WHERE TO BUY HIP CLOTHES, SHREWD MANAGEMENT
By HOLLY KETRON

(MONEY Magazine) – TOMMY HILFIGER TOM; NYSE, $31.75; NO YIELD

It's hard to quantify what makes a fashion super star. "Some designers take off, and a cult forms," explains Laurence Leeds, an apparel analyst at the Buckingham Research Group. There's such a cult following now for Tommy Hilfiger, the $356 million maker of preppy but hip sportswear, ostensibly for men. Hilfiger's $42.50 polo shirts are worn by trendsetters like Bill Clinton, all-girl hip-hop group TLC, and actor/man-about-town Hugh Grant. Revenues grew by 41% for the year ended June 30, and profits were up 49%.

Behind Hilfiger are shrewd licensing deals negotiated by shrewder management. There really is a Tommy Hilfiger, who oversees the design end, while the business is run by industry veterans from Liz Claiborne, The Limited and Polo/Ralph Lauren. Licensing arrangements include one with Estee Lauder to concoct and market Tommy, a unisex cologne. When the fragrance was introduced in June, department store executives said it was second in volume to Calvin Klein's top-selling CK1 (sales: over $100 million since January) this year. Oxford will make Hilfiger dress shirts and golf clothes, while Hart Schaffner & Marx will produce Hilfiger tailored clothing.

Says Michael Carmen, a portfolio manager for State Street Research & Management in Boston, who owns 1.2 million shares bought at an average of $19: "If you want to do licensing, this is the way to do it-with top companies." He projects annual earnings growth for Hilfiger of 30%, which could boost the stock to $42 over the next 12 months for a 32% gain.

--H.K.