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Hilfiger profits to shrink
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January 13, 2000: 8:07 a.m. ET
Popular clothier hurt by department store pricing; will fall short in 3Q and 4Q
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NEW YORK (CNNfn) - High-end clothier Tommy Hilfiger Corp. warned Thursday its profits will fall significantly short of analysts' expectations in each of the next two quarters because of aggressive pricing policies at U.S. department stores.
The Hong Kong-based company said it now expects fiscal third-quarter earnings of 58 cents to 64 cents per diluted share, compared with 61 cents per share a year earlier.
Analysts polled by research firm First Call Corp. had forecast a profit of 73 cents per share for the period, ended Dec. 31
Hilfiger (TOM) also warned its fiscal fourth-quarter earnings will fall to between 35 cents and 45 cents per share, below both the 48 cents per share it earned during the comparable period last year and the 58 cents per share analysts were expecting.
Company officials blamed the third-quarter shortfall on "aggressive price reductions and promotions" by department stores, particularly on Hilfiger's menswear and women's sportswear, which resulted in greater price adjustments than the company anticipated.
Although cautioning it is too early to gauge how its spring clothing line will perform, the company said it is assuming similar trends also will affect results for its fiscal-fourth quarter, ending March 31 as well.
Joel Horowitz, Hilfiger's CEO, said he still believes the company's business fundamentals remain sound and promised to address the company's goal of enhancing long-term shareholder value "in the coming weeks."
But investors may be wary of waiting that long. In before-hours trading immediately following the warning Thursday, Hilfiger's stock shed 1-7/16 from its closing price Wednesday of 19-3/8. 
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Tommy Hilfiger
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