Tommy Hilfiger falls out of fashion

TIME may soon be up for Tommy Hilfiger. Not long ago one of the most recognisable brands on the High Street, the struggling clothing company has appointed a new chief executive and still has to decide whether to sell itself to the highest bidder or try to buy its way out of trouble.

The Hong Kong-based company, under its eponymous founder and head designer, bridged the divide between a country-club look and streetsmart appeal to make it one of the world's top-selling clothing brands. Some 40% of sales were through department stores at a time when these were regaining popularity.

But tastes change while the Hilfiger look has not - and shoppers are moving away from department stores and back to boutiques. Tommy Hilfiger lost $513m (£320m) in the year to March. Sales edged up to $1.89bn but were still down on those of 2000. It is now widely regarded as a fading brand under poor management.

The company has appointed David Dyer, a veteran of the Lands' End mail order clothing company, as chief executive to turn things around but observers believe he will have to move fast. The company was the target of a failed bid by Jones Apparel earlier this year. An attempted buyout also failed, leaving it even fewer options.

It now looks as though Dyer will try to expand his way back to health by buying smaller fashion companies. The idea is to revamp the Hilfiger-brand with new fashion ideas from outside the group and at the same time pick up extra sales volume from the purchased companies.

One possible target company is Sweetface Fashion, which owns the J.Lo by Jennifer Lopez clothing line. The $100m-a-year company is young and popular, and has room for growth, say industry experts. There is also a family connection: the lead backer in the investment group that owns half of Sweetface is Tommy's brother, Andy.

...but look's originator still has it right

POLO Ralph Lauren, also named after its founder and chief designer, virtually invented the country-club look that Hilfiger has played off successfully for years. But the group gains over Hilfiger because it has a more upmarket and conservative clientele and because it has a cannier approach to managing its brand. Polo Ralph Lauren's fourth-quarter profits soared 52%, mainly because it consolidated operations in Europe where sales rose by 10%. In the US it has just taken back from Jones Apparel the licence for its Lauren by Ralph Lauren brand and is also trying to buy back from Jones the licence for Polo jeans.