\n\tAs previously reported, news broke Sunday night that Kering<\/a> Beauty is being sold to L\u2019Or\u00e9al<\/a> for 4 billion euros. Concurrently, Kering and L\u2019Or\u00e9al<\/a> are forming a long-term strategic partnership in beauty and wellness.<\/p>\n \n\tMight this partnership expand into fashion? Only time will tell. But it could make good sense when it comes to Armani<\/a>.<\/p>\n \n\tWills of the late designer Giorgio Armani,<\/a> who died on Sept. 4 at age 91, opened the possibility of L\u2019Or\u00e9al, LVMH Mo\u00ebt Hennessy Louis Vuitton and EssilorLuxottica as potential buyers of his namesake company.<\/p>\n \n\tRELATED: L\u2019Or\u00e9al\u2019s Sales Growth Accelerated in\u00a0Q3<\/a><\/p>\n \n\tL\u2019Or\u00e9al and EssilorLuxottica are licensees for fragrance and beauty, and eyewear, respectively.<\/p>\n \n\t\u201cI continue to expect L\u2019Or\u00e9al and EssilorLuxottica as the most probable acquirors of their respective Armani businesses,\u201d said Luca Solca, an analyst at Bernstein. \u201cWith apparel and leather goods likely licensed to a third party long-term \u2014 same as Est\u00e9e Lauder has done with Tom Ford.<\/p>\n \n\t\u201cI wonder if in this context Kering could be the third-party licensee,\u201d Solca continued. \u201cHaving said that, Kering is more likely to concentrate on getting its core business back on an even keel.\u201d<\/p>\n \n\tArmani\u2019s two wills, dated March 15 and April 5, were made public Sept. 12. After 12 months from their opening and within 18 months at the most, an initial 15 percent of his company could be sold to either L\u2019Or\u00e9al, LVMH or Essilor Luxottica, they stipulate. Armani did not rule out other companies, as long as they are operating in the world of fashion and luxury, and of equal standing.<\/p>\n \n\tThe same buyer would have the right to purchase a 30 percent to 54.9 percent stake in Armani between the third and fifth years, or in five years and within eight to consider a public listing in Italy as a priority or on other markets of equal standing.<\/p>\n \n\tFollowing even a potential listing, the Armani Foundation would keep a 30.1 percent stake of the group to ensure its control.<\/p>\n \t\t\t\t\t\t \t\t\t\t\tS\u00ec Passione<\/p>\n \t\t\t\t\t\t\t\t\tCourtesy Photo<\/p>\n \n\tRegarding the Armani company, Nicolas Hieronimus, chief executive officer of L\u2019Or\u00e9al, during a call Tuesday evening with analysts and journalists to discuss third-quarter and nine-months results reiterated sadness in the passing of Giorgio Armani, with whom the group collaborated for 40 years.<\/p>\n \n\t\u201cWe are very honored that in his success and in the instructions that he left with his heirs, L\u2019Or\u00e9al is considered as a potential acquirer, at least of the first 15 percent,\u201d Hieronimus said. \u201cWe said we would consider all the options. It\u2019s a bit too soon. The family is mourning and focused also on driving this business.<\/p>\n \n\t\u201cThe only important thing that I can confirm today is that the deal we just did with Kering does not prevent us from considering any of the options that are on the table with Armani,\u201d he continued. \u201cSo we will rediscuss it in the future.\u201d<\/p>\n \n\tL\u2019Or\u00e9al generally sticks with its core competency of beauty, but has ventured into fashion in the past \u2014 first with Lanvin, which it owned between 1994 and 2001, and more recently with Mugler, which became part of the French giant\u2019s portfolio as part of the deal when it acquired the Mugler brands and Azzaro fragrances from Groupe Clarins in 2020.<\/p>\n \n\tMost recently, in early February, L\u2019Or\u00e9al joined forces with Jacquemus, <\/a>linking a long-term beauty license and taking a 10 percent stake in the fashion business.<\/p>\n \n\tFashion and beauty are very different animals, even if they share some brand DNA, so it is considered unlikely L\u2019Or\u00e9al would want to run Armani fashion itself.<\/p>\n \n\tNo doubt, L\u2019Or\u00e9al desires to keep the Armani fragrance and beauty license past 2050. That\u2019s where the partnership with Kering could come in. And in the late \u201990s, rumors swirled for years that Gucci wanted to buy Armani, although a deal never materialized.<\/p>\n \n\tThe Armani fragrance and beauty license is a jewel in the crown of L\u2019Or\u00e9al\u2019s Luxe division, where it has been a \u201cbillionaire\u201d brand since 2017. Blockbuster Armani products such as S\u00ec fragrances and Maestro foundation have attracted A-list brand ambassadors like actress Cate Blanchett and Hanni, the lead singer of NewJeans, who helped transform Armani beauty into a sustainable, global powerhouse.