone

WWD Image

Photo By WWD Staff

Spring fashions from H Hilfiger.

Photo By John Aquino and Tayala Centeno

NEW YORK — Surrounded by assistants, cameramen and hordes of hopeful designers at a casting call for his new reality TV show, Tommy Hilfiger was in his element — the master of ceremonies offering opinions on style and serving up well-crafted sound bites.

“Fashion and pop culture are now one,” the designer said, latching onto a phenomenon that he helped propel with advertising campaigns featuring David Bowie, Lenny Kravitz and Beyoncé Knowles. Dressed in ripped jeans, an untucked striped shirt and a dark blazer, Hilfiger was preparing for “The Cut,” in which 16 aspiring designers will compete for the chance to create their own collections under the Tommy Hilfiger label. The program is to debut next year on CBS.

Hilfiger, 53, honorary chairman and principal designer of the company that generated $1.88 billion in revenue for the year ended March 31 — his salary was $18.3 million — appeared to be at the top of his game.

But just days earlier, Tommy Hilfiger Corp. announced that it was under criminal investigation by the U.S. Attorney’s Office in Manhattan regarding its commission policies. The inquiry might ultimately endanger the brand and result in additional tax liability of as much as $160 million, Wall Street analysts and industry executives said.

Subpoenas, some seeking documents as far back as 1990, were issued to the company, as well as former and current executives. Hilfiger has delayed releasing its earnings for the quarter, and its market capitalization has plummeted more than 30 percent, or $365 million, since the announcement. The company’s stock has fallen to $9.19 from $13.17 in New York Stock Exchange trading. About 10 shareholder lawsuits have been filed against the corporation.

“It’s not some minor violation,’’ said management consultant Emanuel Weintraub. “This is a very serious matter, which goes to the integrity of the company and impacts Wall Street’s opinion….This will pass. Tommy will not close down, but it has to slow them down.”

Slowing down would be a move in the wrong direction for Hilfiger, which is trying to rev up its business under the direction of David Dyer, who was named president and chief executive officer after being lured from Lands’ End in August 2003.
View Slideshow
Page:  ... Next »
load comments


Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.
News from WWD

Sign upSign up for WWD and FN newsletters to receive daily headlines, breaking news alerts and weekly industry wrap-ups.

getIsArchiveOnly= hasAccess=false hasArchiveAccess=false