Luxury goods giant Tommy Hilfiger Corp says it will pay out $18.1 million worth of taxes and interest to settle a US Attorney probe into a tax dispute, and has also reported a decrease in preliminary first-quarter revenue.

The case focused on whether Hilfiger had illegitimately moved profits into areas outside of the US in order to benefit from lower tax rates. 

The investigation has come to the conclusion that Hilfiger is free from criminal charges related to payments made between 1990 and 2004, but that the company will pay approximately $15.4m worth of additional federal income tax along with $2.7m interest, according to the settlement.

Hilfiger will file amended federal income tax returns for the financial years ended March 2001-2004 in accordance with the lowered commission rates those years, and is also considering whether it needs to restate past results.

The company has also reported first-quarter net revenue of approximately $319m compared to $329m in the same quarter of 2005, with a smaller net loss than that incurred a year ago.

David  Dyer, president and chief executive officer, said:  "Our preliminary results for the first fiscal quarter of fiscal 2006 were slightly better than our expectations. The quarter's results reflected continued strength in Europe, with double digit revenue gains in both the wholesale and retail components.

"We are also pleased with the performance of our US company stores, where key item programmes and improved inventory management resulted in positive comparable sales and solid margin gains for the third consecutive quarter."

Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and children's wear.