About 24 hours after naming chief executive officer Joel Horowitz chairman on Tuesday, the firm said it was dividing its business into three wholesale operating units — men’s wear, women’s wear and children’s wear — resulting in the elimination of Todd Howard’s post as head of big children’s sizes, men’s jeans and junior jeans, each of which will be integrated into one of the new divisions.
Earlier in the day, Hilfiger reported third-quarter results that were down without special charges and in the red with them. For the three months ended Dec. 31, 2002, the company lost $22.1 million, or 24 cents a diluted share, against earnings of $37 million, or 41 cents, in the same year-ago quarter. Excluding special charges of $87.5 million, the company would have earned $34.8 million, or 38 cents, below year-ago levels but at the high end of the firm’s guidance.
Additionally, in the face of a tough, promotional climate at retail, conservative buying patterns among retailers and the continuing burden of price deflation, the firm lowered fiscal 2004 guidance and reduced capital expenditure plans for next year to between $70 million and $75 million from about $85 million during the current year.
The special charges, which pertain to the company’s closure of 38 U.S. specialty stores, announced last year, include a $73.3 million store closure provision, $2.6 million for write-down of inventory that was included in its cost of goods sold, and $11.6 million in impairment charges to write down fixed assets and leasehold improvements for the stores that will remain open. The affected units contributed $10.3 million and $12 million in net revenue for the quarters ended Dec. 31, 2002 and 2001, respectively.
Revenue for the quarter inched up 0.5 percent to $477.3 million from $474.8 million. Wholesale sales dipped by less than 1 percent compared with last year. Revenue in the children’s and women’s components was up 14.7 percent to $70.6 million and 3.4 percent to $137.7 million, respectively, in the third quarter from last year, but men’s wear declined 11.7 percent to $123.2 million.