(FORTUNE Magazine) – Tommy Hilfiger had its breakout moment in 1994 when rapper Snoop Doggy Dog wore a Tommy rugby shirt on Saturday Night Live. Soon after, Tommy became the brand that bridged preppy white and black urban cultures. That year sales of the clothing retailer soared 64%, to $227 million, and designer Tommy Hilfiger was the latest Seventh Avenue superstar.

Fashion is a fickle business, but designing urban, preppy garb for hyper-trend-sensitive teens can be lethal. "When these companies hit a wall, they hit a big wall," says analyst Faye Landes at Thomas Weisel Partners. In April the $1.6-billion-a-year fashion retailer announced that profits for 2001 would fall between 30% and 40%, to $206 million, according to Goldman Sachs, and that revenues would drop 5%. The news destroyed the stock. It tumbled 32%, to $9, and is now worth a pintsize $824 million.

The problem: Tommy rested on its red, white, and blue laurels too long. Now trendier brands (think Fubu) dominate urban fashion, while Tommy's clothes fill bargain bins at Bloomingdale's and Macy's. Hilfiger tried a host of makeover strategies that were belated and misguided. A women's sportswear collection failed miserably; sponsorships of Mary J Blige and Sheryl Crow concerts didn't sell more capri pants; and while one of its new fragrances has performed well, it won't turn around the company. Says Landes: "Consumers didn't have an appetite for the [women's line]." Sensing this, Tommy postponed its planned career-women line.

The company declined to comment on specific strategies for this article. "We are committed to ongoing investments in the Tommy Hilfiger brand in order to capitalize on growth opportunities ahead of us," said a spokesperson via e-mail. But those strategies seem unfocused and scattered. Hilfiger is replacing its two flagship stores with smaller specialty boutiques in L.A., New York, South Florida, and London. Its board is buying back $150 million of stock in an attempt to boost investor confidence. And Tommy may still buy a competitor after its failed attempt to nab Calvin Klein this winter.

Could it be saved by a suitor of its own? Not likely. Any acquirer will look for a trendier, smaller company, says Margaret Mager at Goldman Sachs. Still, she has hope for Tommy: "Guess stock was a dog, and now it's hot. These brands do rise from the ashes." If the House of Tommy can hang on for another 20, it'll surely enjoy a retro-kitsch revival.

--Mark Borden