Comment on this storyCommentSolely three months after it emerged that Estee Lauder Cos. was in talks to purchase Tom Ford for $3 billion, it’s now being reported that Gucci-owner Kering SA is in superior discussions to accumulate the American designer’s eponymous model.Kering’s problem with the label, identified for its expensive fragrances and mini-dresses, could be virtually the inverse of Estee Lauder’s. While Estee has buckets of magnificence know-how, it lacks credibility in trend. In distinction, Kering, which declined to touch upon Friday, is a grasp of high-end clothes and niknaks however would want to take management of the cosmetics arm to make the acquisition work.Tom Ford’s top-end attire line would definitely be a good match with Kering’s portfolio, which is led by Gucci but in addition consists of Saint Laurent, Bottega Veneta and Balenciaga.Kering has the “magic contact” with trend, luxurious adviser Mario Ortelli advised me, with the flexibility to inject and maintain the precise artistic imaginative and prescient, alongside impeccable advertising and marketing, distribution and merchandising.Tom Ford, estimated by UBS to have gross sales of €1.5 billion ($1.49 billion) in 2021, is strongest in menswear and Kering might use its Brioni model to produce a number of the Tom Ford clothes presently produced by Ermenegildo Zegna NV. The French conglomerate might additionally draw on its experience in trend to develop Tom Ford’s womenswear, footwear and leather-based items. The latter are the true revenue drivers of the business.Plus, the 2 homes have a historical past. The designer Tom Ford was behind Gucci’s first reinvention within the Nineties. And Kering is presently making an attempt a third revamp of the near €10 billion income model, whereas holding it below the path of designer Alessandro Michele. Analysts at Jefferies level out that if Ford might collaborate with Michele, this might ignite curiosity in Gucci as soon as extra. Michele’s granny stylish with Tom Ford’s horny silhouettes, anybody?Kering additionally has a sturdy stability sheet, with Bloomberg Intelligence estimating a internet money place within the yr forward, so it might simply afford the mooted $3 billion price ticket.But to get the perfect worth from the deal, Kering should take management of Tom Ford’s profitable magnificence license, which is presently with Estee Lauder. That gained’t be low cost or straightforward.Kering has made no secret of its need to develop Gucci’s magnificence enterprise, which is presently licensed to Coty Inc. It has arrange an inner crew to judge its choices within the sector. If Tom Ford have been a stepping stone to constructing essential mass in cosmetics and perfume, then the complexities and expense of buying the license could be value it.Perhaps the 2 firms might attain some type of settlement, whereby Kering takes Tom Ford’s trend whereas Estee Lauder takes the cosmetics and perfume enterprise. Or they might accomplice on magnificence. Cosmetics homes are used to working with manufacturers and celebrities on a licensed foundation, and there is perhaps scope for Kering to finally purchase out its accomplice.Yet even when the precise particulars could possibly be hammered out to each events’ satisfaction, there are different obstacles to be navigated.Kering has been efficiently constructing its eyewear enterprise, so Tom Ford’s gross sales right here would useful too. But once more, its eyewear is licensed to Marcolin SpA, though this is because of expire shortly, in accordance with UBS.And let’s not neglect the personalities concerned. Tom Ford put Gucci on the map together with his horsebit excessive heels, silk shirts and velvet flares. But he after which 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 the minority pursuits in Gucci.It’s additionally not clear whether or not Ford himself will probably be a part of the deal, or how lengthy he’ll stick round. So Kering as soon as extra probably faces paying up for a model solely to have to seek out a new designer. At least transitioning to recent artistic expertise is one in all its core competences.If these factors could be resolved — and traders appeared optimistic on Friday — then creating a new pressure in magnificence, increasing eyewear and bringing some luster again to Gucci would make taking one other threat on Tom Ford value it. This column doesn’t essentially mirror the opinion of the editorial board or Bloomberg LP and its house owners.Andrea Felsted is a Bloomberg Opinion columnist overlaying shopper items and the retail business. Previously, she was a reporter for the Financial Times.More tales like this can be found on bloomberg.com/opinion
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