Blog: Leonie BarrieTommy Hilfiger merging ops

Leonie Barrie | 9 March 2009

just-style has exclusively learnt that fashion and lifestyle firm Tommy Hilfiger is merging its operations in the US and Canada, in a move that will create a new business unit called Tommy Hilfiger North America. Some jobs will be lost in the merger, a company spokesperson confirmed.

The changes come after a review of Tommy Hilfiger's operations identified synergies between the two units which have both shifted their focus onto their retail businesses in recent years.

“The unprecedented economic crisis around the world has led us, like all other companies, to review the business structure and identify areas of consolidation and efficiency,” said Fred Gehring, CEO of the Tommy Hilfiger Group.

In contrast, Liz Claiborne is pinning its hopes on a new supply deal with Li & Fung to play a “critical role in driving gross margin improvement across its brands.” The disclosure came as the apparel maker widened its fourth quarter loss after promotions and discounts hit margins in both its retail and wholesale businesses, and the company was forced to write down the value of its brands by $683m.

The company, which owns brands such as Juicy Couture, Lucky Brand and Kate Spade, saw its quarterly loss rise to $828.9m as revenues fell 22.2% to $911.2m.

As long as the economic downturn continues, there’s a strong likelihood apparel businesses will be more motivated by short-term survival than by great long-term strategies. One commentary on just-style this week asks whether recession is changing the sourcing rules - and takes a closer look at some of the sweeping generalisations doing the rounds.

Mosaic Fashions has taken steps to secure the future of its UK fashion chains after calling in the administrators. It has sold its Warehouse, Oasis, Coast, Karen Millen and Anoushka G brands to a new company called Aurora Fashions, which is jointly owned by Kaupthing bank and Mosaic's former management. Together, the chains have 1,377 stores in 45 countries and employ 8,700 people worldwide.

A separate announcement also confirmed The Shoe Studio Group has been sold to UK footwear retailer Dune in a move that safeguards 1,660 jobs and 300 Shoe Studio concessions, but will lead to the loss of 90 jobs.

Retailer Marks & Spencer, meanwhile, needs to change "in a fundamental way" if it is to grow sales and profit in the medium term, according to analysts at Credit Suisse. In a damning report on the regime of M&S executive chairman Sir Stuart Rose, Credit Suisse's retail research team questions the extent of the company's 2004-2008 recovery and argues that radical action is needed now to restore its fortunes.

At the heart of the retailer's problems, the analysts argue, lies its inability to reposition in changing clothing and food markets, leaving it with a much older customer base than many of its competitors.

 


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