The relationship between Estee Lauder and Tom Ford explained

Last month, Tom Ford sold his eponymous luxury brand to the Estee Lauder Companies in a deal worth $2.8 billion—one of the largest in the fashion industry in recent times.

“This transaction is a tremendous gain for Estee Lauder,” says Thomaï Serdari, director of the Fashion and Luxury MBA program at the Leonard N. Stern School of Business at New York University. “While today’s macroeconomics remain uncertain due to the war in Europe, the extreme measures against Covid-19 in a huge market like China, and the shifting consumer mindset—more choices, less disposable income, and short attention spans—the Tom Ford brand is singular. After all, it is the first, true luxury brand born in the USA in the 21st century.”

While the acquisition was driven by the prestige of Tom Ford’s beauty segment, which includes signature scents, skin care and cosmetics, the deal also brings eyewear and apparel to Estee Lauder.

In the past, beauty companies that acquired fashion businesses typically struggled with the challenge. “However, the strength of Estée Lauder Companies rests precisely on the ability to manage the unique DNA of each one of the businesses in their portfolio while also providing a rigorous structure from which each one can receive what they don’t already have,” Serdari says. 

What Estee Lauder might not have down the road is Ford himself. So far, Ford committed to staying with the company, which he launched in 2006, only through the end of 2023.

“I wouldn’t be surprised if Mr. Ford decided to remain for a short term and then focus on his own creative work, be it his already successful career as a movie director, writing or photography,” Serdari adds. Ford directed A Single Man and Nocturnal Animals—both Oscar-nominated films. “But even if he were to leave tomorrow, he has already set in place strong foundations that can carry the brand well into the future.”

Ford was born in Texas in 1961 to realtor parents. He went on to study architecture and design in New York and Paris. He was also the creative director of both Gucci and Yves Saint Laurent.