By  on November 3, 2010

Tommy Hilfiger has mastered the art of reinvention.

After challenging years when the company needed to redefine its business in the U.S., Hilfiger is solidly back on track. In fact, 2009 was the best year in its 25-year history, Tommy Hilfiger, principal designer and visionary of the brand, said Tuesday. But a turnaround wasn’t always so clear when the firm was suffering from overdistribution and excess promotional activity in department stores in the late Nineties and the early Aughts.

Hilfiger said executives borrowed from the firm’s European playbook, where the business had premium positioning and balance. Taking a hard look at the U.S., he said a decision was made to reinvent the business by going back to its roots and doing what the label knew best.

“We took all of Europe and planted it back in the U.S.,” Hilfiger said.

The company also developed an exclusive with Macy’s, “which has been a godsend,” Hilfiger said. “We now have a very substantial home in America with all our product lines — men’s wear, women’s wear, children’s, home, fragrance and all the licensed products.”

In addition, Hilfiger opened more of its own stores in the U.S. — and now has 1,000 around the world.

“We’ve come full circle in resetting the brand,” said Hilfiger, who last year sold the company to Phillips-Van Heusen Corp. for $3 billion.

When Hilfiger was trying to figure out how to reinvent the line, he met with Karl Lagerfeld and asked him how he was able to succeed with Chanel. “He said, ‘It was very simple. I looked at the Chanel archives and decided to modernize what existed already and make it relevant for today.’ As simple as it sounds, that’s exactly what we did,” Hilfiger said.

The designer decided to look back at what the label had been and what it stood for over the years. He said he realized it was “a cool, American classic brand — preppie with a twist. That’s exactly what we were when we started,” and it has returned to that.

Hilfiger recounted his start in the business, beginning when he was 18 years old in Elmira, N.Y.

“I started with $150 from pumping gas at night while I was in high school,” he recalled. “I wanted to look cool, and was wearing bell-bottoms, and all the guys wanted to look like me.”

Hilfiger said he’d drive his Volkswagen Beetle five hours into New York City, load up with 20 pairs of jeans and sell them back to friends in the high school parking lot. He then rented a store with two friends called People’s Place, where he sold rock ’n’ roll posters, clothing and incense.

“We’d open at 3 p.m. after school and on weekends,” he said.

Hilfiger also bought from manufacturers, but saw they didn’t have what he wanted. So he started sketching ideas himself. He would take ready-made jeans and embellish them with fringe and pockets. He put the dark blue ones in the washing machine with sticks and stones and Clorox and “created what I called stonewashed jeans. Ultimately, I was pleasing the customer. You really have to listen to the customer. I’ve kept that idea with me all those years,” he said.

Hilfiger eventually moved to New York City, met with Mohan Murjani, who wanted to back him, and launched a line of preppy clothes in 1985.

“I started Tommy Hilfiger based on what I wanted to wear,” he said. “I had been spending time in California and it was a very relaxed, easy lifestyle. But I wanted to wear preppy clothes that were easy and relaxed. Brooks Brothers was very uptight, Ralph was Ralph…and I decided to redefine the classics.”

Hilfiger said he took chinos, button-down shirts, polo sweaters, cotton sweaters and golf jackets and made everything loose, relaxed, washed, cool and full of interesting details. He launched at a time when U.S. companies were going casual on Fridays, allowing their employees to come to work in chinos and open-collared shirts.

“I was really at the right time at the right place,” he said.

In the Nineties, Hilfiger teamed up with Silas Chou, Lawrence Stroll and Joel Horowitz and greatly expanded the brand into other categories, such as women’s wear, children’s wear and accessories. The brand went public in 1992, opened in-store shops in major department stores, and launched a fragrance with Estée Lauder.

“We were growing at unprecedented rates in the Nineties,” Hilfiger said. “That came back to haunt us. We became too big and overdistributed. We didn’t see the backlash. What he learned from that experience is: You never oversupply the demand.”

Hilfiger said he was fortunate that Fred Gehring, then chief executive officer of Tommy Hilfiger Europe, planted the seeds there in the early Nineties, and decided to open stores on the best shopping streets, giving the brand premium positioning — slightly more upscale and expensive. “This allowed us to rebalance the business,” he said.

Discussing highlights of the company’s history, Hilfiger took note of the significance of pop culture to the brand’s success. He said the label was one of the first to do celebrity marketing and recalled a campaign with Britney Spears before she launched her first album.

“She wanted to model, and she looked like she was the jeans customer, so we used her in our jeans campaign,” he said. “Using celebrities would not only build our customer base but would appeal to their fans as well.”

Tommy Hilfiger went on to feature celebrities such as Lenny Kravitz, Jewel, Sheryl Crow, David Bowie and Iman in the apparel campaigns, and Beyoncé in the True Star fragrance campaign.

“From the beginning, I wanted to be associated with pop culture,” the designer said. “I wanted to be associated with music and Hollywood and young celebrities, and wanted to really zig when other people zagged. We’ve wrapped the brand in pop culture to make it new and exciting. We still feel that is a language we speak with our young consumer and younger demographic.”

Responding to a question about defining how the customer’s shopping habits have changed, Hilfiger said shoppers now have a large number of choices. “Price is a huge factor, and she’s not going to be totally loyal. She’s on the Internet, and she shops in the mall.”

Asked what excites him about the future, Hilfiger said: “It seems like only yesterday that I was standing in Mohan Murjani’s office and was overwhelmed that he would back my brand. I’m looking at completing global expansion, and we’re tiptoeing around a home line. We’re always challenging ourselves to better the product, the marketing and advertising, and the people we’re surrounded with. We’re always looking for what is next and what is new.”

Finally, asked about the “bold move” to go exclusively with Macy’s, Hilfiger explained that the company had inconsistent business with other department stores, and therefore going with Macy’s was a good move. “Macy’s was really our best performing retailer for the Tommy Hilfiger brand. I believe it was the right move. We left a lot of business on the table when we walked away from the other customers. Macy’s is one of the best department stores in the world.”

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