In mid-November we tried to flesh out the story of fashion house Tommy Hilfiger
Tommy now says it will begin reducing shipments to Dillard's beginning in April, the start of its 2005 fiscal year. The firm will send around 30% fewer shipments to the department store next fiscal year versus the current fiscal year. While total sales generated from Dillard's for 2004 aren't yet available (Tommy just announced its Q3 results, remember), they'll likely be lower than fiscal 2003's revenue contribution of $240 million. That figure made up 13% of Tommy's 2003 net sales; for 2004, it will be closer to 11%.
Unsurprisingly, this move -- and, more generally, the continued contraction of its wholesale business -- is expected to impact results in the future. Without providing detailed projections, the company told investors to look for sales and net income to fall from 2004 levels by substantial margins. (A loss is possible for Q1 in part because of seasonally slow business in Europe.)
This news comes on the back of a downbeat holiday quarter at Tommy, where revenue fell to $451 million from $477 million the year before.
Tommy shares were up nearly 16% in afternoon trading, pushing the stock to about $14.75. It's 52-week high is $16.60. Still, even with the company beating its previous guidance, significant challenges in its markets and with its distribution channels lie ahead.
Talk about the future for Tommy on our Tommy Hilfiger discussion board.
Dave Marino-Nachison can be reached via email.
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