HILFIGER EYES SEPT. ’96 ENTRY FOR WOMEN’S LINE
Byline: Catherine M. Curan With contributions from Lisa Lockwood
NEW YORK — Tommy Hilfiger, who has been delaying his entrance into women’s wear while remaining one of the hottest names in men’s wear, now hopes to show his first women’s line in September 1996, according to Joel J. Horowitz, chief executive officer of Tommy Hilfiger Corp.
“We’re looking at the end of calendar year 1996 or the spring of 1997,” Horowitz told WWD Tuesday. He said no one has yet been hired for that operation, but the company has been interviewing potential staffers.
On Monday, Hilfiger reported that earnings soared 63 percent in the second quarter.
As for the women’s launch, Horowitz said, “It’s probably back a little from our original thoughts. We have so much on our plate with men’s and boys’ wear, and the retail business, and the commitment to women’s is so great.
“When we added a boys’ business to men’s wear it was an easy piggyback, since sourcing and even the product was similar. With women’s apparel, Tommy needs a whole separate design team and production team and distribution facility bacause women’s is all shipped hanging, and men’s is shipped flat-packed.
“It’s a major undertaking, and it needs total management focus to make sure it’s done right,” Horowitz continued. “We’re not going to test it in any small way. It’s going to be a big business right out of the box.”
As for pricing, he said, “There will be components of the line that will approach bridge price points, but for the most part, it will be better.”
Hilfiger’s second-quarter earnings came to $10.6 million, or 58 cents a share, easily topping the mean Wall Street estimate of 50 cents a share. In the year-ago quarter, the company earned $6.5 million, or 43 cents. Average shares outstanding rose to 18.2 million from 15.1 million. In the quarter ended Sept. 30, sales climbed 43 percent to $80.4 million from $56.1 million. Gross margin increased to 46.5 percent of sales from 44 percent.
Horowitz attributed the sales increases to ongoing expansion of the in-store shop program in department stores, as well as an increase in sales of men’s and boys’ products. He also attributed the gains to strong performances of the licensed products, including underwear, tailored clothing and dress shirts that were launched in stores this fall.
Josephine Esquivel, an apparel analyst at Lehman Bros., said Hilfiger’s decision to postpone the introduction of women’s wear was well received by Wall Street, and analysts in general have a high degree of confidence in the company’s management.
She said the outlook is strong for the December quarter and on into spring. She noted that bookings are up over 25 percent in men’s sportswear and 50 percent in boys’ wear.
Esquivel said she estimates 62 cents a share for the third quarter, against 46 cents. For the year, Esquivel projects earnings per share of $2.05, against $1.54. Discussing the delay in the women’s introduction, Edward Johnson, director of Johnson Redbook, concurred: “They’ve got a lot on their plate right now.” He said Hilfiger can bring in women’s wear when the market for its other products has been saturated.
Johnson expects Hilfiger’s momentum to continue, fueled by the addition of men’s and boys’ in-store shops, and new licenses, as well as a fragrance for men in April 1995. As for the retail and outlet stores, he said high overhead squeezed margins, but he expects margin pressure will ease in the future.