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Hilfiger pre-tax sales drop

By FashionUnited

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Tommy Hilfiger has reported that its pretax profit has fallen 45.9 per cent during the financial year 2004/5. The company's net income for the year dropped from GBP 93 million the year before to GBP 50 million.

Hilfiger cites a decline in orders from US department stores as the cause for the drop. However, substantial legal fees due to governmental investigations of the company's commission policies also affected the balance, writes Women's Wear Daily. Revenues dropped to just under GBP 1 billion from GBP 1.04 billion during the same period last year.

Due to the governmental investigations the company is delaying its fourth quarter and fiscal 2005 financial statements. The Hong Kong-based company did warn, however, that fiscal 2006 revenue would fall short of expectations as a result of the declining orders in the US. It said it expects operating income to be in the high-single digit percentage range of revenue.

Hilfiger said that it is in talks with the US Attorney's Office about a possible civil resolution of the investigation and the company has also initiated talks with the Hong Kong Inland Revenue Department to settle issues.

Tommy Hilfiger Europe revealed higher revenues of about GBP 292 million for the fiscal year 2005, compared with GBP 226 million the year before. Hilfiger sayd this increase included roughly $34 million form the translation of a stronger Europ in fiscal 2005. International wholesale revenue for 2005 increased to approximately GBP 287 million from GBP 236 million last year, although the US wholesale declined, again due to a decline in orders from major customers.

Hilfiger