Rock on, Tommy: Hilfiger is trying to regain his cutting edge with a star-studded rock'n'roll show

What is not immediately obvious as you stroll into the open-plan, 17th-floor offices of Tommy Hilfiger, brightly lit by windows that stare down New York's Hudson River, is whether you are entering the home of a fashion house or a music label. Sure there are racks of pick'n'mix clothes rolled across the aisles and a fashion shot or two on the desks, but the walls are adorned by guitars, photographs of rock and rap stars, and album covers. In one frame sits the Tommy Hilfiger sweater worn by Michael Jackson in a Vogue feature. In another, the designer himself posing with Mick Jagger. In a third, a broody black-and-white still of Tommy and his three brothers – Andy, Bobby and Billy (who died of a brain tumour in 2001) – looking every inch the rock band.

It takes only a moment to shake the confusion – because, of course, Tommy Hilfiger has stood for almost a quarter of a century in that exact spot where music and fashion meet. More than any other designer, he has inspired – and been inspired by – the stars of rock and rap. He has courted and clothed them, and the millions who take fashion cues from their musical idols have rushed out to buy his clothes.

As a result, Hilfiger stands atop a multi-billion-dollar fashion empire that is a household name across the globe, and is the public face and driving force of a company that had annual sales approaching $2bn at its peak. When it was taken over by private-investment firm Apax Partners in 2006, the company was worth $1.6bn, and the price tag is $1bn more now, with a European stock-market flotation in the offing when markets recover from their current jitters.

"Have you seen Andy's office?" Hilfiger asks, practically skipping across to find his brother. The designer is a sprite in person, 5ft 8in and neat, with schoolboy hair that somehow seems more blond than grey and belies his 57 years. Dressed in dark greens and blues, with a tartan tie and – a secret indulgence – solid-silver buttons for the jeans fly, the outfit is, naturally, his own.

Andy Hilfiger, 10 years his junior, is the musician of the two, a songwriter and bass player who has flitted around the music business for years and most recently worked with Jennifer Lopez on her clothing and perfume lines. Tommy used to manage Andy's first teenage band; Andy is a kind of celebrity liaison officer for the business these days, and his digs at the back of the office is a sofa-strewn den where the two can hang out. This particular day, Andy has found some old footage of an obscure New York rock band to share, but more often ' the two will discuss the latest video or new track from a buzz-worthy youngster on the New York circuit.

"Musicians and music have inspired fashion designers for a very long time," Tommy explains. "Fashion designers, being who they are, never admit that. They would never want people to think that anyone gave them any idea – God forbid. They act as if they were creating all these ideas on their own, but that's not true at all. Musicians have inspired all of us. All of those looks, from the preppy Beach Boys, to the jeanswear looks of the 1960s and 1970s, to the more mod look – they have all given designers tremendous inspiration over the years."

In Hilfiger's own story, it is impossible to untwine music and fashion. The second of nine children born to a jeweller and a nurse, in the conservative – outright dull – upstate New York town of Elmira, dyslexic Tommy acted the fool and played truant at school, and longed for the rebellion incited by his musical heroes in rock'n'roll. One weekend, while still at high school, he set off for New York with $150 and two friends to buy 20 pairs of bell-bottom jeans, which he sold to the culturally malnourished youth of Elmira. Before graduating from high school he had set up a shop called People's Place and a prosperous "import" business, shipping goods in from the big city. It would not be long before he owned a chain of 10 stores and was genuinely importing from around the world.

"In 1970, I was on the King's Road in London, looking at cool boutiques and restaurants. It was all very mod – the whole look was one step ahead of anything that was happening here in New York," he says. "The Brit designers and rock stars took it to another level. I went to see what was going on there, to see some of the super-groups from the UK, the high-heeled boots, the velveteen bell-bottoms – there were only two stores here that sold it. And I used to go to India, to different parts of the world, looking for new ideas, and it would always end up that ethnic looks would become the most popular, because somehow they were associated to rock'n'roll."

At its peak, many of the young bands passing through New York would stop by People's Place and Hilfiger would endeavour to get his clothes on their backs. "I dressed Bruce Springsteen before anybody knew who he was," he says gleefully.

The shift from retailer to designer was gradual, as he began customising jeans and other items, and it was not until 1979, well after People's Place had collapsed, that he moved to New York to pursue a career as a fashion designer – and then not until several more years had passed that, with the backing of an Indian entrepreneur, he broke spectacularly on to the industry stage.

Hilfiger has ever since endured the sniffiness of the fashion establishment, which claims he is more of a marketing phenomenon than a traditional designer. It's not an entirely unfair charge, given that he introduced his first signature collection in 1985 not with a Fashion Week show in a chi-chi loft or club downtown but with a giant billboard in Times Square (see the ad on page 16). The uproar it caused on Fashion Avenue (the self-labelled "fashion capital of the world", an area from 34th to 42nd Street on Seventh Avenue), which was appalled to see an upstart put himself in the same league as Ralph Lauren, Perry Ellis and Calvin Klein, brought priceless publicity.

