Tommy Hilfiger’s Prep School

The designer recounts how he built his brand, which rang up $5.6 billion in worldwide sales at retail last year, with distribution in more than 90 countries.

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Men'sWeek issue 04/05/2012

Last year, the Tommy Hilfiger brand rang up $5.6 billion in worldwide sales at retail, with distribution in more than 90 countries. How Hilfiger, principal designer at the brand that bears his name, propelled himself from humble beginnings in Elmira, N.Y., into the ranks of the world’s top fashion brands is one of the best-known and oft-repeated tales of Seventh Avenue lore.

This story first appeared in the April 5, 2012 issue of WWD.  Subscribe Today.

“When I was a teenager growing up in Elmira, I had a dream. And the dream was to become a designer and build my own brand,” related Hilfiger. Jump-starting that dream early, Hilfiger went into the jeans business with his friend Larry Stemerman as a high school student.

“We each put $150 in a kitty and drove to New York City in a Volkswagen Beetle and bought 20 pairs of bell-bottoms from the streets of the Village — Saint Mark’s Place — and brought them back to the schoolyard and basically sold them to our friends,” recalled the designer.

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The scheme was a fast hit and in 1969 Hilfiger opened a store in downtown Elmira called People’s Place. “We sold bell-bottoms, candles, all sorts of gear of the time. We discovered we were creating a business and a sort of lifestyle brand at that time,” said Hilfiger.

He and his partners in People’s Place opened a group of stores in upstate New York, including one near the Cornell University campus. However, as with any business, there were stumbling blocks and a big one occurred following a meeting with his accountant. “He said, ‘By the way you guys, you’re bankrupt.’ So this was a shock at 23 years old,” said Hilfiger.

Resisting his parents’ wishes, Hilfiger opted out of college and moved to New York, where he worked a number of freelance design jobs. “I worked for Jordache jeans; they fired me,” he admitted.

That didn’t stop Calvin Klein from offering Hilfiger a job, and he almost took the gig — but instead went into business with backer Mohan Murjani at the last minute. “I told Calvin I was going to take the job on a Thursday. Mr. Murjani offered to back me on a Friday, so I called Calvin on a Monday and told him, ‘I’m not taking the job, I’m going into competition with you.’ He laughed and hung up the phone,” remembered Hilfiger. “And here we are 26 years later.”

Today, Hilfiger and Klein are siblings of sorts, as both of the brands are owned by PVH Corp., although Klein is no longer active in his namesake label.

RELATED STORY: Tommy, Calvin Again Lift PVH Profits >>

Since launching the Tommy Hilfiger brand in 1984 with Murjani, Hilfiger and his company endured a roller-coaster ride of ups and downs before arriving at their current robust position in the PVH portfolio. “What I learned on the way is that you have to keep a brand alive, you have to keep it relevant and you have to keep it fresh,” said Hilfiger.

The company faced some existential threats over the years, including the implosion of Murjani’s holdings, which led to the brand being acquired in 1989 by Silas Chou and Lawrence Stroll. Hilfiger extolled the business savvy and smarts of Chou and Stroll, as well as former Tommy Hilfiger chief executive Joel Horowitz and current ceo Fred Gehring.

Chou and Stroll most recently took Michael Kors public. “They bought [Kors] when it was doing $25 million eight years ago and now it has a market cap of over $8 billion today. That didn’t happen by accident,” said Hilfiger. (Michael Kors had a market cap of $9.1 billion as of Wednesday.)

In the Nineties, Hilfiger famously veered off course and embraced a contemporary, urban look and audience, which boosted sales while muddling the brand message.

“As a result of the tremendous growth in the Nineties of Tommy Hilfiger, we felt a plateauing and a stalling at the end of the Nineties,” said Hilfiger. “It made us really think about what to do next.

“We have made many mistakes along the way, sometimes closing stores because we opened in poor locations. We made mistakes of overdistributing,” admitted Hilfiger. “But I think those mistakes were great learning periods and it gave us a lot of strength now in growing the brand globally in avoiding some of those pitfalls.”

The brand has become particularly successful in Europe, where it was positioned at a higher price point with a more premium look than in the U.S. Upscale stores sold the brand on prime shopping streets in Europe and delivered a consistent brand message of preppy, all-American designs with a twist.

“When we strayed away from it, we lost our identity,” said Hilfiger of the preppie DNA of the brand. “When we came back to it, we regained our identity. So that is why I keep talking about identity and brand heritage. Once you own that, holding onto it is really key.”

Since returning to its roots, Hilfiger’s sales have steadily grown around the world, including Asia, Europe, Central America and South America, with each market responding to the preppie look in their own way. “If the Italians are wearing preppie in a very bright and colorful way, in Tokyo they are wearing pattern with pattern and tartan with argyle. In Santiago they are wearing very clean, slick silhouettes but it’s still preppy. In America, it’s very eclectic.”

While product is paramount, the right marketing is essential to burnishing a brand. The current Hilfigers family campaign is effective because it speaks to people of different ages, shapes and sizes, said Hilfiger.

Celebrities such as Britney Spears, David Bowie, Usher and the Rolling Stones have long been central to Hilfiger’s branding, and the designer invented his own acronym as a shorthand for the formula. “Pop culture is all about what I call F.A.M.E.: fashion, art, music and entertainment,” explained Hilfiger. “I believe celebrity, entertainment, music, artists and people in the know make a brand happen.”

In his new role as the style adviser on “American Idol,” Hilfiger said he is urging contestants to take a page from his own playbook and create their own brand identities — à la Jennifer Lopez and Jessica Simpson, who have built fashion businesses via licensing their names and personalities.

The brand’s positioning in the premium segment below luxury has been beneficial to its growth. “We’ve been able to break through difficulties in the financial crisis,” Hilfiger pointed out. “And we’ve been able to grow faster in various areas. We are still a status brand but still affordable and accessible.”

With the company’s success, Hilfiger has devoted resources to philanthropy, establishing the Tommy Hilfiger Foundation. Hilfiger helped establish a community center in Elmira and built a summer camp with the Fresh Air Fund called Camp Tommy in upstate New York in 1999.

For three seasons, Hilfiger has mentored young American designers and sponsored the CFDA/Vogue Fashion Fund’s Americans in Paris program.

A maxim Hilfiger tries to impress on advice-seekers is the importance of establishing an enduring style, rather than chasing short-lived trends. “When you are branding and building a brand, remember that fashion is very much a part of it, but fashion is fleeting and style is forever,” he said.