By  on May 23, 2006

NEW YORK — Tommy's going Dutch.

In a sweeping consolidation of operations at Tommy Hilfiger Corp., the $1.7 billion apparel firm, some 230 people were let go Monday as the company outlined a new organizational structure and worldwide leadership team. As part of the restructuring, the brand's corporate headquarters will relocate to Amsterdam, while its New York offices will, in effect, become a satellite unit.

Other initiatives include the closure of the H Hilfiger vertical retailing business and the ending of the children's wear collection apart from selling it within Hilfiger stores.

Fred Gehring, the former head of Hilfiger's European operations who took over as global chief executive officer of Hilfiger following the company's sale to Apax Partners' funds on May 10, said a reorganization was necessary to restore the position of the Hilfiger brand in the U.S.

"One of our first priorities has been to assess our worldwide organization so that we are best positioned to execute our plans of elevating the Tommy Hilfiger brand in the U.S. and capitalizing on the premium positioning that we have built globally," said Gehring, who will continue to be based in Amsterdam while spending significant time in the U.S.

Hilfiger will scale back its U.S. management and corporate infrastructure based in New York and New Jersey, which employs about 800 people in total. In addition, the company is consolidating management responsibilities in its U.S. wholesale business and eliminating some U.S. back-office functions. Executives throughout all ranks of the company were given notice and severance packages in areas such as women's sales, women's design, e-commerce, advertising, public relations, legal, operations and human resources.

The company said while the U.S. retail and licensing businesses have been strong, and the men's wear division has begun experiencing positive momentum, the other U.S. wholesale businesses have faced "material challenges" in recent years. The children's wear division has gone through an extended period of decline over several years and will cease activity other than within company-owned stores. Junior Jeans will be folded into the women's wear division.

The H Hilfiger vertical retail initiative will be discontinued, and the H staff will be redirected to focus on the development of Hilfiger's full-price freestanding retail stores carrying Tommy Hilfiger items, as well as a line of product specifically designed for those stores. The H stores will become Tommy Hilfiger units. The U.S. e-commerce activity will be converted from an in-house setup to an outsourced approach. As the company becomes a private firm, it is also phasing out public company functions, such as investor relations.Among some of the high-ranking executives let go Monday were Robert Rosenblatt, chief operating officer; James Gallagher, executive vice president, general counsel; Rebecca Shafer, executive vice president, marketing and brand development, and Theophlius Killion, executive vice president, human resources. David Dyer, as reported, left his role as president and ceo upon the closing of the company's sale to Apax.

As for Hilfiger's role, Gehring said, "Tommy will continue to play an important role in determining the DNA of the brand. He won't be involved in micromanaging decisions, but will be involved in the general direction of the brand. He can combine it with his extracurricular activities," such as TV and film projects.

Going forward, Tommy Hilfiger Corp. will consist of four independently managed business units (U.S.A., Canada, Europe and the Far East Buying Offices) directed and controlled by a small corporate management team consisting of Gehring, Ludo Onnink, chief operating officer, and Joe Scirocco, who is continuing as the company's chief financial officer.

The business will be supported by three executive vice presidents — namely Avery Baker, who has been in marketing at TH Europe and becomes executive vice president, global communications; Michael Arts, also an executive from TH Europe, who will serve as executive vice president, global brand management, who will work closely with designer Tommy Hilfiger, and Anne Marino, who recently joined the company from Donna Karan International and will be executive vice president, global licensing.

On an operating level, Gehring will retain the ceo responsibilities for the Tommy Hilfiger Europe division and will assume the same responsibilities for Tommy Hilfiger USA.

Within the U.S., Allan Zwerner will continue as president of U.S. wholesale and president of the men's wear business. Leslie Singer, formerly president of juniors, has been named president of the women's wear business, which will now include women's and juniors.

Gary Sheinbaum will continue to serve as president of the U.S. retail business. Marino will also serve as president of U.S. licensing, and Scirocco will serve as chief operating officer of Tommy Hilfiger USA in addition to his role as group chief financial officer.

In Europe, Daniel Grieder, former senior vice president of commercial operations, will become chief operating officer, with oversight of wholesale and licensing activities, while Onnink will retain his responsibilities as cfo, while overseeing all European retail operations and development.In Canada, Howard Starr, ceo and president, will continue to oversee the business there.

The Karl Lagerfeld business, which Hilfiger acquired in December 2004, will continue to be managed by Anne Acierno.

"We see the Karl Lagerfeld business as a very material opportunity," said Gehring. He said no changes are planned in that division, and the focus for now will be on the organizational structure of the Hilfiger company.

He said the company will retain its offices on West 26th Street and in New Jersey.

As for Hilfiger's design team, he said that there are two totally independent design teams, one in Europe and one in the U.S. "We will make a major effort to step up the level of overlap between the two product groups," said Gehring. "The intention is to harmonize it more. There will be a mutual exchange of creative ideas. They're both very significant businesses on both sides of the ocean."

Discussing the closure of the H stores, Gehring said the main mission has to be to improve the positioning of the Tommy Hilfiger label. "H is confusing more than anything. The talent is quite strong and will be much more effective if focused on the Tommy Hilfiger brand."

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