Hilfiger Shuffles Executives, Rethinks Its Retail Strategy
By TERI AGINS and SALLY BEATTY THE WALL STREET JOURNAL

NEW YORK -- Tommy Hilfiger Corp., one of the hottest American fashion brands of the 1990s, has charted the exit strategies of two key executives while it grapples with the difficult retail climate.

Late last week, Hilfiger disclosed that Joel Horowitz, the well-respected executive who helped found the company in 1984 and who has served as chief executive since 1994, plans to step down after his contract expires in 2004. "I'm not retiring," said Mr. Horowitz, 51 years old. "This is a transition, the natural evolution of a business after 20 years."

The announcement, he added, was intended "to make a smooth transition" as the company searches for an executive to be groomed as his eventual successor. Mr. Horowitz will remain a director. Likewise, Silas Chou, 56, Hilfiger's chairman since 1989, is leaving when his term expires at the end of this month. Mr. Chou has been busy developing A&G Group Ltd., a London-based luxury-goods concern, which he acquired in 2000 with Lawrence Stroll, formerly Hilfiger's co-chairman. The orderly plan is striking in an industry not known for graceful executive transitions.

Designer Tommy Hilfiger, 51, the company's principal designer and honorary chairman, now will become chairman. "This is my baby, my dream, to build this business, and I have a lifetime contract. I'm not going anywhere," Mr. Hilfiger said. "Joel, Lawrence and Silas and I have had a great run. Now it's time for a change."

The management shake-up comes as Hilfiger is doing some soul-searching. The fashion house continues to place all its bets on its namesake Tommy Hilfiger label. It also has relied heavily on the department-store industry, where key clients such as Macy's, a unit of Federated Department Stores Inc., and Dillard's Inc., continue to struggle for market share against more nimble specialty retailers and cheaper mass merchants.

By comparison, other major apparel makers, such as Liz Claiborne Inc. and Jones Apparel Group Inc., have responded to market pressures by diversifying their brand offerings. This has enabled them to build businesses with such retail favorites as Wal-Mart Stores Inc. and Kohl's Corp.

While Hilfiger, Polo Ralph Lauren Corp. and Nautica Enterprises Inc. continue to be the anchor menswear brands at department stores, Hilfiger's market share has slipped to about 7% or 8% from about 10% three years ago, estimates David M. Lamer, a former Hilfiger manager who is now a senior equity analyst with Ferris Baker Watts Inc. Mr. Lamer estimates that Hilfiger's menswear will generate about $410 million at wholesale in fiscal year 2003, down from $795 million in the fiscal year ending March 1999.

Hilfiger's revenue peaked at $1.9 billion in 2000. But the brand, once a favorite with the kids who admired rockers and rappers, has lost some of its clout to brands ranging from Kenneth Cole Productions Inc. to Sean "P. Diddy" Combs's Sean John line.