Apax Partners, owners of Tommy Hilfiger the popular high street retailer, are to sell the company for a massive £3 billion to Phillips-Van Heusen (PVH).

Phillips-Van Heusen, owners of Calvin Klein amongst other popular brands announced their plans to take over Tommy Hilfiger on the 15th of March, a move which will see the company become one of the largest in the fashion industry. This will be one of the highest ever amounts paid for a clothing company. This will leave PVHs boss Fred Gehring with a few more pounds in his paycheque as PVH will be earning sums in excess of 4.6 billion dollars per annum.

PVH have obviously seen the benefit of owning Tommy Hilfiger as it is one brand which has managed to stay afloat during the recession. Other clothing companies have not been so lucky. Last year Tommy Hilfiger saw a rise of 3.5% in sales over a six month period. This was helped by the exclusivity deal between itself and American department store Macy's. Macy's now are the only store, apart from Hilfiger's own stores, that are allowed to sell Hilfiger product in the U.S.A. It is thought PVH will benefit from Hilfiger's worldwide customer base as they only sell around 10% of their current lines outside of America, whilst Hilfiger gain 10 % of its sales from the Japanese market and 50% from the European market. This will help PVH to slowly introduce its other brands to a larger customer base.

It is thought that other market consolidation deals such as the Tommy takeover will occur inside the fashion industry in the near future. This is not a good sign within the market. It shows us that the company bosses are possibly starting to give up hope. If they could see the company continue to bring in a substantial profit in the years to come, they would not be as keen to sell the brand. Many clothing companies have resorted to making cutbacks. Larger companies like PVH have used extra money to invest in other brands like Hilfiger. A brand such as this is not safe from liquidity whereas, companies which have several brands within their overall offering can fall back on the ones profiting if some suddenly see a loss.

This also helps when introducing their brands into new retail outlets as they have more than one product on offer, giving them the ability to make exclusivity deals that include a combination of different brands.

Market research has shown that the smaller brand companies are struggling to find their ways into our shopping bags, due to not seeing enough action on their shop floors. PVH and similar companies are very well aware of this and are understandably taking advantage whilst they can. These investments can see a very profitable outcome for the purchaser, as when the recession inevitably ends consumers will once again have more money to fund their interest in shopping.

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