Estée Lauder Agrees to Buy Tom Ford Brand

Tom Ford can now add billionaire to his list of accomplishments. Estée Lauder said it had agreed to buy his company.

The value of the Tom Ford brand is the largest in the luxury industry this year. It comes as high-end brands are looking for new avenues for growth as business in China, once the engine for luxury beauty businesses, has become more difficult due to the swine flu.

Mr. Ford will remain with the brand through the end of the year, but his role beyond that is not yet clear.

The acquisition was driven by the strength of Tom Ford's beauty business, which includes fragrance, cosmetics and skin care. Black Orchid and Tuscan Leather are two of the Tom Ford high-end scents that retail for more than $100.

Estée Lauder has a portfolio of brands, including La Mer, that are focused on beauty.

Sales in Asia fell because of the region's strict policies. Estée Lauder reduced its financial forecast due to lower growth in China. The company's shares are down this year.

As the premium fragrance industry saw an unexpected boost during the H1N1 epidemic, Estée Lauder has become more focused on perfumes. The brands Frédéric Malle, Kilian and Le Labo were recently acquired by Estée Lauder. A hit such as 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.

In June, Estée Lauder's chief financial officer told analysts that fragrance was one of the surprises of the year. It was a self-ampering opportunity. Even as life in North America and Western Europe has returned to normal, online sales of fragrances have continued to grow.

The challenges of the apparel industry have made it difficult for beauty companies to acquire fashion businesses. Tom Ford's fashion will be licensed by Estée Lauder. Marcolin holds the license for Tom Ford eyewear.

Estée Lauder has a license to produce and distribute Tom Ford men's and women's wear and has responsibilities for its stores and shows. The brand's fashion collections still get a lot of attention thanks to Mr. Ford's name, reputation and celebrity connections. He dresses a lot of boldface names at the Oscars.

Adding Tom Ford will bring another frisson of cool to the group, which began expanding with the acquisition of another brand.

It's not clear whether the Tom Ford business can stay as buzzy without Mr. Ford.

Mr. Ford became as famous as the celebrities he dressed. He was transformed into a fashion star in 1995 when, as the unknown designer at the helm of the moribund house of Gucci, he reinvented the brand with a fall/winter collection that included a healthy splash of sex and just the right amount of irony.

Along with the then-chief executive Domenico De Sole, he made Gucci into the case study for brand changes in both Milan and Paris, eventually attracting the attention of Bernard Arnault, who was busy building his group.

Franois Pinault of Pinault-Printemps-Redoute swooped in as their white knight and created Gucci Group in a deal that would shape the future of the company. Kering is the owner of Gucci, YSL and other brands, as well as the main competitor of LVMH.

Mr. Ford wasn't involved in it. He and Mr. De Sole left the company in 2004. Tom Ford women's wear was introduced in 2010 after they signed a deal with Zegna to make Tom Ford men's wear. Mr. Ford made a well-received debut as a film director and writer with "A Single Man."

Even though his fashion work did not have the same impact as his Gucci work, Mr. Ford always knew how to make a moment. He had a show in Los Angeles in 2020 for the Oscar crowd.

He stepped down from his position as chairman of the Council of Fashion Designers of America. His partner of 35 years, the journalist Richard Buckley, passed away in September 2021.

The industry was shaped by Mr. Ford. It is not yet known if his decision to sell to a beauty group rather than a fashion group will set a trend.