NEW YORK — Tommy Hilfiger USA Inc. is the target of an ongoing criminal investigation conducted out of the U.S. Attorney’s office in Manhattan, according to the company.
THUSA said in a statement on Friday that it is cooperating with the investigation. The company on Thursday received a grand jury subpoena from the U.S. Attorney’s office requesting documents dating back to 1990.
Executives at THUSA declined to elaborate further on the probe. A spokeswoman for the U.S. Attorney’s office declined comment.
THUSA is a subsidiary of Tommy Hilfiger Corp., which is based in Hong Kong. According to the subsidiary, the documents sought related to THUSA’s domestic and/or international buying office commissions. Buying office commissions were paid to a non-U.S. subsidiary of Tommy Hilfiger Corp. to provide services that include product development, sourcing, production scheduling and quality control functions, according to THUSA.
“It appears that the investigation is focused on whether the commission rate is appropriate,” THUSA said in a statement. The subsidiary added that it is “unable to predict the timing or the outcome of the investigation.”
In addition, the company said certain current and former employees have also received subpoenas.
Tommy Hilfiger Corp., through subsidiaries, designs and manufactures men’s and women’s sportswear, jeanswear and children’s wear under the Tommy Hilfiger trademarks. Over the last three quarters, Hilfiger earnings have seesawed from profit to loss, while top-line results also have been inconsistent. For the most recent quarter, ended June 30, the company reported a net loss of $7.6 million compared with last year’s earnings of $17 million. Sales fell 10.5 percent to $328.6 million from $367.2 million.
Over the past five years, Hilfiger has seen declines on both the top and the bottom lines. Sales for the year ended in March totaled $1.88 billion, 5.1 percent below the $2 billion raked in five years earlier. Profits last year tallied $132.2 million and were 23.3 percent below the $172.4 million in earnings registered during the fiscal year ended March 2000.
The parent company last month said it is consolidating the company’s New York City-based design, production and merchandising headquarters to one location in the city at 601 West 26th Street.
In the past few years, the firm also has seen several changes on the management side. Joel Newman, executive vice president of finance and operations, retired in July. David Dyer assumed the role of chief executive officer and president in September 2003, taking over for Joel Horowitz, who remains chairman.
— With contributions from Evan Clark