It was just the right moment to bring back that "preppy old American" look, Hilfiger recalls. "Ralph Lauren and Brooks Brothers and traditionalists were out there doing proper schoolboy gear, and I just gave it a crank, changed the look of it all to really create a sensation. When that happened, the surfers, the skaters, the rockers, the snowboarders, the rappers, the athletes, the movie stars, they all started wearing the clothes and helped establish the business."

What gave sales their biggest upwards jolt was the moment in 1994 when the rapper Snoop Dogg wore an oversize Hilfiger jersey during an appearance on Saturday Night Live, and suddenly Tommy Hilfiger was the most sought-after designer for hip-hop stars and their fans. The womenswear Tommy Jeans ad campaign fronted by another hip-hop artist, Aaliyah, was one of the most successful of the period.

"Andy brought me Aaliyah," Tommy Hilfiger says. "Andy knows how much I love music and how much I like to be involved in music, and Andy being a musician has always been in the world and has always been able to bring these people to me before I even knew who they were. He brought me Britney and Beyoncé. The day we photographed Britney Spears, her first song [Baby One More Time] went to number one."

Andy is still fixing the pop-star introductions, although not always successfully. There was a bit of a to-do that made the gossip columns in 2006, when Tommy threw a punch at Guns N' Roses frontman Axl Rose at a celebrity party in some barely remembered dispute. "That was Andy's fault; he's always leading me astray," he says.

A project that has seen both men make full use of their connections has been the Hilfiger Sessions – intimate jamming sessions with a bill shared by big stars and up-and-comers. They began in Amsterdam and have now been put on in cities around the world, most successfully with ex-Fugee Wyclef Jean hosting in Madrid; they are in the throes of organising the first event in London, planned for the autumn.

In another attempt to intertwine music and his fashion line, Hilfiger has just launched Tommy TV, an online venture for aspiring young artists. A joint project with Sony BMG, the idea is that the swish new website will become a forum that will push the best new talent towards a major- label signing. Aspiring artists are invited to upload audition videos via YouTube.

Maybe the upcoming young musicians Hilfiger is keeping an eye out for will turn out to be in the orbit of his four children, the eldest already fast becoming fixtures on New York's art scene. Maybe in the orbit of his 18-year-old son, Richard, who has begun putting out hip-hop-influenced tracks under the name Rich Hil. Or maybe of 23-year-old daughter Ally, who has been dating a British songwriter living in Berlin and whose most recent project has been installation art based intriguingly on the number eight – a number that seems to have special significance for the Hilfiger clan, more of which later. Among Ally's set, Hilfiger is known as "The Godfather" for his patronage of their work. As the designer is flitting proprietorially about his Soho store on the afternoon of our meeting, one of Ally's downtown hipster friends wanders in, looking for her, says hi, then wanders out. He is introduced as an "artist-stroke-skateboarder".

Yes, they are characters, the Hilfiger clan and their hangers-on. Their adventures in obsessive-compulsive New York, on the slopes in exclusive Lech, Austria, or in the seclusion of celebrity-brushed Mustique in the West Indies mean they are a reality TV series waiting to happen.

Or at least they would be if the family had not already had two nasty brushes with reality TV. Ally was the focus of an MTV series called Rich Girls, which ran for a season in 2003. Although it received decent notices (The New York Times declared approvingly that Ally "hams up the manic-depressive trials of adolescence... and how she has been 'denied a childhood' by life and her fickle parents"), it left her feeling "really, really alone" and fractured her ' relationship with best friend Jaime Gleicher. Two years later, Tommy himself tried his hand at being a fashion-industry version of Donald Trump – the Alan Sugar of the original American Apprentice – by hosting a contest called The Cut, where hopefuls vied for a job as a designer for Hilfiger. Viewers switched off. "They wanted me to play a nasty megalomaniac," he says, "but it just wasn't me. At first I thought it was going to be fun, but I'm very impatient; I don't want to sit and have somebody tell me to stand in front of lights wearing make-up for 45 minutes while some other person has to change batteries on a camera. And then they did the show the way they wanted to do the show."

Hilfiger is usually guarded when it comes to his personal life, but it is a time of some big changes. After splitting from his first wife Susie after 20 years of marriage in 2000, he is now planning his wedding to former model Dee Ocleppo, having picked 8 August – 08/08/08, there's that special number again – as the date. His Connecticut mansion is up for sale (price tag: $28m) and the couple have New York City's most desirable new residential address, at the converted Plaza hotel overlooking Central Park.

For his birthday in March, though, it was back to familiar Mustique, the exclusive Caribbean island where he could be assured of dropping in on his next-door neighbour Mick Jagger, where Shania Twain or Bryan Adams might holler a hello in the street, and where he has celebrated New Year's Eve with the likes of Lou Reed and the boys from Pink Floyd. "It's an island unlike this island," Hilfiger says, and it does indeed sound a world away from Manhattan. "Sand and grass and trees and one grocery store, two gift shops, two bars, a little fishing village, one hotel, less than 100 homes. Population of local people under 500. I go as much as I can. I fell in love with it 23 years ago."

