NEW YORK — H Hilfiger, which was pulled this year from 120 Federated Department Store doors in which it was sold, is on the road back.
It is being reinvented as a more high-end lifestyle label developed for Hilfiger’s own stores with the eventual goal of becoming a 200-unit global chain. Company executives said this was the initial plan for the H brand before it switched gears and was launched exclusively with Federated in spring 2004.
Even with a $10 million ad campaign featuring David Bowie and Iman and a traveling multicity fashion show led by Tommy Hilfiger, the brand was a major disappointment in the department store format and faced intense competition from other better lines, as well as Federated’s own brand, I.N.C. H Hilfiger was in stores for about a year; the last shipment arrived in the summer.
Still, executives believe there is a lot of life left in the label. For several months, a new team has been working on the redesign of the product and the development of the three freestanding stores the company is scheduled to open in the first three months of next year. The first will be a 5,500-square-foot space in Tysons Corner in Vienna, Va., on Feb. 2, followed by North Park Center in Dallas later in February and Oak Brook Center in Chicago in March.
Going head-to-head with retail chains such as Banana Republic and J. Crew, the company plans to open 10 to 12 H Hilfiger stores by the end of 2006. The goal is 20 stores in three years, and down the road, a total of 200 stores globally, said Michelle Parsons, general merchandise manger for the H Hilfiger brand.
“There is a demand for more upscale, refined sportswear,” Tommy Hilfiger said in an interview. “For us to present it in our own stores gives us great opportunity and adds growth to our brand. H is different than the Tommy Hilfiger line, but there is still a very wearable aspect to it, with the women’s line looking more feminine, and cashmere sweaters already bestsellers in our stores. This customer is interested in Hilfiger product, but wants something a bit more upscale, something they can’t find in department stores.”
The relaunch of H Hilfiger is a step toward more new business opportunities for Tommy Hilfiger Corp. The $1.8 billion firm also plans to launch the Karl Lagerfeld contemporary women’s and men’s collections in February for fall 2006 retailing. Just last week the 20-year-old company cut about 135 U.S.-based employees as part of its initiative to align the cost structure of its U.S. wholesale business, a segment that remains challenged. U.S. wholesale revenue for the first quarter dropped 29.4 percent to $115 million from $163 million in the year-ago period.
Tommy Hilfiger Corp. also could be going through some even bigger changes as J.P. Morgan Chase has been retained to try and sell the company. Among those eyeing it is Wal-Mart Stores Inc., which is considering a bid. Should Wal-Mart succeed in buying the company, the strategy to open H Hilfiger stores, which feature higher-priced items, could keep the brand alive in an upscale capacity.
Two weeks ago the company released preliminary financial results because of an accounting restatement. For the fiscal year 2005 that ended in March, the firm said preliminary net income was $86 million, or 93 cents a diluted share. It added that it expects to reduce fiscal-year 2004 net income to $131 million from $132 million, and increase the net loss for fiscal-year 2003 to $518 million from $513 million.
In addition to the new stores, there is an H Hilfiger unit in Manhattan’s SoHo and another in White Plains, N.Y., at The Westchester mall, which also will carry only the H Hilfiger brand, but will not immediately be redesigned to fit the new store format. While the stores are mostly mall based for now, Parsons said the company has started to look at street locations for future units nationwide.
The H Hilfiger stores will carry both women’s and men’s casual and dress apparel, as well as accessories including belts, handbags, hats, scarves and shoes. While prices will be similar to the Tommy Hilfiger line for department stores, H Hilfiger will feature select luxe items in each category. Prices will range from $20 for a knit top to $650 for a jacket. Other product offerings are to include cashmere sweaters, washed leather jackets and woven shirts.
The stores will be designed so that there is a separate entrance for the women’s product and the men’s. Accessories will be placed close to the dressing rooms for easy access while customers are trying on apparel. As an added service bonus, busy mothers and fathers easily can purchase their items as they try them on.
“It will be easy for them to tend to their children, rather than standing at a counter to pay,” Parsons said. “This customer is very much a part of the Tommy Hilfiger family, but a bit more progressive and individual. She looks for fun, sexiness, humor and wit in her clothes. While H was a bit dressier in the past, we are focusing the new H as a lifestyle collection, focusing on the mix of casual and dressy.”
As for the store design, the focus is “authentic American,” and while that means red, white and blue in the Tommy Hilfiger collection, H stores will feature natural-looking brushed-metal fixtures and wooden floors. Throughout the stores there will be collections of handpicked vintage items, such as watches, books and cameras, as well as artwork ranging from photography to modern art, all of which will be available for purchase by customers.
“We really worked on thinking of things this customer would be interested in so they can have a multidimensional experience in the store,” said Louise Trott, senior vice president, creative director, who joined Hilfiger four months ago from her design post at Gap. “Having these items for sale gives them something more to shop for.”
Another aspect of the H brand is what executives said is the idea of “owning the letter H,” Trott said, mentioning that the store also will be filled with the letter seen in vintage signs hanging on walls, rugs and on hangtags. The H logo, along with the phrase “Something unexpected, spring 2006” hangs on the barricade where the stores are being constructed, along with a billboard in lower Manhattan.
Parsons said the company has not mapped out an advertising plan beyond local ads for store openings and in-store events for the grand openings. She said that Hilfiger will do personal appearances in the stores in order to introduce the new concept to customers. He already made an appearance at Tysons Corner on Sept. 29 to promote the coming store.
“It went really, really well,” she said. “The turnout was amazing, and it really validated our decision to open the first store there.”
With all the potential changes in the company, Tommy Hilfiger executives seem confident that the H brand will be sticking around.
“This is a very strong, very authentic collection,” stressed Ann Acierno, president of new business development at Hilfiger. “Louise brings a unique vision and Michelle has built a highly focused, very appropriate team. We will succeed with this….I can tell you that.”