NEW YORK — As if the pressure on Tommy Hilfiger to turn around his company wasn’t already enough, his decision to become a TV personality has just ratcheted it up a notch.
Observers said Hilfiger is taking a huge risk with his decision to go on TV in the 13-episode midseason offering from CBS called “The Cut,” which at first glance looks to be a hybrid of Bravo’s yet-to-air “Project Runway” and NBC’s “The Apprentice.” Sixteen contestants will compete for the opportunity to design a collection under the Tommy Hilfiger label, with Hilfiger presiding over the contest — and presumably uttering some variation of “You’re fired!” to usher out the might-have-beens. During each episode, guests will also serve on a Trump-style advisory board, critiquing contestants and offering up industry advice.
And though “The Apprentice” was a ratings boon for NBC and certainly took Donald Trump from New York celebrity to heartland household name, it didn’t stop his hotel and casino business from going belly-up.
Financial analysts said Hilfiger’s shot at television stardom could be a major distraction from his efforts to rebuild his business, which has seen better days. Over the last three quarters, Hilfiger earnings have seesawed from profit to loss, while top-line results have been inconsistent. For the most recent quarter, ended June 30, the company reported a net loss of $7.6 million versus last year’s earnings of $17 million. Sales fell 10.5 percent to $328.6 million from $367.2 million.
Since the beginning of the calendar year, the company’s stock has fallen 10 percent, or $1.46, to $13.20 from $14.66. Moreover, Hilfiger’s shares have substantially underperformed the broader market, lagging behind the S&P 500 by 9.7 percent year-to-date.
According to SEC filings, Hilfiger’s stake in the company has remained unchanged since last September’s proxy statement, in which it was disclosed that the designer owns 3,968,548 shares, or 4.4 percent of the firm’s outstanding stock.
Clearly Hilfiger doesn’t need the money a TV gig will provide, although Trump only earned $50,000 an episode in “The Apprentice’s” first season. As honorary chairman of Tommy Hilfiger Corp., the designer was the highest-compensated executive at a U.S. publicly listed apparel company in 2003. His $18.3 million salary — he took no bonus — was enough to grab the number-one spot on the list. Still, his compensation fell 10.8 percent from 2002, due to lower U.S. sales in fiscal 2003.Some observers, like brand consultant Marc Gobé, view the reality TV venture as a potentially workable strategy for reconnecting the brand with consumers. “I think Tommy needs to regain some of the charisma he used to have,” said Gobé, president and chief executive officer of Desgrippes Gobé and author of “Emotional Branding” and “Citizen Brand.” “I don’t think you can do that by just doing traditional media.”
Scott Bedbury, founder of the brand development consultancy Brandstream, agreed: “Frankly, there’s such a distrust of advertising these days. Back in the Fifties and Sixties, consumers believed anything companies said. Smart companies today are looking at content development.”
To Gobé’s mind, entertainment and celebrity are cornerstones of the Hilfiger identity, which is why he likes seeing the designer make a concerted effort to reestablish ties to the music industry and ground the brand back in the hip-hop lifestyle. Hilfiger recently tapped Beyoncé Knowles as the face of the company’s new fragrance, True Star, and in the September issue of In Style, Hilfiger and Beyoncé appear in a chummy six-page story set at the designer’s home in Mustique.
“He walked away from that connection to celebrity for a while,” said Gobé, “first by losing the connection with the music world, and second by creating communication and advertising that looked like any other brand. That was a mistake. You can’t be Ralph Lauren number two. You have to be Tommy Hilfiger number one.”
How Tommy’s own rising reality star will affect the brand is debatable. And, of course, production values will be a major factor. As Bedbury said, “It’s all in the execution. If it feels forced, I think consumers will reject it.”
Brad Adgate, senior vice president and corporate research director of Horizon Media, said, “It has to be interesting, but if he can build himself as a celebrity, I think that can only help the brand.”
“Every once in a while you get a reality show where people go, ‘Ewww, that’s not working,’” said Jane Buckingham, president of Youth Intelligence. “The people who end up doing well in these types of shows, they’re not apologetic. Even if you hate them, you kind of like them. But he’s certainly dynamic enough to build a huge brand. And he runs in a world that people find tremendously interesting.”“The Cut,” which comes to CBS from Lions Gate Television and Pilgrim Films and TV, will be Hilfiger’s second brush with reality TV. Daughter Ally was the star of MTV’s watchable but cringe-inducing “Rich Girls,” which drew 1.1 million viewers in the 18-to-34 market for its debut. In the New York Observer last December, Simon Doonan called the show “the mesmerizing MTV reality sensation starring luggage heiress Jaime Gleicher and Ally Hilfiger as the two spoilt and endearingly retarded Manhattan brats they obviously are.” Which just goes to show, compelling reality TV doesn’t necessarily equate to a positive opinion of its stars.
And as Buckingham points out, if what’s in stores isn’t up to snuff, even the best-produced show won’t translate into sales for the Hilfiger label. “If the merchandise isn’t right, it definitely won’t work in favor of the brand,” said Buckingham. “He’s going to get his moment in the sun, and it has to be the right product at the right time.”
Several retail consultants said Hilfiger’s reality show likely won’t hurt the public’s image of the Hilfiger brand, but the show’s success in boosting merchandise sales is not guaranteed.
“They’re certainly going to get more notoriety,” said Craig Johnson, president of Customer Growth Partners, a retail consultant firm. “The way I look at it, they will get noticed, and they will get a certain buzz the same way that Donald [Trump] has gotten it.”
But Johnson is slightly skeptical, calling the reality show a “potential two-edged sword.”
“Is the buzz going to translate into any kind of top-line growth in the line?” he asked. “Just the same way that The Donald’s gotten a lot of buzz, he [Hilfiger] has had a few financial difficulties at the same time, too.”
Richard Keim, managing partner at Kensington Management Group, agreed with Johnson that the show will create a new source of attention. “The company certainly can use a little help there,” said Keim, noting that awareness of the brand reached saturation levels roughly two years ago when “you couldn’t walk down the street without seeing a sign saying ‘Tommy Hilfiger.’”Kim Picciola, an analyst at Morningstar, noted the company could see an increase in sales if the merchandise showcased on the reality program reflects current trends. “If it’s hot and following fashion trends, then I think there’s a good chance they’ll see a pop in sales.”
Additionally, she said, the show could add a certain credibility to the brand as a whole. By showcasing Hilfiger’s talent with what seems to be his personal, hands-on approach, customers who have not looked at buying the merchandise prior to the show might find it appealing.
But Picciola noted that, at least in the case of Trump’s “The Apprentice,” “Trump really benefited more than maybe his business did per se.”
As a result, Tommy TV runs the risk of helping Hilfiger’s persona more than offering a boost to his company’s financial picture.
— With contributions from Meredith Derby, Jeff Bercovici and Dan Burrows
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