Tommy Hilfiger Predicts Loss for Q1 2005

Tommy Hilfiger Corp. (TOM), helped by strong results from its European business, posted a profit for the fourth quarter in contrast with a loss a year ago.

However, the Hong Kong-based fashion company said Wednesday it expects a loss in the first quarter and anticipates revenue for the rest of the year to be below projections.

Its shares sank $1.74, or about 11 percent, to $13.76 on the New York Stock Exchange (search).

The company earned $26.9 million, or 29 cents per share, in the three months ended March 31. That contrasts with a loss of $113.8 million, or $1.26 per share, in the year-ago period.

Excluding special charges, profits were $36.7 million, or 40 cents per share, compared with $28.3 million, or 31 cents per share a year ago.

Analysts surveyed byThomson First Call (search) expected 37 cents per share.

The special charges totaled $14.6 million, or 11 cents per share, before taxes. They related to the closure of four retail stores the company announced in February; the repositioning of the U.S. young men's jeans business in March; the acceleration of the depreciation of certain shops within U.S. department stores; and other cost reduction moves.

Sales in the fourth quarter rose 2.4 percent to $510.1 million, from $498 million in the year-ago period.

Tommy Hilfiger Europe generated revenues of $163.6 million in the fourth quarter, up 39.5 percent from $117.3 million a year ago, while sales in the U.S. fell 12.3 percent to $269.2 million in the fourth quarter from $337.8 million a year ago.

"Our performance for the quarter exceeded earlier expectations due to stronger than anticipated European operating results and favorable currency translations," David F. Dyer, president and chief executive, said in a statement.

For the quarter ending June 30, Tommy Hilfiger anticipates a loss in the range of 10 cents to 13 cents per share. It blamed such factors as the seasonally low shipping patterns in Europe and lower-than-expected revenue in the United States.

Analysts surveyed by Thomson First Call expected a profit of 3 cents per share for the first quarter.

Tommy Hilfiger expects revenue for the year to decline by high single digits, a larger drop than its previous forecast for a mid-single digit decrease. The company attributed the decline to struggling U.S. sales particularly in its teen jeans and childrenswear divisions, despite success in its newly-launched, more upscale H Hilfiger line of products.

For the full year, ended March 31, Tommy Hilfiger earned $132.2 million, or $1.45 per share. That contrasts with a loss of $513.6 million, or $5.68 per share in the year-ago period.

Revenue was $1.87 billion for the year versus $1.88 billion in the year-ago period.

As of March 31, 2004, Tommy Hilfiger's worldwide store count was 167, including 132 outlet stores and 35 specialty stores, compared with 166 stores a year earlier, including 115 outlet stores and 51 specialty stores