Tommy Hilfiger - The Struggles of an American Fashion Icon

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Case Details:

Case Code : MKTG090
Case Length : 15 Pages
Period : 1969-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Tommy Hilfiger
Industry : Branded Apparel
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Uncertain Times for a Successful Brand Contd...

Meanwhile, industry observers felt that the reason why the company was not perturbed much by the negative developments was that it was a huge success with its customers as well as the stockmarkets. The mid-1990s were a period of handsome growth for Tommy Hilfiger.

Its clothes were as popular among the general population, as they were among leading celebrities from the world of politics, cinema and music in the US.

Between 1991 and 1995, sales had increased six times to $321 million with profits touching $41 million. Going public in 1992 at $15 per share, Tommy Hilfiger's stock had touched $70 by 1998 (growth during the 1990s decade averaged at around 48%).

This was in sharp contrast to other fashion labels such as Donna Karan, Ralph Lauren and Calvin Klein, which were faring badly.

Leading business publications, industry analysts and market observers foresaw great times ahead for the company. While a Fortune article³ wondered, "How does he stay so hot?", a Crain's New York Business article⁴ stated, "The name Tommy Hilfiger itself is a guarantee of future success." It appeared as if this clothing and fragrance brand could do nothing wrong.

However, by 2000, the scenario had changed completely. In the last six months of 2000, profits declined by 12%, plunging the stock price below $6 by the beginning of 2001.

Some of the company's main stores had to be shut down and quite a few fashion shows had to be cancelled. An ex-employee said, "This is a company that is disappearing day by day."⁵

Analysts put forward various reasons for the problems Tommy Hilfiger was facing. As the company began trying to set things right in the early years of the 21^st century, the strategic and marketing mistakes it had made over the years started becoming evident.

Background Note

Born Thomas Jacob Hilfiger (March 1951) in New York, Hilfiger was the second child (of nine) of a watchmaker of Dutch-German origin. Hilfiger's entrepreneurial spirit led him to start working at a very young age. In 1969, his outlook towards fashion and clothing took shape after he took up a sales job at a hippie clothing store...

Excerpts >>

3] 'Tommy Sings America,' Fortune, September 06, 1999.

4] 'Tommy Hilfiger's Appeal is Tailor-Made for Gains,' Crain's New York Business, November 09, 1998.

5] 'Tommy's Tumble,' www.newyorkmetro.com, February 12, 2001.