<\/p>\n \n\tIn March 2018, L\u2019Or\u00e9al and Armani renewed that license until 2025, after having worked together since 1988. It was among Armani\u2019s first licenses.<\/p>\n \n\tAt the time of the renewal, Giorgio Armani said in a statement that \u201cover the years our mutual trust has constantly generated excellent results.\u201d<\/p>\n \n\tKering, for its part, could merit from adding at least one more powerful fashion holding at this time when it\u2019s struggling to turn around its star Gucci brand. Gucci has Demna as a new designer, which energized buyers with his debut display there at the recent Milan Fashion Week in September. But a turnaround at Gucci will take time.<\/p>\n \n\tMeanwhile, Kering\u2019s newly appointed CEO Luca de Meo has sprung into action to revive the ailing company. The Kering Beauty announcement \u2014 coming just one month after his official arrival \u2014 was a surprise to the beauty and fashion industries. But financial analysts have lauded the move.<\/p>\n \n\tThe Kering Beauty deal will be a windfall for Kering, whose net debt amounted to 9.5 billion euros on June 30. However, whether Kering would want to make a major acquisition like Armani remains to be seen.<\/p>\n \n\tHSBC cited 2024 filings that show Armani generated 2.3 billion euros in sales from fashion and about 3.4 billion euros overall. The bank extrapolated that the fragrance and beauty business brought in upward of approximately 1.5 billion euros and the eyewear, licensed to EssilorLuxottica, with a smaller contribution.<\/p>\n \n\tNews of L\u2019Or\u00e9al\u2019s acquisition of Kering Beauty \u2014 its biggest to date \u2014 comes less than two years after the group purchased Aesop \u2014 now its second-largest deal \u2014 which closed on April 3, 2023. That operation valued the Australian premium cosmetics brand at more than $2.5 billion.<\/p>\n \n\tOn June 30, L\u2019Or\u00e9al\u2019s financial debt \u2014 current and non-current inclusive \u2014 was 8.8 billion euros, while its cash and cash equivalents amounted to 4.8 billion euros.<\/p>\n \n\t\u201cMr. Armani over the years went on the record that he did not want to sell to the French,\u201d said one source who requested anonymity. \u201cThis is why his will was surprising, but perhaps it was an opportunistic choice.\u201d<\/p>\n \n\tIndeed, the bourse appears to be \u201cthe most logical\u201d solution for several observers, although one source said this implied \u201ca cultural change\u201d within the company.<\/p>\n \n\tAnother source wondered why Armani changed his mind. \u201cBanks have been chomping at the bit to get a cut of the deal,\u201d the source said. \u201cThey must have whispered in Mr. Armani\u2019s ears for years.\u201d<\/p>\n \n\tThe potential deals emerging from the wills are a bit of a Rubik\u2019s Cube. \u201cIf L\u2019Or\u00e9al acquired Armani, inevitably the other categories would be licensed out,\u201d another source said. \u201cThe same would apply if EssilorLuxottica bought the company. L\u2019Or\u00e9al and EssilorLuxottica could also team up and avoid losing their licenses, and they would only have to find an apparel manufacturer.\u201d<\/p>\n \n\tIf L\u2019Or\u00e9al were to team with Kering on a stake in Armani, it might resemble the pairing of the Est\u00e9e Lauder Cos. with Ermenegildo Zegna Group on Tom Ford.<\/p>\n \t\t\t\t\t\t \t\t\t\t\tBackstage at Giorgio Armani spring 2026 at Milan Fashion Week.<\/p>\n \t\t\t\t\t\t\t\t\tJonathan Daniel Pryce\/WWD<\/p>\n \n\tZegna ventured into new territory by producing and distributing all of Ford\u2019s men\u2019s and women\u2019s fashion and accessories. When the deal was announced, the plan was for Zegna to also produce the brand\u2019s underwear, fine jewelry, childrenswear, textiles and home design products.<\/p>\n \n\tZegna was no stranger to Tom Ford, as has it has been producing its menswear since around 2006. Acquiring Tom Ford\u2019s fashion operations was seen as a way to create synergies for Zegna, which also owned a 15 percent stake in the company, allowing it to strengthen its womenswear segment.<\/p>\n \n\tIn November 2022, the Est\u00e9e Lauder Cos. acquired Tom Ford, with Zegna and Marcolin SpA entering long-term licensing agreements for Tom Ford Fashion and Tom Ford eyewear, respectively. The move marked the beauty giant\u2019s first venture into the fashion world and its biggest deal, having paid $2.3 billion for the activity.<\/p>\n \n\tThe Est\u00e9e Lauder Cos. outbid Kering, which had been reported as a front-runner for Tom Ford.<\/p>\n \n\tLVMH has the vertical structure enabling it to run both Armani fashion and beauty, should it choose. It also has the funds available to make such an acquisition.