Analysts widely supported Tommy Hilfiger Corp.’s move to restructure its operations and close down pieces of its business, but they cautioned Monday that more is needed. “While this is a significant step, we still think the business is unhealthy,” said Prudential Equity Group analyst Lizabeth Dunn. Investors, however, liked the news enough to lift shares of Hong Kong-based Tommy Hilfiger which ended up 49 cents, or 4.7 percent to $10.89. They earlier reached an intraday high of $11.35.
Late Friday, Tommy Hilfiger said that it’s slashing 100 jobs, or 20 percent of its work force, in shutting down its young men’s jeans division, consolidating men’s sportswear into three collections and integrating jeans into them, and changing its U.S. men’s, women’s and children’s wholesale division to include design, merchandising and production teams.
The largely operational steps are expected to cost $10 million to $14 million in fiscal 2005. On an annual basis, however, Tommy Hilfiger is projecting savings of $40 million beginning in 2006. The moves are part of what’s turning out to be an incremental restructuring of the struggling apparel maker under David Dyer, the former Lands’ End boss who was named chief executive 18 months ago to turn the designer’s fortunes around.
Tommy Hilfiger made a major strategic shift away from its core preppy attire with the acquisition last month of the trademarks of designer Karl Lagerfeld, an internationally known designer. “This acquisition is an important first step in our long-term strategy of building a multibrand portfolio of businesses,” Dyer said in a press release at the time.
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