The luxury sector in the spotlight today. Investors are looking at developments in China with the possibility of the Chinese government easing the restrictions on the Covid front. Added to this is the rumor that sees the giant Kering in advanced negotiations for the purchase of the fashion brand Tom Ford.
The luxury giants thus marked significant increases in the stock market with Kering (+ 6%) and LVMH (+ 4.7%) rising in Paris. In Piazza Affari, on the other hand, Moncler has almost + 8%.
According to rumors reported by the Wall Street Journal, Kering, owner of Gucci, would be at an advanced stage of discussion for the purchase of the fashion brand Tom Ford. Kering has been the focus of persistent M&A speculation, with the recent underperformance of its flagship brand Gucci – which accounts for the majority of the group’s earnings – putting it under market scrutiny after years of stellar growth. “The logic is compelling,” said RBC’s Piral Dadhania, citing Tom Ford’s past as creative director of the Gucci and Yves Saint Laurent brands in the 1990s and early 2000s, as well as the brand’s high positioning.
While this would not be a “right move” for Kering in the short term, the company could potentially benefit from Ford’s involvement in a broader capacity, added the analyst, who also noted that the French group has complementary skills to further develop the brand’s offering in the women’s clothing and leather goods sector. A leading figure in American fashion, the Texan Ford is known for defining one of Gucci’s most popular eras before launching his own brand. He started with menswear, later adding womenswear, beauty products and eyewear. According to Exane BNP Paribas, most of the brand’s business is accomplished through licensing in the beauty industry with Estee Lauder and eyewear with Marcolin. Kering, which has strengthened its eyewear division by recently purchasing US brand Maui Jim, has also signaled interest in expanding into the beauty industry. European luxury companies have invested in the US market, which last year overtook the Old Continent to become the world‘s leading luxury market, expanding beyond traditional high-end venues like Madison Avenue to cities like Detroit and San Antonio. According to Jefferies analysts, US consumers show a strong appetite for luxury and are expected to continue to lead the market again next year, especially in light of uncertainty in China, where strict COVID-19 policies continue to disrupt. business in that market.