Tommy Hilfiger (B) Turnaround
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Case Code: BSTR492 Case Length: 13 Pages Period: 2005-2010 Pub Date: 2016 Teaching Note: Available |
Price: Rs.500 Organization: Tommy Hilfiger, Apax Partners, PVH Industry: Apparel Countries: USA, Europe Themes: Business Strategy, Brand Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background
Tommy had evolved into an American success story. Throughout the 1990s, its sales had grown at 48% CAGR (cumulative average growth rate), peaking at US$1.9 billion in 2000. Tommy Hilfiger was named after its founder Jacob Thomas (Hilfiger) who had started Tommy in 1985 financially backed by an Indian textile magnate, Mohan Murjani (Mohan). In the late 90s, after Mohan sold his stake, Hilfiger along with three other partners, Chou, Stroll, and Joel Horowitz (Horowitz), took the company public. Public equity gave Tommy access to resources for expanding its stores and licensing its brand to new geographies like Canada, Mexico, and Central America.
Casual khakhi pants and polo shirts with a youthful attitude were the quintessential Tommy outfits and they appealed to men in the 20-35 age bracket. The label was retailed slightly lower than similar designer tags but had its own distinct vibrancy and cuts to stand out from the rest. Since its inception, Tommy had been known for its preppy American classic roots but in the early 90s it strayed into the hip-hop trend. It started manufacturing baggy and bright colored clothes which appealed to the hip-hop fraternity. To further increase the brand reach, in the mid-nineties, it forayed into the womenswear and children’s wear categories and also launched a range of accessories from perfumes to sunglasses. Toward the late nineties, Tommy was sourcing and marketing an extensive product line which ranged from bed-sheets to jewelry and watches.
The company’s principal growth strategy had been to expand its in-store shop program by partnering with retailers to allocate floor space dedicated to the sale of Tommy products. Tommy sold its merchandise primarily through large department stores. Federated Department Stores, Dillard's Department Stores, The May Department Stores Company 6 respectively accounted for approximately 23%, 21%, and 16% of Tommy’s sales, that is, 60%. Tommy also had its own retail stores....
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