Hilfiger to Close Flagship Rodeo Drive Store

Rodeo Drive is losing its largest store as struggling Tommy Hilfiger Corp. finalizes plans to close its flagship Beverly Hills location and move to a less ritzy, smaller location in Los Angeles, the company said Thursday.

The Rodeo Drive location will shut down as soon as another Los Angeles store opens in the next six to 12 months, spokeswoman Catherine Fisher said. The new store will sell men’s and women’s sportswear, as well as fragrances and other products, rather than the more expensive clothing featured at the Beverly Hills store.

The casual clothing designer is actively looking for a new site. Fisher would not disclose potential locations.

Plans to close the 20,000-square-foot, white-trellised Beverly Hills store came as a surprise to Hilfiger’s neighbors. The store serves as an anchor for retail business along Rodeo Drive. It opened in November 1997 with a star-studded party hosted by MTV. The celebration marked a comeback for the street, which had struggled through the recession of the early 1990s.

“I had no idea [the closure] was coming,” said Ron Michaels, president of the Rodeo Drive Committee, a business promotional organization. Michaels also is manager of the nearby Louis Vuitton boutique. “It’s such a beautiful store.”

Some locals say that in recent times the store has drawn less traffic than others, a problem on a street where ground-floor retail space can cost $18 to $20 per square foot each month, three times the rate at many other desirable shopping locations in the region.

Hilfiger would not release sales figures for the Rodeo store.

The company this week reported a 2.2% increase in net income for its fiscal third quarter on a 13% rise in sales. Its stock closed up 50 cents at $14.31 Thursday on the New York Stock Exchange. It had peaked at $41 last August.

The move to close the Beverly Hills store is part of a companywide restructuring intended to move Hilfiger away from expensive flagship locations toward less costly specialty stores. Its other flagship store in London is also closing and it has scrapped plans for a New York store.

These stores target their higher-end lines to rock stars and fashion models and were intended to boost the image of what many perceive to be a mid-range retailer, rather than a luxury designer.

“[The flagship] was always intended as an image and marketing vehicle,” Fisher said. “[It] was never designed to be profitable.” But analysts say the focus on image has been a costly strategy for Hilfiger, whose core customer is young and typically cannot afford to shop on Rodeo Drive.

“None of these [types of] stores make any money,” said retail analyst Margaret Gilliam of Gilliam & Co. in New York. “Typically, they’re just for prestige.”