In business as well as in pleasure, the future is looking brighter. The brand is expanding again and Hilfiger has just signed the lease for a 22,000sq ft flagship store on Fifth Avenue, putting it next door to Fendi on one of Manhattan's most fashionable shopping streets. Two years away from the corporate spotlight of the New York Stock Exchange – when Apax bought the firm, it took it private – have helped the company effect a turnaround at a time when its fortunes had looked to be fading fast.

"It's so exciting because four years ago the business was in a phase of going down," Hilfiger says. "We had a mega-business in the US, but we were facing a lot of competition that we hadn't seen before. The Abercrombie & Fitches of the world were opening up, Gap was strong, Banana Republic was strong, the urban brands opened up and the diffusion brands came over from Dolce & Gabbana and others. We took a step backwards, did some repair work, and now we're stronger. Every successful designer brand always evolves. Armani had his bumps in the late-1980s, Versace had its bumps. You prove your strength when you hit some of those bumps but then rise up."

Apax promoted Fred Gehring, who had successfully kept the Tommy Hilfiger brand upmarket in Europe during what he calls the US business's "bling era", to be chief executive of the whole company. Tommy continued serving as principal designer. "Fred has kept the brand on a par with all the other designer brands in the world outside the US market," Hilfiger says. "Now we are bringing that philosophy back home to upgrade the brand here."

What he hopes is that he has got rid of one particular headwind: the false, but excruciatingly persistent rumour that he made racist remarks on The Oprah Winfrey Show more than a decade ago. The charge went around and around the internet, seeping into the public consciousness, and it still hangs there, half-remembered, that he didn't want various races wearing his clothes. For the avoidance of doubt, Hilfiger had never been on Oprah. He had never been reported distancing himself or his clothes from the black community. One of his proud boasts is that the hip-hop duo Mobb Deep namechecked him in the lyric "Tommy Hil was my nigga". He has hired private detectives to try to root out what he feared was a smear campaign by a rival, but to no avail.

"The first time I heard the rumour, I didn't believe it. I thought it was crazy. It hurt my integrity because at the end of the day, that's all you have. If people are going to challenge my honesty and my integrity and what I am as a person, it hurts more than anything else. We hired teams to go out and investigate, and they traced it back to a college campus, but they couldn't put their finger on it. I create my clothing for all different types of people, regardless of their race, religion or cultural background."

Last year, in desperation, Hilfiger finally did go on Oprah's show, and the presenter herself declared the tale "a big fat lie". And yet it persists. Just a few months ago, the Hilfiger company had to send in Carter Ruck, libel lawyers extraordinaires, when preppy clothing range Frank Fuller Classic declared in a magazine ad that "We're not racist like Tommy Hilfiger".

Hilfiger still asks sceptics to get in touch by emailing rumor@tommy.com, but the designer is hopeful that he is now laying the issue to rest. His final statement on the subject: "Words can be fleeting, but actions withstand the test of time. Friends, family, and business colleagues who know me, who see the way I live and conduct business, know that the rumour is complete nonsense. The Oprah show finally extinguishes the rumour once and for all."

With store openings in the US, across Asia and Europe, with music ventures to launch and a wedding party to plan, the business now is all about delegation – even for one so imprinted with Hilfiger's own brand of creativity. "In the early-1980s, I established a heritage, a vocabulary, a look and feel, and it always evolves but at the same time it keeps connected," he says.

He has long since stopped seeing all the designs going out emblazoned with his name, but that does not mean he is not fizzing with ideas. In the quick-fire manner of speech which reflects his restless thought process, he explains: "I will set a look or a trend. Maybe I will have been travelling. Maybe take a trip to Scotland, and I'll come back and say, 'Guys, it's time to bring back tartan, let's do tartan in a brand-new, fun young, spirited way. Let's do Donegal tweed but make it new.' Maybe I'll be in Texas and say, 'Let's do cowboy shirts again but let's do cowboy shirts with embroideries and do them in real authentic indigo American denim or in a whole new colour palette.' Or 'I was watching Out of Africa last night, so let's do this whole safari story.' Or 'I was watching The Graduate, let's do a 1960s story and make the clothes similar to what Dustin Hoffman was wearing.'

"And because we like rock'n'roll, we are always looking at what is the next look in that. I really believe that the whole punk look is coming back, with skinny, skinny jeans and a lot of black." With that prediction for the Hoxton-isation of the American masses, we are done and the designer is off. It is Mustique in the morning for a catch-up with Mick and pals, before the family flies in, and there are plans for the Fifth Avenue store to be laid before then, and preparations for his London events this week. Busier than ever, the pop-culture magpie flits away.