Buying Tom Ford would be a loop moment for Gucci

Buying Tom Ford would be a loop moment for Gucci


Simply three months after it emerged that Estee Lauder Cos. was in talks to purchase Tom Ford for $3 billion, it’s now reported that Gucci proprietor Kering SA is in superior talks to amass the eponymous label from the American designer.

Kering’s problem with the label, recognized for its costly perfumes and mini-dresses, could be virtually the reverse of Estée Lauder’s. Whereas Estee has buckets of magnificence know-how, he lacks vogue credibility. In contrast, Kering, which declined to touch upon Friday, is a grasp of high-end attire and equipment however would wish to take management of the cosmetics department for the acquisition to work.

Tom Ford’s high-end clothes line will surely be an excellent match with Kering’s portfolio, which is led by Gucci but additionally contains Saint Laurent, Bottega Veneta and Balenciaga.

Kering has the “magic contact” with vogue, luxurious advisor Mario Ortelli informed me, with the power to inject and preserve the appropriate inventive imaginative and prescient, in addition to impeccable advertising and marketing, distribution and merchandising.

Tom Ford, whose gross sales are estimated by UBS at 1.5 billion euros ($1.49 billion) in 2021, is strongest in menswear and Kering may use its Brioni model to produce a few of Tom’s garments. Ford presently produced by Ermenegildo Zegna NV. The French conglomerate may additionally draw on its vogue know-how to develop Tom Ford womenswear, footwear and leather-based items. These are the true revenue engines of the trade.

As well as, each homes have a historical past. Designer Tom Ford was behind Gucci’s first reimagining within the Nineties. And Kering is presently making an attempt a 3rd revamp of the almost 10 billion-euro model, whereas protecting it below the watchful eye. course of designer Alessandro Michele. Jefferies analysts level out that if Ford may collaborate with Michele, it may rekindle curiosity in Gucci. Michele’s stylish granny with the attractive silhouettes of Tom Ford, anybody?

Kering additionally has a powerful stability sheet, with Bloomberg Intelligence estimating a internet money place for the yr forward, so it may simply afford the reported $3 billion price ticket.

However to get probably the most out of the deal, Kering must take management of Tom Ford’s profitable magnificence license, presently owned by Estée Lauder. It will not be low-cost or simple.

Kering has made no secret of its need to develop Gucci’s magnificence enterprise, presently licensed to Coty Inc. It has arrange an inside workforce to evaluate its choices within the sector. If Tom Ford was a stepping stone to constructing important mass in cosmetics and fragrances, then the intricacies and expense of buying the license could be price it.

Maybe the 2 firms may attain some form of deal, whereby Kering would take vogue from Tom Ford whereas Estee Lauder would take the cosmetics and perfume enterprise. Or they may companion on magnificence. Cosmetics homes are used to working with licensed manufacturers and celebrities, and Kering may finally purchase out its companion.

But even when the precise particulars may very well be labored out to the satisfaction of each events, there are different hurdles to beat.

Kering has efficiently grown its eyewear enterprise, so Tom Ford’s gross sales right here would additionally assist. However once more, its glasses are licensed to Marcolin SpA, though that is because of expire shortly, based on UBS.

And let’s not neglect the personalities concerned. Tom Ford put Gucci on the map with its excessive horsebit heels, silk shirts and velvet flares. However he, then CEO Domenico De Sole, now chairman of Tom Ford, parted methods with Kering in 2004, when the French conglomerate accomplished its $8 billion acquisition of minority pursuits in Gucci.

It is also unclear if Ford itself will probably be a part of the deal, or how lengthy it should keep. Kering is due to this fact as soon as once more doubtlessly confronted with paying for a model and having to discover a new designer. At the very least transitioning to new inventive expertise is certainly one of his core competencies.

If these factors might be ironed out – and traders appeared optimistic on Friday – then creating a brand new pressure in magnificence, increasing eyewear and restoring a few of Gucci’s luster would make Tom Ford worthwhile.

This column doesn’t essentially mirror the opinion of the Editorial Board or of Bloomberg LP and its house owners.

Andrea Felsted is a Bloomberg Opinion columnist masking client items and the retail trade. Beforehand, she was a reporter for the Monetary Occasions.

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