Macy's in exclusive deal with Hilfiger

ATLANTA (Reuters) - Retailer Macy's Inc (M.N) said on Friday it signed an accord with Tommy Hilfiger USA Inc to be the exclusive U.S. department store retailer of the design company's men's and women's sportswear, starting in fall 2008.

Under the pact, Macy's will expand Hilfiger offerings in its stores and on its Web site, and work with Hilfiger on new ventures and brand extensions, the two companies said in a statement.

Tommy Hilfiger will continue to operate its own free-standing stores and sell goods online at tommy.com, the companies added. Products distributed through Hilfiger's licensees will still be sold on a nonexclusive basis.

The move comes as Macy's is looking to boost awareness of its brand and lift sales after acquiring May Department Stores two years ago. Last year, the company converted more than 400 former May stores, which operated under names such as Foley's and Hecht's, to the Macy's name.

In recent months, Macy's has boosted promotions to attract shoppers as sales at those ex-May stores disappointed.

"I think Macy's is playing catch-up with the likes of J.C. Penney Co (JCP.N) and Kohl's Corp (KSS.N)," which have increased their unique brands, said Brian Sozzi, a retail analyst with Wall Street Strategies.

"I don't see it as a big deal for Macy's; it's more of a big deal for Tommy Hilfiger," Sozzi said.

Kohl's recently launched an exclusive clothing line by designer Vera Wang and kitchen gadgets under the Food Network brand. Penney has added unique brands including Liz & Co. by Liz Claiborne Inc (LIZ.N), and plans to launch a line of clothes and home goods made by Polo Ralph Lauren Corp (RL.N) in spring 2008.

Macy's rolled out an exclusive line of home products by Martha Stewart in September. Its recent television ads have featured Stewart and singer Usher, who has a fragrance line at the retailer.

Macy's, which also operates Bloomingdale's stores, said this week that its new holiday ad campaign will feature designer Hilfiger and other famous names such as chef Emeril Lagasse and entertainer Sean (Diddy) Combs.

Macy's shares were up 34 cents, or 1.1 percent, to $32.80 in afternoon trading on the New York Stock Exchange. Macy's stock is down 14 percent so far this year while Kohl's and Penney are off 18 percent and 28 percent, respectively.