Tommy Hilfiger, the struggling apparel maker that is the subject of a federal tax probe, reported preliminary results for the recently completed fiscal year: They show a continued decline in its business despite ongoing efforts to reposition the company.
Pretax income fell an estimated 46 percent to $92 million, on lower sales, partially as a result of slackening demand from U.S. department stores.
Analysts had been expecting an even larger decline, and the relief that business was not worse helped send shares of the company’s stock, traded on the New York Stock Exchange, up 96 cents, or 8.54 percent, to $12.20.
The figures are preliminary, because Tommy Hilfiger has delayed the filing of its fourth quarter and full-year financial results until sometime before Aug. 10, as a result of the investigation.
The Hong Kong-based company also said that revenue in the current fiscal year will decline to the mid-single digits, slightly more than previously expected, but predicted that earnings would rise 30 percent to 35 percent.
In an effort to resolve the federal probe, Tommy Hilfiger said that it has adopted measures recommended by an internally appointed special committee, and begun negotiations with the U.S. attorney’s office for the southern district of New York and the Hong Kong internal revenue department.
Tommy Hilfiger disclosed in September that the U.S. attorney’s office was investigating whether the commissions paid by the company’s subsidiaries to overseas buying offices were improperly inflated to shield income from tax authorities.
As a result of the investigation, the company and some of its officers and directors have become a defendant in eleven clas-action shareholder lawsuits that the court has since consolidated into a single case.
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Dressed up: Close: $12.20 (+96 cents)