Right from the start, Joel Horowitz says his relationship with Tommy Hilfiger was pure chemistry.
"By far, my biggest contribution was being a great partner to Tommy," said Horowitz, who was Hilfiger's business partner and chief executive officer of the company for 19 years. "Our partnership, from 30 minutes after we met, was made in heaven, whether it related to the business or everything else. If it wasn't for our strong relationship and partnership, the business would never have evolved."
Horowitz, who stepped down in 2004, met the designer in 1984 through Alan Gilman, then president of Murjani International.
"My position was head of new business, and Alan walked Tommy into my office one day and said, 'Here's a new business for you,'" recalled Horowitz. "Tommy was dressed in Girbaud chino pants, an oversized white poplin shirt and a big smile. Thirty minutes later, we were in love."
According to Horowitz, Hilfiger talked about what he wanted to do, and Horowitz put his two cents in, as well. "We met on June 30, 1984, and he was on a plane to Hong Kong July 1 to put a line together," said Horowitz, who also made the trip.
Bloomingdale's was the first store to buy it. "They gave us a little corner," he recalled.
Horowitz said he was able to map out a long-term strategy for the business and stick with it. They were able to make their mistakes during the early days under Murjani before he and Tommy invested their own money in it, he added.
"In the beginning, it was pretty hectic. It was received terrifically. The concept of the line for men's wear was quite revolutionary, both from a product standpoint and how we engineered the business," said Horowitz.
Hilfiger took all the old classics and made them modern. For example, he made a sport shirt oversized, and took chinos and khakis and washed them.
"Operationally, we took a women's wear approach by shipping monthly collections to the stores in groups, rather than the typical twice-a-season men's wear deliveries. We were the originators for the men's wear market," said Horowitz, even though occasionally they'd run into trouble with getting all the groups together to be shipped on time.
According to Horowitz, one of the problems was that Mohan Murjani, ceo, wanted to be in many businesses, even before certain ones were solidified. "We started with men's wear and he pushed us into children's wear, neckwear and women's wear too early."
After Murjani ran into financial difficulties, they decided to buy the business from him and, in 1989, Hilfiger and Horowitz met with Silas Chou and Lawrence Stroll.
Chou, a major Hong Kong manufacturer, was already familiar with the preppy young designer, having met Hilfiger in the mid-Eighties. Chou was walking up Rodeo Drive and saw Hilfiger's men's wear store and wanted to make his sweaters.
"He sought us out, and became a manufacturer and supplier for us," said Horowitz. Chou and Stroll were partners in Ralph Lauren Europe, and Chou said they should meet Stroll, so they were off to Paris.
"Tommy and I couldn't believe how lucky we were to have partners like them. I came out of Ralph Lauren, and so did Lawrence, and Silas had exposure to Ralph. The concept was to appeal to a young, Polo-type customer. We learned from the godfather in our industry. I was happy to partner with guys who weren't just financial investors," said Horowitz.
Chou and Stroll continued to head up their other businesses. Chou kept up his manufacturing operation and Stroll continued his Ralph Lauren venture for about a year, and also kept his Canadian businesses.
For 15 years, the partners were a formidable team. Horowitz ran the day-to-day operations; Hilfiger was the product person; Stroll provided product and marketing expertise, and Chou helped Horowitz with the overall structure of the company and Far East sourcing.
"We worked closely all the time on everything. One of our greatest strengths was that the four of us became a tight, tight partnership. Everybody knew their role and worked so well together," said Horowitz.
Although they didn't agree on everything, Horowitz said, "I have to hand this to Silas: [Chou and Stroll] were the majority partners, but no major decision was ever made without a consensus."
And the business took off. "The growth was astronomical," said Horowitz. "In March 1989, we were doing $25 million in sales and losing $5 million with five or six businesses." In the first year of their new partnership, they eliminated every business but men's wear. That first year, they generated $25 million alone and basically broke even. "We took five businesses and went back to one. Every year from then on, we virtually doubled," said Horowitz. In 1992, the year the company went public on the New York Stock Exchange, volume was about $125 million, with a profit margin of 18 to 20 percent.
"Virtually throughout the Nineties, the company doubled every year," said Horowitz. The firm went on to add women's apparel, children's wear and entered the European market.
Horowitz said the first fragrance license with Estée Lauder marked a turning point for the company.
"It was such a critical license for us. It gave us great brand recognition with the female consumer and we were able to get brand-name recognition internationally in Europe and Asia," he said, laying the groundwork for the women's apparel introduction. In 1995, Hilfiger entered women's wear through a license with Pepe Jeans. When Hilfiger bought Pepe, it brought jeanswear and women's wear in-house.
Spurring its rapid growth in the Nineties was the brand's association with the hip-hop community. Tommy Hilfiger became a favorite of rappers such as Snoop Dogg and Coolio, and as a result, the brand started chasing many different trends — oversize logos, big athletic jerseys and baggy, low-waisted jeans — and lost its core preppy customer.
"We attracted the hip-hop customer because the hip-hop community in the Nineties liked the preppy American look. Our association with music, which we had all along, is what set us apart from other brands. We wanted the apparel and business to stand for fun, and music was part of that. It helped spur the growth in the Nineties," said Horowitz, adding it gave the brand an international appeal, as well.
But once the hip-hop crowd moved on to other designers, the brand suffered from overdistribution, promotional problems and an identity crisis.
"I think there was a combination [of things]," said Horowitz. "It was us selling too much product into the channel. The department store channel, which was the lion's share of the business, accounted for at least two-thirds of our U.S. wholesale revenues. The department stores at that time had not consolidated yet and everything was about promotion and price wars left and right. We had to reduce our dependency on department stores, so we cut back."
Although some observers believed it was the department stores that wanted to cut back on Hilfiger's lines, Horowitz insisted: "It was 90 percent us and 10 percent them."
Asked what he would have done differently, he said: "I think what I would do differently is control the growth more than I did. In retrospect, it was my decision alone, being ceo. I think we let some of the pressure of being public do things that were not quite right for the brand, growing the business beyond what the consumer demand for the product was."
In the early 2000s, the American wholesale business got increasingly tougher, and U.S. revenues began to slide, although the European business continued on its growth track. In 2002, when the company was ringing up $1.87 billion in revenues, Horowitz said he would step down as ceo when his contract expired in March 2004, but that he would remain a director of the company.
Reflecting on his tenure, Horowitz said highlights were purchasing the Hilfiger business from Murjani and controlling its destiny; the partnership with Chou and Stroll; going public in 1992; building the European business, which made Hilfiger into a powerful global brand, and creating an organization of strong managers and rewarding them both personally and professionally. "A lot of people made a lot of money," said Horowitz. Asked why he decided to retire in 2004, he said: "I always had a plan when I started working at 18 years old that I wanted to retire at 40. But I was having much too much fun and the business just needed me. When I turned 50, I felt that was the time to do what I wanted to do."
Asked if he ever anticipated this kind of success, he said, "Not in a million years. It's been quite rewarding. None of us went to college. We all had a dream and stayed very focused on it. We ran it like a real business, not just a fashion business. We've been very fortunate — we came in when the casualization of the workforce was really happening for men."
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