NEW YORK — Having bought another designer, Tommy Hilfiger is now sorting out his own house.
In a move aimed at speeding up product to market and turning around its ailing wholesale business, Tommy Hilfiger Corp. — which last month bought the rights to the Karl Lagerfeld name — has restructured its own design and production operations and its women’s, men’s and children’s divisions, and closed its young men’s division. The changes will result in cost savings of $40 million and the loss of 200 positions, according to David Dyer, president and chief executive officer of Tommy Hilfiger Corp.
But more changes could be on the way: Dyer indicated that the future of the company’s H Hilfiger line, which was introduced with much fanfare last spring exclusively at Federated Department Stores and at Hilfiger’s own shops, remains up in the air after a disappointing performance.
“We’re still taking a look at it. We haven’t made a decision yet,” said Dyer. He said Federated still has the exclusive, and Hilfiger has sold some specialty stores, including Parisian. “The whole segment of the better contemporary business, which includes Calvin Klein, Michael Michael Kors and H, hasn’t performed very well. We’re reevaluating how to go forward,” said Dyer.
Last month, H’s designer, Ginny Hilfiger (Hilfiger’s younger sister), left the company to spend more time with her family. Her successor hasn’t been named. Some market observers noted that perhaps Hilfiger would try and convert its prime H space at Federated Department Stores into Karl Lagerfeld shops.
“A lot of our emphasis will be on Karl Lagerfeld, and we’ll continue with Lagerfeld Gallery,” said Dyer. “It will be 2006 before we get a different [Lagerfeld] line out for the U.S.” He noted the company is currently strategizing whether to launch Lagerfeld handbags and accessories first, another Lagerfeld apparel line or even a Lagerfeld line initially in Europe and Asia. “We want to do it right, and we’re looking at many things,” he said.
Hilfiger’s wholesale business last year accounted for approximately $700 million in revenues out of the company’s total $1.88 billion. Wholesale sales are half of what they were in 1999.
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