Replanting his American flag

Once a preppy kingpin and then a megabrand designer of urban streetwear,with over $1.9 billion in sales of baggy jeans and colourful logo jerseys in the United States at his peak....

Once a preppy kingpin and then a megabrand designer of urban streetwear,with over $1.9 billion in sales of baggy jeans and colourful logo jerseys in the United States at his peak,Tommy Hilfiger,in the 1990s,was very cool. But then,about 10 years ago,he just wasnt. People became more interested in his divorce and his dating life and his daughters reality television show than his clothes,all of which looked increasingly like the result of a designer who was trying too hard.

The situation had become so bad for Hilfiger that a few years ago the company seriously considered selling his clothes at Wal-Mart. Magazines had stopped paying much attention to him. As had his customerssales in department stores had dropped by as much as 75 per cent.

So the $3 billion sale of Tommy Hilfiger to the clothing conglomerate Phillips-Van Heusen that concluded May 6 was significant. The price was nearly seven times what Phillips-Van Heusen paid for Calvin Klein in 2003.

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The large logos and the big red,white and blue theme became ubiquitous, Hilfiger said in an interview in his Chelsea office. It got to the point where the urban kids didnt want to wear it and the preppy kids didnt want to wear it. I think I was living in denial, he said. Since he started his business in 1985,when he was 34,Hilfiger has had the good fortune to team up with financial partners who enabled him to create the kind of world where living in denial can be an asset. Few other designers would have thought another preppy brand could compete in a market long ago cornered by Ralph Lauren,but Hilfigers idea of a youthful twist on American classicsbrightly coloured oxfords and buttonholes stitched in greenwas an immediate success.

His company went public in 1992,just as the designer became one of the first to embrace the streetwear market. The company added accessories,fragrances,a home collection and jeans,as well as franchises in Europe and Asia. With that growth came expectations from Wall Street. But as Tommy Hilfiger became more widely available,the label became less desirable. By the end of the 90s,the companys stock price had plummeted to $7.50,half its original value.

The strangest thing about Hilfigers trouble was that his business overseas was just heating up,and new sales in Europe were making up for the loss of business in the United States. But that would mean a second chance for the brand. After seeing the collections rise in the US,Fred Gehring,former executive for Ralph Lauren and Pepe Jeans,started a new company in 1997 as the Hilfiger licensee for Europe. The collection,sold in more than 4,000 small stores from Spain to Germany,grew to more than $1 billion at the same time sales in the United States were falling.

In 2005,Gehring proposed to take the company private. Apax Partners,a private equity firm,acquired the company for $1.6 billion. Gehring became its chief executive and set out to turn around the business by ending some licensees,returning the focus to preppy classics and breaking the promotional cycle. In 2007,he made a deal with Macys to carry the line exclusively in exchange for more desirable placement in its stores and help with marketing. Terry J. Lundgren,Macys chief executive,said the line has been one of the best performing in the store,even during the recession.

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In February,at Hilfigers runway show in Bryant Park at the end of Fashion Week,it was obvious that something had changed. The reviews were enthusiastica welcome and necessary refresh, said Style.com. The business is now highly profitable,earning $300 million annually,largely thanks to the European operation. Tommy has been able to come back and reinvent himself and you have to give him credit for that, said Anna Wintour,the editor of Vogue.