After a series of twists and turns, the Tom Ford saga has finally reached its conclusion. Estée Lauder Companies has officially acquired the American fashion brand, adding Tom Ford to its portfolio.
Despite Kering being widely regarded as the frontrunner in the race to acquire the luxury house, it was Estée Lauder Companies that emerged as the proud owner of Tom Ford. The beauty group, which already held the beauty license for the brand, signed an acquisition agreement on November 15th. This move will strengthen Estée Lauder’s already impressive portfolio, which includes renowned brands such as Clinique, La Mer, and M.A.C.
The deal valued Tom Ford at $2.8 billion, but Estée Lauder Companies will pay around $2.3 billion to secure the brand. The acquisition will be funded through a combination of cash, loans, and $300 million in deferred payments starting in 2025.
Estée Lauder Companies has stated that this acquisition will drive the growth of Tom Ford Beauty. The multinational corporation plans to provide “creative oversight, increased speed and agility, and enhanced online penetration opportunities” to further propel the brand’s success. In fact, Tom Ford Beauty already achieved a remarkable 25% increase in net sales during Estée Lauder Companies’ fiscal year 2022. The division is expected to generate an annual net revenue of $1 billion within the next two years.
In terms of organization, the men’s and women’s fashion, accessories, and underwear activities of Tom Ford will be licensed under the Ermenegildo Zegna Group, while the eyewear department will fall under Marcolin SpA. Estée Lauder Companies has confirmed that founder and CEO Tom Ford will continue to oversee the brand’s artistic direction until the end of 2023. Additionally, Domenico De Sole, chairman of Tom Ford International, will serve as a consultant during the same period.
This agreement signifies a significant milestone in the development of Estée Lauder Companies, particularly following a decline in results during the first quarter of its fiscal year 2023. The multinational corporation experienced an 11% decrease in revenue, amounting to $3.93 billion, and a 29% decline in net profit, totaling $489 million, between July and September.
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