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Tommy Hilfiger to Shut Most U.S. Stores

Apparel maker will sell 37 outlets after the holiday season, blaming weak performance in the retail industry.

October 31, 2002|From Reuters

Clothing maker Tommy Hilfiger Corp. said Wednesday that it plans to close most of its U.S. stores and expects earnings for the rest of the year to lag, citing a bleak retail environment.

Shares of Tommy Hilfiger -- which reported a 27% rise in quarterly earnings, helped by strength in Europe -- fell $1.85, or nearly 20%, to $7.50, making it one of the top percentage losers on the New York Stock Exchange.

Shaky consumer confidence "has negative potential implications for holiday apparel spending," the company said.

"Our previous plans had anticipated some improvement in holiday and spring," Chief Executive Joel Horowitz said. "Although it is too early to gauge retail performance for those seasons, we now believe that promotional pressures will be greater than previously expected."

Tommy Hilfiger said it plans to sell 37 of its 44 U.S. specialty stores after the holiday selling season, citing weak performance.

The Hong Kong-based apparel designer and retailer reported net income of $61 million, or 67 cents a share, in the fiscal second quarter ended Sept. 30, compared with $47.9 million, or 53 cents, a year earlier.

Net revenue in the quarter was roughly flat at $546.5 million.

The company, which recently named Tommy Hilfiger chairman, was expected to earn 59 cents a share, according to earnings tracking firm Thomson First Call.

As a result of weakness in the retail industry and increased promotional activity, Tommy Hilfiger said it expects earnings in the second half, before charges, of 45 cents to 65 cents a share.

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