Estée Lauder Agrees to Buy Tom Ford Brand in $2.8 Billion Deal

Perfumes have become a focus for Estée Lauder, particularly as the premium fragrance industry saw an unexpected bump during the pandemic, with shoppers seeking out small luxuries. Estée Lauder’s recent perfume acquisitions include the brands Frédéric Malle, Kilian and Le Labo. While hundreds of fragrances are released every year, a hit such as Chanel No. 5 or Mugler’s Angel can be the engine of a brand’s finances, thanks to the high profit margins associated with scent, whose appeal is not season specific.

“One of the surprise categories of growth for us during the pandemic was fragrance,” Tracey Thomas Travis, Estée Lauder’s chief financial officer, told analysts in June. “It represented a self-pampering opportunity for people.” Shoppers became more willing to buy fragrance online, Ms. Travis said, and such sales growth has continued even as life in North America and Western Europe has returned more to normal.

Estée Lauder said that Tom Ford’s net sales had grown nearly 25 percent in its most recent fiscal year, which ended in June, from the year earlier.

Other beauty companies, like Clarins and Procter & Gamble, have in the past acquired fashion businesses such as Mugler and Rochas to leverage their fragrances, but struggled with the challenges of the apparel industry. Estée Lauder, however, will license Tom Ford’s fashion to a third party: Ermenegildo Zegna, the Italian group. Marcolin, which has held the license for Tom Ford eyewear since 2005, will continue to do so.

Zegna, with a license to produce and distribute Tom Ford men’s wear since 2006, will now become Estée Lauder’s sole licensee for Tom Ford men’s and women’s wear, as well as accessories, jewelry, children’s wear and home wares, with responsibilities for its stores and shows and for ensuring the brand remains a luxury product and continues to cast the sort of runway-associated halo that sells beauty products. Though a relatively small part of the brand’s portfolio, the brand’s fashion collections still receive outsize attention thanks to Mr. Ford’s name, reputation and celebrity connections. (He always dresses a host of boldface names on Oscar night.)

Ensuring their continuing relationship with Tom Ford will bring another frisson of cool to the Zegna group, which began expanding in 2018 with the acquisition of another buzzy independent American brand, Thom Browne.

“I am happy to see the preservation of the great relationship that we have built over the past 16 years,” Mr. Ford said, referring to Zegna and Marcolin. “With their full commitment, I trust they will continue the brand’s future as a luxury company that strives to produce only the highest quality fashion and eyewear.”


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