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Buying Tom Ford would be a loop moment for Gucci

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Just three months after it emerged that Estee Lauder Cos. was in talks to buy Tom Ford for $3 billion, it is now reported that Gucci owner Kering SA is in advanced talks to acquire the eponymous label from the American designer.

Kering’s challenge with the label, known for its expensive perfumes and mini-dresses, would be almost the reverse of Estée Lauder’s. While Estee has buckets of beauty know-how, he lacks fashion credibility. By contrast, Kering, which declined to comment on Friday, is a master of high-end apparel and accessories but would need to take control of the cosmetics branch for the acquisition to work.

Tom Ford’s high-end clothing line would certainly be a good fit with Kering’s portfolio, which is led by Gucci but also includes Saint Laurent, Bottega Veneta and Balenciaga.

Kering has the “magic touch” with fashion, luxury advisor Mario Ortelli told me, with the ability to inject and maintain the right creative vision, as well as impeccable marketing, distribution and merchandising.

Tom Ford, whose sales are estimated by UBS at 1.5 billion euros ($1.49 billion) in 2021, is strongest in menswear and Kering could use its Brioni brand to supply some of Tom’s clothes. Ford currently produced by Ermenegildo Zegna NV. The French conglomerate could also draw on its fashion know-how to develop Tom Ford womenswear, footwear and leather goods. These are the real profit engines of the industry.

In addition, both houses have a history. Designer Tom Ford was behind Gucci’s first reimagining in the 1990s. And Kering is currently attempting a third revamp of the nearly 10 billion-euro brand, while keeping it under the watchful eye. direction of designer Alessandro Michele. Jefferies analysts point out that if Ford could collaborate with Michele, it could rekindle interest in Gucci. Michele’s chic granny with the sexy silhouettes of Tom Ford, anyone?

Kering also has a strong balance sheet, with Bloomberg Intelligence estimating a net cash position for the year ahead, so it could easily afford the reported $3 billion price tag.

But to get the most out of the deal, Kering needs to take control of Tom Ford’s lucrative beauty license, currently owned by Estée Lauder. It won’t be cheap or easy.

Kering has made no secret of its desire to develop Gucci’s beauty business, currently licensed to Coty Inc. It has set up an internal team to assess its options in the sector. If Tom Ford was a stepping stone to building critical mass in cosmetics and fragrances, then the intricacies and expense of acquiring the license would be worth it.

Perhaps the two companies could reach some sort of deal, whereby Kering would take fashion from Tom Ford while Estee Lauder would take the cosmetics and fragrance business. Or they could partner on beauty. Cosmetics houses are used to working with licensed brands and celebrities, and Kering could eventually buy out its partner.

Yet even if the exact details could be worked out to the satisfaction of both parties, there are other hurdles to overcome.

Kering has successfully grown its eyewear business, so Tom Ford’s sales here would also help. But again, its glasses are licensed to Marcolin SpA, although that is due to expire shortly, according to UBS.

And let’s not forget the personalities involved. Tom Ford put Gucci on the map with its high horsebit heels, silk shirts and velvet flares. But he, then CEO Domenico De Sole, now chairman of Tom Ford, parted ways with Kering in 2004, when the French conglomerate completed its $8 billion acquisition of minority interests in Gucci.

It’s also unclear if Ford itself will be part of the deal, or how long it will stay. Kering is therefore once again potentially faced with paying for a brand and having to find a new designer. At least transitioning to new creative talent is one of his core competencies.

If these points can be ironed out – and investors seemed optimistic on Friday – then creating a new force in beauty, expanding eyewear and restoring some shine to Gucci would make Tom Ford worthwhile.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.

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Hazel J. Edmonds

The author Hazel J. Edmonds