Tommy Hilfiger Corp. (TOM) Wednesday withdrew its earnings forecast for fiscal 2005 and said it was delaying the release of fiscal second-quarter results as the clothing designer looks into questions raised by federal prosecutors about payments among subsidiaries.

But the company did issue preliminary data showing a 14- percent drop in pretax income in the fiscal second quarter that ended Sept. 30, citing higher markdowns due to a lackluster back-to-school shopping season.

Tommy Hilfiger shares fell more than 9 percent on the New York Stock Exchange (search).

The U.S. Attorney's office in New York is looking into the commission rates paid from various Tommy Hilfiger subsidiaries to Tommy Hilfiger (Eastern Hemisphere) Limited (search) for certain services, and other related tax matters, the company said.

Tommy Hilfiger (Eastern Hemisphere) is a British Virgin Islands (search) corporation owned by the company.

Tommy Hilfiger first said in September that its U.S. unit had been subpoenaed for documents relating to commissions that were paid to a non-U.S. subsidiary since 1990. Since then, the company has been hit by 10 shareholder lawsuits.

Hong Kong-based clothing retailer and wholesaler Tommy Hilfiger said it has formed a special committee of directors to conduct its own internal probe into the issues, hiring former U.S. Attorney Mary Jo White to head its legal team in the investigation.

It also has hired FTI Consulting Inc. to review the office commission rates paid by the company's subsidiaries.

The company said it was delaying filing its fiscal second-quarter financial results with the Securities and Exchange Commission (search) because its accountants, PricewaterhouseCoopers LLP, said its review of the results cannot be completed until the special committee has finished its review.

The company also pulled its 2005 earnings forecast, but gave partial results for the quarter that ended Sept. 30, saying pretax income in the period fell 14 percent to $69.3 million, as sales dropped 2 percent to $536.1 million.

The delay in filing its quarterly report may cause the company to violate its debt covenant, Tommy Hilfiger said. But it also said it expects to cure any noncompliance in a timely fashion, so it does not expect its debt payments to be accelerated because of the delay.

Tommy Hilfiger shares were down 89 cents at $8.56.