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Monday July 30 6:17 PM ET

NEW YORK (Reuters) - Fashion group Tommy Hilfiger Corp. on Monday reported its fiscal first-quarter net profit dropped 7.2 percent,

but the results were better than expected as it cut costs and controlled inventory, triggering a gain in its shares. Tommy Hilfiger's shares last traded up 93 cents, or 7.1 percent, at $14.03 in afternoon trading on the New York Stock Exchange. The results were seen as particularly strong because the company not only beat forecasts for the quarter but also did not cut projections for the full year to March 31, 2002, analysts said. Many fashion retailers and manufacturers have been warning about slower profits and revenue growth in recent months. The Hong Kong-based apparel designer and retailer said net income for the first quarter ended June 30 was $9.0 million, or 10 cents per diluted share, compared with $9.7 million, or 10 cents, a year earlier.

Analysts' earnings estimates ranged from 8 cents to 9 cents per share, with a mean of 8 cents per share, according to research firm Thomson Financial/First Call. Revenues fell to $355.7 million from $399.9 million in the year-earlier quarter, mainly on weakness in its wholesale business. ``Although partially due to the acceleration of certain shipments originally planned for the second quarter, these results reflect improvements in our product offerings, streamlining our operations and continued strong inventory management,'' said Hilfiger's Chief Executive Joel Horowitz. The company said it believes it could achieve analysts' consensus EPS estimate of $1.60 for the full year. It also said it remains comfortable with the current quarterly consensus estimates, except that second-quarter consensus estimates should be reduced by 1-2 cents to reflect the earlier timing of shipments, which contributed to the first quarter figures. ``The company has met expectations for the quarter, and endorsed guidance for the rest of the year in the midst of a challenging retail environment,'' said Carol Murray, retail analyst at Salomon Smith Barney. ``Their inventories look to be in very good shape too,'' she said.

The company said that its forecasts for the remainder of the year assume some improvement in business conditions during the coming

back-to-school and holiday selling seasons. Tommy Hilfiger Corp. acquired Tommy Hilfiger Europe, its largest and fastest growing licensee, in June, for $200 million in cash. The company has also sought to expand its product mix of apparel, fragrance and eyewear in Europe through alliances with cosmetics company Estee Lauder, Swiss-based men's apparel company Strellson, Lantis Eyewear and German footwear company Hamm Group.