Estee Lauder to buy Tom Ford in Us$2.8bil deal

NEW YORK: Estee Lauder (EL) Cos Inc has agreed to buy U.S. fashion label Tom Ford for Us$2.8bil (Rm12.6bil), 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,” said Raymond James analyst Olivia Tong.