Wal-Mart Purchase of Hilfiger Discounted
By George Anderson
The rumor that Wal-Mart had approached one of the banks representing Tommy Hilfiger Corp. to possibly acquire the apparel manufacturer was shot down by many analysts almost as quickly as it took off.
The initial report that Wal-Mart was interested in Hilfiger came from Women’s Wear Daily.
The rationale for a potential Wal-Mart bid was that the chain is looking to upgrade its image and entice consumers to give its fashion department a chance, many of whom shop in the store for everyday items but go elsewhere to buy clothes.
The company has been trying to improve the stature of its apparel departments with resets that make the sections easier to shop and highlight the chain’s George line of designer clothing, according to Bloomberg News.
Trying to develop a hipper reputation for clothing, said Patricia Edwards of Wentworth, Hauser & Violich, will not include a purchase of Hilfiger. The chain, she said, “has been very clear in the past that they don’t want to pay up to have a designer name.”
Ms. Edwards also doesn’t see a fit for Hilfiger clothes in Wal-Mart. “To skip straight over moderate and go directly to the low end consumer doesn’t make sense,” she said. “It would be a tough sell for Kohl’s to get him, let alone a Wal-Mart.”
Ben Strom, an analyst at Variant Research, said the Hilfiger brand has not done well in recent years but that a deal with Wal-Mart doesn’t make sense because outlets that currently carry the brand would likely drop it should a deal with the retailer take place.
Other potential suitors for Hilfiger, as reported in WWD and elsewhere, include the investment firm Apax Partners.
Jones Apparel Group, Perry Ellis International, Li & Fung USA, Kellwood Co. and Liz Claiborne have reportedly been contacted by Hilfiger’s bankers and have taken a pass.
Moderator’s Comment: Do you see Hilfiger making sense as an acquisition for Wal-Mart or another retailer? What does Wal-Mart need to do to create a hipper
image for its fashions?
To the poll question, we said there was a zero percent chance that Wal-Mart would acquire Hilfiger. We explained it all in an interview with MarketWatch
Radio yesterday. For those so inclined, you can hear it by
clicking here. –
George Anderson – Moderator
- Wal-Mart mentioned as Hilfiger suitor – Bloomberg News/Arkansas
- Hilfiger shares rise, fall
on deal talk – MarketWatch
- Better Fit Elsewhere for Tommy Hilfiger – MarketWatch