Fashion house Tommy Hilfiger has fallen deep into the red because of a decline in the value of some of its acquisitions

The Hong Kong-based company said on Tuesday that it had crashed to a $439m (�280m) loss for the three months to June, compared with a $9m profit during the same period last year.

The company's losses were inflated by $430m in one-off costs reflecting the difference between what the firm paid for certain assets and what they are worth now.

Accounting rules require companies to write off a decline in asset value against profits.

But Hilfiger made a bigger-than expected profit of $2.6m when one-off costs were stripped out, buoyed by strong demand for its women's and children's clothes.

Shares climb

On Wall Street, Hilfiger shares jumped 80 cents to $13 in early trade in a market that was sharply higher overall.

Hilfiger chief executive Joel Horowitz described current retail market conditions as "difficult," but said the company was well placed to weather the storm thanks to tight inventory and cost controls.

The company added that co-chairman and director Lawrence Stroll - who helped to develop the Hilfiger brand - was stepping down.

US fashion and clothes retail firms have been hit hard by the uncertain economic outlook, with many high-profile names struggling to match the buoyant sales figures seen during the boom years of the 1990s.

Earlier this month in London, shares in upmarket clothes retailer Burberry fell below their offer price on their first day's trading on the stock exchange.

In style

But Hilfiger has been insulated from the worst of the post 11 September downturn by stronger sales in Europe.

The company is one of the fashion industry's biggest success stories of the last ten years.

In the mid-1990s, Tommy Hilfiger jeans became one of the most sought-after items of clothing in the US and Europe, triggering a flood of counterfeit products.