The world's biggest retailer, Wal-Mart, could be the new owner of Tommy Hilfiger Corp if all goes well. According to a report by WWD, Wal-Mart is believed to have initiated the idea and could be starting due diligence analysis on the company by the end of this week.

Although spokespeople for both parties declined to comment and the bankers could not be reached, JP Morgan Chase & Co and Goldman Sachs have apparently been shopping around quietly for buyers for Tommy Hilfiger Corp. Potential buyers that were contacted are thought to include private equity firm Apax Partners and retailers such as Jones Apparel Group Inc, Perry Ellis International Inc, and Liz Claiborne Inc. However, Jones, Perry Ellis and Claiborne are said to no longer be in the running.

According to financial sources the asking price for Hilfiger is at least $1.82 billion (£1.03 billion), possibly going as high as $2.16 billion. The deal could be signed before the end of November, with a rush behind the proceedings while the valuations are still applicable, one anonymous source told WWD.

"Selling Tommy at Wal-Mart and exiting the department store channel would be a tremendous boom for apparel firms," an apparel executive with inside information told WWD. "Between Tommy Hilfiger and George, Tommy would be the winning card." George, a label that was launched in the UK, apparently took longer to catch on in the US. Meanwhile, Tommy could be used in other categories at Wal-Mart, such as home goods, said another apparel executive.

The acquisition of Hilfiger by Wal-Mart is believed to fit the group's strategy. CEO H. Lee Scott has said that the company can offer varying price points, from entry level to more upscale. Adding Hilfiger to the stable would increase Wal-Mart's fashion percentage, thereby allowing it to better compete with main rival Target Corp, which offers affordable lines by designers Cynthia Rowley, Rachel Ashwell and Michael Graves.

According to brand consultant and chairman of Siegel & Gale, Alan Siegel, the inclusion of designer brands is the "single most important move Target has made to add retailing excitement to (its) image". It has allowed the company to expand its client base to include those who are also interested in fashion. The acquisition of Hilfiger by Wal-Mart could produce the same results.