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fashion-features

Tommy Hilfiger’s Blue Year Yields Red Ink of $513.6 Million

Tommy Hilfiger posted nine-digit losses for its fourth-quarter and year-after special charges and amid declines in its wholesale and retail operations.

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Neither Horowitz nor Seegal could be reached for comment at press time.

Andrew Jassin of the consulting firm The Jassin-O’Rourke Group observed, “Denise Seegal is a good apparel leader who knows the marketplace and understands brands. With the company searching for a ceo, to me it makes sense for Tommy Hilfiger to absorb JLo as an operating division and rollup, which would give its women’s business a shot in the arm. Maybe in the process, it finds that its ceo candidate is right in its own backyard.”

Jennifer Black, an analyst at Wells Fargo who follows retail and apparel firms, but not Tommy Hilfiger specifically, said, “Sweetface makes perfect sense. It’s not so big that it can’t be managed and it has existing management talent through Denise Seegal.”

The Tommy women’s wear business in Europe grew significantly in fiscal 2003 and contributed about 25 percent of Europe’s revenue for the year. The ceo said that gains in the Tommy Europe women’s business partially offset declines in the U.S. and that women’s continues to represent an opportunity for the firm in the European market.

In the juniors’ category, the U.S. continued to be highly promotional during the fourth quarter. “Teens continue to be price-sensitive and have traded down to shop in the moderate channel, resulting in price pressure,” Horowitz noted. “In response, we continue to focus on pre-launch testing to identify potential best sellers to deliver trend-right fashion, and to minimize production and delivery time.”

Retail sales in the period fell by 3.7 percent to $73.1 million from $75.9 million. An increase in the number of stores partially offset a comparable-store sales decline in the mid-teen percentage range. Retail revenues include those of 37 stores previously slated for closure, with 18 closed at the end of the reporting quarter.

Licensing revenue rose 24.2 percent to $18.4 million, but the company said the increase was due entirely to the recognition of royalties on an underperforming license that had not previously been recognized.

For the year, the firm sustained a walloping $513.6 million loss, or $5.68 a diluted share, from income of $134.5 million, or $1.49, last year, due mostly to a $430 million charge reflecting the cumulative effect of a change in accounting principle. Revenues inched up 0.6 percent to $1.89 billion from $1.88 billion.
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