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After weeks of rumors and discussions, the Estée Lauder Group has finally bought the House of Tom Ford for $2.3 billion, an amount that includes cash and debt. This new purchase puts the emphasis on beauty, before fashion.
The American fashion and beauty house, valued at 2.8 billion dollars, was finally bought for 2.3 billion by the Estée Lauder group. Tom Ford, the founder, CEO and main shareholder of the eponymous House will keep his position as creative director until the end of 2023. Domenico De Sole, president of Tom Ford International, will remain as a consultant until the same date.
“I couldn’t be happier with this acquisition, as The Estée Lauder Companies is the perfect home for the brand,” the designer said in a statement. “They have been an extraordinary partner from day one of my founding the company, and I am thrilled to have them become the stewards of luxury in this new chapter of the Tom Ford brand.”
Estée Lauder, now head of the American company, will outsource fashion and accessories, to companies like Ermenegildo Zegna NV (fashion), or Marcolin (eyewear), already licensed.
Regarding Tom Ford Beauty, high-end fragrances represent about 50% of sales. According to JP Morgan, fragrances are among the top 15 prestige brands in the United States and the top 10 in China.
Tom Ford Beauty at the heart of this acquisition
Even before this major buyout, Tom Ford’s beauty business already had a licensing agreement with the French group, which includes a collection of fragrances, makeup and skin care products.
On the financial side, for the year ended June 2022, net sales for Tom Ford’s beauty division were up about 25%, year over year. Estée Lauder is ambitious and says it should achieve annual net sales of $1 billion over the next few years.
“Tom Ford is an ultra-luxury player and still has tremendous growth potential in the U.S. and especially abroad. This customer base is very attractive to Estée Lauder, as it would be to any luxury conglomerate,” said Andrew Charbin, managing director of the Sage Group, an investment bank specializing in mergers and acquisitions for high-end consumer brands.
The launch of Tom Ford Beauty in China was one of Estée Lauder’s most significant introductions into the country. Despite this, it announced that its sales in Asia had dropped, due to the country’s strict anti-covid policies.
It’s a fine line between fashion and beauty
For months, there were rumors about this future acquisition of the brand Tom Ford. Between Estée Lauder and Kering, the war of the groups was declared and it is finally the beauty that wins over the luxury. Only time will tell if the decision of the American brand will have a significant impact on the beauty industry. Before it, other brands have tried similar alliances, but failed. Like Clarins and Procter & Gamble, which acquired respectively the houses Mugler and Rochas. A failure partly due to the problems faced by the clothing industry.
“There have been a lot of mergers and acquisitions in recent years, and some transactions that made no sense turned out to be complete failures for the buyers. Because of the market, everyone got a little excited and overpaid with cheap financing for mediocre assets,” said the director of The Sage Group.
The success of Estée Lauder’s strategy depends heavily on its licensing agreements. Like for example the one with the Zegna group, 20 years old with an automatic renewal for another ten years. Or the licensing agreement with Marcolin, which has held the license for Tom Ford eyewear since 2005, and which will keep its license for life.
Read also >Estée Lauder close to buying Tom Ford
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After weeks of rumors and discussions, the Estée Lauder Group has finally bought the House of Tom Ford for $2.3 billion, an amount that includes cash and debt. This new purchase puts the emphasis on beauty, before fashion.
The American fashion and beauty house, valued at 2.8 billion dollars, was finally bought for 2.3 billion by the Estée Lauder group. Tom Ford, the founder, CEO and main shareholder of the eponymous House will keep his position as creative director until the end of 2023. Domenico De Sole, president of Tom Ford International, will remain as a consultant until the same date.
“I couldn’t be happier with this acquisition, as The Estée Lauder Companies is the perfect home for the brand,” the designer said in a statement. “They have been an extraordinary partner from day one of my founding the company, and I am thrilled to have them become the stewards of luxury in this new chapter of the Tom Ford brand.”
Estée Lauder, now head of the American company, will outsource fashion and accessories, to companies like Ermenegildo Zegna NV (fashion), or Marcolin (eyewear), already licensed.
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After weeks of rumors and discussions, the Estée Lauder Group has finally bought the House of Tom Ford for $2.3 billion, an amount that includes cash and debt. This new purchase puts the emphasis on beauty, before fashion.
The American fashion and beauty house, valued at 2.8 billion dollars, was finally bought for 2.3 billion by the Estée Lauder group. Tom Ford, the founder, CEO and main shareholder of the eponymous House will keep his position as creative director until the end of 2023. Domenico De Sole, president of Tom Ford International, will remain as a consultant until the same date.
“I couldn’t be happier with this acquisition, as The Estée Lauder Companies is the perfect home for the brand,” the designer said in a statement. “They have been an extraordinary partner from day one of my founding the company, and I am thrilled to have them become the stewards of luxury in this new chapter of the Tom Ford brand.”
Estée Lauder, now head of the American company, will outsource fashion and accessories, to companies like Ermenegildo Zegna NV (fashion), or Marcolin (eyewear), already licensed.
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