RETAIL—Hilfiger Planning Third Street Move

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Tommy Hilfiger has found a new home.

After a little more than three years on tony Rodeo Drive, the manufacturer of upscale casual clothes worn by very cool rappers and less cool suburbanites is opening two stores on Third Street Promenade in Santa Monica, sources said.

Tommy Hilfiger Corp. announced early last year that it would close the gargantuan flagship store it built in 1997 at Santa Monica Boulevard and Rodeo Drive and search for other locales more in tune with its clientele of teens, preppies and hip-hop stars.

Real estate sources said last week that the chain recently leased space along the promenade and now plans to open two stores in late spring or early summer.

While officials with Tommy Hilfiger were not available for comment, they apparently feel the L.A. stores will do better on the trendy promenade, which is crammed on weekends with hordes of young and middle-aged shoppers with plenty of cash.

The company has worked hard to find space on the three-block pedestrian mall, the popularity of which has been so great that vacancies have been rare. The fashion firm was able to find two tenants willing to move out earlier than expected.

Hilfiger will take over the lease held by Remi, a pricey Italian eatery at 1451 Third St. near Santa Monica Mall and will assume the lease held by John Anthony Apparel, a casual clothes retailer that has been at 1424 Third St. for 21 years.

Sources said Hilfiger will pay Remi $825,000 to assume the restaurant’s lease, which expires in nine years. The agreement, which closed right before Christmas, gives the clothier a 4,500-square-foot space at around $4 a square foot, according to Randy Starr, the commercial real estate agent who put the deal together.

The restaurant is scheduled to shut down at the end of January, said Starr, executive vice president of Tenzer Commercial Brokerage. “(Hilfiger) will save a lot of money because the space is worth closer to $10 (a square foot),” he said.

Details were not available on the lease for John Anthony Apparel, which occupies about 4,000 square feet near Remi.

The Hong Kong-based Hilfiger has been trying to change its marketing strategy since an earnings warning was issued last February. Soon after, the company announced it was closing its 20,000-square-foot Beverly Hills flagship operation, the largest store on Rodeo Drive. Hilfiger still occupies the white-trellised store and is looking for a tenant to rent the $144,000-a-month space, according to real estate broker Matthew May, president of May Realty Advisors.

For a few years in the late 1990s, Tommy Hilfiger was one of the hottest designers houses, with its clothing a must-buy item for young sophisticates and inner-city kids.

Through extensive licensing deals, the Tommy Hilfiger brand now appears on fragrances, belts, bedding, home furnishings and cosmetics, all of which were sold at the Beverly Hills store.

The Santa Monica stores are expected to have a scaled-back inventory, focusing on casual clothing.

Critics have felt that Hilfiger has been trying to appeal to everyone, from hip-hop kids to the wealthy entertainment crowd. But that marketing strategy began to crumble about a year ago.

For the second quarter of fiscal 2001 ended Sept. 30, 2000, the company reported net income of $44.9 million, compared with $76 million in the comparable period a year earlier.

Its stock has also been lackluster. It was selling for about $9.50 a share last week, well off its 52-week high of $22.62.

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