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The Ermenegildo Zegna Group continues to evolve and in 2023 it will begin to be responsible for all of Tom Ford’s fashion business.
In November, the Estée Lauder Cos. Inc. said it was acquiring the Tom Ford brand in a transaction valuing the company at $2.8 billion. As part of the deal, the Zegna Group and Marcolin entered long-term licensing agreements for Tom Ford fashion and Tom Ford eyewear, respectively.
Zegna has had the license for Tom Ford menswear since around 2006, but with this deal the company is venturing into new territory as it will be producing and distributing all of Ford’s men’s and women’s fashion, accessories, underwear, fine jewelry, childrenswear, textile and home design products.
Zegna’s 20-year licensing agreement with Lauder allows for an automatic renewal for an additional 10 years. As part of this transaction, Zegna is acquiring the operations of the Tom Ford fashion business.
Led by chairman and chief executive officer Gildo Zegna, the Italian menswear giant has been increasingly changing skin, first with the acquisition of a majority stake in Thom Browne in 2018 and then publicly listing on the New York Stock Exchange in December 2021. That same year, it joined forces with Prada to buy a majority stake in cashmere firm Filati Biagioli Modesto SpA. The Zegna group has been steadily building its own textile supply chain, acquiring majority stakes in the likes of Tessitura Ubertino, a leading manufacturer of high-quality women’s fabrics; in Pelle Tessuta, which specializes in the weaving of leather, and in Cappellificio Cervo, a historic men’s hat brand based in Biella, among others. This strong supply chain built over the years can be channeled into the Tom Ford business.
Acquiring Tom Ford’s fashion operations is expected to create synergies for Zegna, which also owned a 15 percent stake in the company, and will allow it to strengthen its womenswear segment. Gildo Zegna is expected to create an appropriate structure to fuel the brand’s development.
Upon revealing the deal, Zegna described Tom Ford as one of the most “iconic and distinctive ultra-luxury brands in the world” and said this next step perfectly aligns with his strategy. “We have been partners and shareholders of the Tom Ford fashion business since its inception and I have worked with Tom for many years and consider him an esteemed friend,” the executive added. “This transaction is our first since our listing on the New York Stock Exchange in December 2021, and confirms our commitment to leverage our platform to create value for all of our stakeholders.”
That said, questions about the future of the Tom Ford brand without its founder are swirling. Under the agreement with Estée Lauder, Ford, the founder and CEO of his namesake brand, will continue to serve as its creative visionary after closing and through the end of calendar 2023. Domenico De Sole, chairman of Tom Ford International, will stay on as a consultant through that period, too. The Tom and Dom partnership has been a formidable one, going back to their Gucci days, but there is no visibility yet on the potential development of the creative and managerial organization under Zegna.
To be sure, the deal is in sync with Zegna’s ambitious plans.
In May last year, at its first Capital Markets Day, the group revealed its medium-term financial goals, aiming for revenues to exceed 2 billion euros and for adjusted operating profit to reach at least 15 percent of revenues.
In the three months ended Sept. 30, the Zegna group reported unaudited revenues of 357 million euros, up 27.5 percent year-over-year. Sales in the first nine months of 2022 reached 1.09 billion euros, up 22.9 percent compared with the same period in 2021.
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