On the glossy pages of magazines, young men and women frolic on a beach, wearing unlogoed T-shirts and short shorts, their aura that of sun and surfboards. In their relaxed, vaguely privileged demeanor, this photogenic crowd presents an undeniable contrast to the urban image of the same brand a decade ago, when the models wore their hair in dreadlocks and swaggered down the street, bold and cool, with a big "Tommy Hilfiger" on their oversize sweats.
Now the dreadlocks are gone from the advertisements -- and the big red, white and blue "Tommys" are pretty much gone from the streets. The Tommy Hilfiger Corp has announced that it is moving away from its logo after many of the company's earlier urban constituencies abandoned Tommy for designers they call more "authentic": Fubu, Ecko, Phat Farm, J.Lo and Sean John.
"Tommy, Polo Jeans and Nautica are big losers," said Todd Slater, an analyst at Lazard, "but the biggest loser is Tommy; he's lost the most market share. Ralph has not lost his core customer the way Tommy has," he said, referring to Polo Ralph Lauren. "As a company, Tommy has to reinvent itself."
Many analysts, investment bankers and other industry watchers say the company is struggling to find new direction; they see its latest advertising campaign and the bus trip company officials are making to winter vacation spots this week -- a Florida beach tour complete with amateur model contests -- as only the latest signs of desperation. The company's stock has plummeted from its May 1999 high of US$41.06; it closed on Friday at US$5.73, near its all-time low.
The company is now closing 37 out of 44 Tommy Hilfiger specialty shops in the US -- some of which were opened with great fanfare only months before. For the three months ended on Dec. 31, the company lost US$22.1 million on sales of US$477.3 million.
And while its sales of women's and children's clothes were up from a year earlier, men's wear, echoing a national trend, was down 11.7 percent. And the company's jeans business, once a mainstay, has fallen off precipitously, analysts say. Joel Horowitz, the company's chief executive, last month lowered earnings projections for next year.
Recent management changes at the company illustrate the term "revolving door." Hilfiger himself assumed the job as chairman in October, but quit last month to reclaim his longtime title as honorary chairman. He remained the principal designer.
Horowitz, who said earlier that he had wanted to wind down his day-to-day responsibilities next year, assumed the additional duties of chairman; he said he has been interviewing candidates to succeed him as chief executive. Lawrence Stroll resigned as co-chairman last July, leaving Silas Chou, the other co-chairman, in the post. Then he left, and Hilfiger took over.
"Maybe a new CEO, maybe some new ideas will help, but I view the Tommy business as essentially mature," said Margaret Mager, an analyst at Goldman Sachs, and the author of several reports on the company. "I don't think it's going to come back. The froth is off the cappuccino, and it's not going to get frothy again."
Many clothing companies have trouble appealing to fickle teenage customers, but the Hilfiger Corp has additional problems. It does much of its business in department stores -- Mager estimated 50 percent to 60 percent of the company's business. And department stores themselves, as everyone knows, are in trouble.
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