A great operation is coming up in the luxury market. According to information from the Wall Street Journal, the French luxury giant Kering is in the process of buying the fashion brand Tom Ford, known for its menswear line. However, last August, the New York newspaper had mentioned talks with the cosmetics giant Estée Lauder, which could have led to an agreement of about 3,000 million dollars. Today, the tricolor company seems to be the favorite, although sources close to the file assured the Wall Street Journal that there were still no guarantees.
A more favorable economic context for Kering
This reversal of the situation is explained by the current financial health of the two suitors. On the one hand, Kering currently has a market value of almost 60 billion euros and posted a higher-than-expected increase in sales in October thanks, in particular, to the influx of American tourists in European capitals, with Paris in the lead.
On the Estée Lauder side, the situation is quite different since the company announced this week a 5% drop in sales during the last quarter, a drop attributable to the closure of stores in China under the effect of Covid-19 as well as to a slowdown in US domestic orders. In addition, the specialist in beauty products, which has Clinique or MAC in its ranks, has also reduced its forecasts for the current fiscal year.
Strategically, Kering’s acquisition of Tom Ford makes sense as the French company would bring its expertise in the field of fashion and more specifically high-end accessories. The American brand would also like to develop its women’s accessories business while its high-end cosmetics and perfumery line is already experiencing rapid growth.
Source: BFM TV
