I first met Tommy Hilfiger around 1990, when he was already well known in the fashion industry. In the late 1960s he’d been a teenager in upstate New York, but he wanted access to fashionable clothing that he couldn’t find in local stores. So he and some friends would drive to New York City, buy dozens of pairs of bell bottoms and other hippie clothing, drive back upstate, and sell the clothes from the trunk of his Volkswagen. Before he was 20 Tommy and a partner had opened a basement shop called People’s Place, which grew into a small chain of stores. By the mid-1980s Tommy had moved to New York City and found a backer to launch his own brand: classic East Coast clothing with a casual, carefree twist inspired by time he’d spent in California. In 1985 his ad agency put up a billboard in Times Square that compared Tommy Hilfiger to Calvin Klein, Ralph Lauren, and Perry Ellis. It was a bold statement, but it put him on the map—and he had the creative vision to deliver on it.
Tommy Hilfiger’s Chairman on Going Private to Spark a Turnaround
When the author became involved with Tommy Hilfiger, as a partner in the company that had the license to sell Hilfiger products in Europe, the brand was one of fashion’s hottest. Overall sales had more than doubled from 1997 to 2000. But that came at a price, the author writes. The brand was too hot, too hyped, and grew too fast. Hilfiger products began to sell at a discount in the United States—and the company’s designers started creating stuff that felt like discount clothing. Soon U.S. sales were falling every year. Meanwhile, the European division had chosen not to sell the lower-quality versions, had created its own design center and supply chain, and was increasing sales by roughly 50% a year. Gehring proposed a strategy for turning the company around—and the board countered that he should find a buyer. So he did.
As the winning bidder, Apax Partners, a European private equity firm, allowed Gehring to do a dramatic restructuring and scale back the U.S. business in the short term, laying the groundwork for the brand’s turnaround in less than four years.
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