Betsy White

Why Phillips-Van Heusen is Buying Tommy Hilfiger

The Monday announcement of Phillips-Van Heusen's $3 billion deal for Tommy Hilfiger puts to rest weeks of speculation that the two clothing companies were in deal talks. But according to the two chief executives who put together the deal, it was a merger that had made sense for a long time. "You don't often get an opportunity to buy a brand with the depth and breadth that Tommy has," Emanuel Chirico, chief executive of Phillips-Van Heusen, told DealBook on Monday. Mr. Chirico and Fred Gehring, Tommy Hilfiger's chief executive, say that the two reached out to each other about two and a half months ago to explore a potential deal in lieu of an initial public offering for the preppy clothier. "We had come to conclusion that this was a good alternative to an I.P.O.," Mr. Gehring said. The two executives already knew each other fairly well. Tommy Hilfiger's owner, the British private equity firm Apax Partners, had backed Phillips-Van Heusen's acquisition of Calvin Klein in 2003. And Phillips-Van Heusen holds a license to produce some Tommy Hilfiger clothing. It was the Calvin Klein deal in particular that helped draw the two companies together, the two chief executives said: Phillips-Van Heusen gives that company's team a wide berth to manage its operations, a business model that Tommy Hilfiger management found attractive.

Something Old, Something New

Shoppers in Boston may not see a new Filene's Basement in Downtown Crossing anytime soon, but the store's famed automatic markdown system is making a comeback this year. Filene's Basement is planning by the fall to roll out a new version of the concept, which provides deeper discounts on items the longer they remain unsold, to the entire chain and its sister company, Syms. The new automatic markdown will feature one item every month by a specific designer for both men and women, rather than the large assortment of merchandise offered at the legendary location in Boston that shuttered several years ago. "I absolutely adore the automatic markdown system. It creates that sense of urgency and scarcity,'' said Marcy Syms, chief executive of discounter Syms Corp., which bought Filene's Basement in bankruptcy court last year. "But the way it was in Downtown Crossing was pretty unsustainable.'' Syms unveiled the automatic markdown concept - and plans to launch an e-commerce site this year for Filene's Basement - while visiting the company's renovated shop yesterday in Norwood that combines the Filene's Basement and Syms brands under one roof. The store, which officially opens tomorrow, brings together Syms' extensive suit and tailored offerings with Filene's Basement's designer clothes and accessories. It's the second of a dozen joint shops the business is hoping to open over the next two years. There are currently 24 Filene's Basement shops and 26 Syms stores. Retail analysts say the joint venture makes sense and will help the company better compete in the increasingly fierce marketplace.

French Connection Rises on Nicole Farhi Brand Sale

French Connection Group Plc, a U.K.-based fashion retailer, rose the most since December in London trading after announcing plans to sell the Nicole Farhi brand and close most of its U.S. stores. French Connection climbed as much as 14 percent. The retailer will sell the money-losing label to OpenGate Capital for as much as 5 million pounds ($7.6 million), London-based French Connection said. The company will also close about 17 of 23 U.S. outlets to focus on its wholesale operations there. The retailer last year announced plans to close 21 stores in Japan. "We have had to make some tough decisions, but our exit from the Japanese market, the reduction of our US retail presence and the sale of Nicole Farhi, together with a reduction in our overhead base, leaves us with a continuing business that we expect will be both profitable and cash generative even in the current difficult economic environment," Chairman and Chief Executive Officer Stephen Marks said in the statement.

Fossil Succeeds by Doing Everything Itself

Fossil Inc. loves to use vintage images from the 1950s, and the company's business strategy couldn't be more retro: Want it done right? Do it yourself. Designing, manufacturing, retailing, advertising, graphics, architecture, factories in the Far East—Fossil doesn't just tap these specialties and resources, it owns them. In an era of the virtual corporation, in which every service imaginable is often outsourced and subcontracted, Richardson-based Fossil has emerged as a one-stop shop for fashion and design. It's an expensive, labor-intensive proposition, demanding just the right eye for trends. Companies can easily grow too fast or reach beyond their competency, and when the economy turns, they're exposed. Not Fossil. Most of its competitors struggled last year and retreated to survival mode as the recession deepened. Fossil reset expenses early and then grabbed for market share, confident that consumers would snatch up its new designs. The company ended the year with $1.5 billion in sales and a record $139 million in profits, continuing a string of profitability that dates to before it went public in 1993. The real rush came in the fourth quarter, when Fossil's net income jumped 51 percent and direct-to-consumer sales (as opposed to its wholesale business) rose 22 percent. In the past 12 months, Fossil's stock price has almost tripled.

Back to top