Estee Lauder to buy US fashion label Tom Ford in $2.8 bn deal

BENGALURU: Estee Lauder Cos Inc said on Tuesday it agreed to buy US fashion label Tom Ford for $2.8 billion, its biggest deal yet, adding a line of beauty products and apparel to the Clinique brand owner’s portfolio.

Luxury companies have so far enjoyed steady demand for their products, but cracks are starting to show as decades-high inflation forces some customers to tighten their purses.

Estee said this month US retailers were cutting stocks of its products amid worries of a demand slowdown and lowered its full-year forecasts, hurt by lockdowns in China.

While Estee Lauder already sells Tom Ford beauty products and fragrances, the deal has raised some eyebrows on Wall Street. “Given the strength of Tom Ford Beauty, especially in EL’s most significant long-term growth market of China, we understand the appeal of the deal, but handling the fashion businesses leaves some questions,” Raymond James analyst Olivia Tong wrote in a note dated Nov 14.

The deal is the latest in a series of acquisitions by Estee Lauder, including taking control of Ordinary skincare brand owner Deciem last year for about $1 billion. As of Tuesday’s close, Estee’s stock fell 17% since the deal talks with Tom Ford were reported by the media in August.