<\/p>\n \n\t\u201cWe don\u2019t think this makes sense for several reasons,\u201d wrote Erwan Rambourg, global head of luxury and consumer at HSBC, in a note released Sept. 22. \u201cFirst, LVMH rarely owns minority stakes in companies. And if they were to build on that stake, they would be left to deal with L\u2019Or\u00e9al on the beauty part until 2050.<\/p>\n \n\t\u201cSecond, the core Armani ready-to-wear brand is complex, not meaningful in terms of sale at the LVMH level [a ninth of LV\u2019s sales] and not accretive at 17 percent EBITDA margin in 2024,\u201d he continued. \u201cThird\u2026we believe LVMH is in a phase of managing fewer brands better rather than adding to its portfolio of about 90 assets.\u201d<\/p>\n \n\tIn its third quarter ended Sept. 30, LVMH\u2019s key fashion and leather goods division performed better than expected. It posted a 2 percent organic sales decline versus a consensus forecast for a 4 percent drop to 8.5 billion euros, with Vuitton and Dior both seeing significant improvement with local customers in China. Other brands in the division include C\u00e9line, Givenchy, Loewe, Marc Jacobs and Pucci.<\/p>\n \n\tEssilorLuxottica could definitely be a contender for Armani, too. The company\u2019s lucrative eyewear license with the brand \u2014 one it\u2019s likely not to want to give up \u2014 was renewed a couple of years ago for another 15 years, to run until 2038.<\/p>\n \n\tThe partnership between the fashion group and the\u00a0eyewear<\/a>\u00a0powerhouse dates back to 1988, when Giorgio Armani teamed up with\u00a0the late Luxottica founder and visionary entrepreneur Leonardo Del Vecchio<\/a>\u00a0to develop branded glasses, marking the evolution of the item as fashion accessory.<\/p>\n \n\tAt the time, the two parties signed an initial 14-year licensing agreement.\u00a0Luxottica then lost the license to Safilo SpA in 2003<\/a>, but the original tie-up was eventually restored\u00a0with the deal effective in 2013<\/a>.<\/p>\n \n\tGiorgio Armani felt personally close to EssilorLuxottica and to Del Vecchio.<\/p>\n \n\t\u201cDuring the course of my career I have always built long-term collaborations and agreements with trusted partners,\u201d\u00a0Giorgio Armani<\/a>\u00a0said in a statement released Sept. 14, 2022. \u201cThe relationship with\u00a0EssilorLuxottica<\/a>\u00a0has been a cornerstone of my path, born from personal and professional esteem, which has led to challenging choices. Such an important renewal is the confirmation of a mutual loyalty that makes me proud and that will lead to further, important innovations.\u201d<\/p>\n \n\tEssilorLuxottica is no stranger to fashion. In July 2024 it made a surprise $1.5 billion deal for Supreme in cash. At the time it wasn\u2019t shocking that the brand was sold, since the fashion brand\u2019s owner VF Corp. at the time was looking to trim its portfolio. But the fact the buyer was the eyewear giant raised a few eyebrows.<\/p>\n \n\tEssilorLuxottica chairman and CEO Francesco Milleri and Paul du Saillant, group deputy CEO, said at the time the deal fit into their strategy.<\/p>\n \n\t\u201cIt perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity,\u201d they said then. \u201cWith its unique brand identity, fully direct commercial approach and customer experience \u2014 a model we will work to preserve \u2014 Supreme will have its own space within our house brand portfolio and complement our licensed portfolio as well. They will be well-positioned to leverage our group\u2019s expertise, capabilities and operating platform.\u201d\u00a0<\/p>\n \n\tThe eyewear giant, with 2024 sales of 26.5 billion euros in 2024, could afford Armani. However, one source underscored how the group appears to be more committed to developing its med-tech segment through a slew of M&A operations, acquiring, for example, Automation & Robotics, a Belgium-based company that designs and manufactures automated systems for quality control of optical lenses, or ophthalmology platform Optegra, which operates a network of more than 70 eye hospitals and diagnostic facilities across Europe under the Optegra, Lexum and Iris brands. There\u2019s also the Espansione Group, which specializes in the design and manufacturing of noninvasive medical devices. Of course, these all took place before the opening of Armani\u2019s will.<\/p>\n \n\tSince the designer\u2019s death, the Armani Group has so far acted in continuity, unveiling the exhibition and the designer\u2019s namesake spring show as he had planned, staging it at Milan\u2019s Pinacoteca di Brera, and appointing Giuseppe Marsocci as its CEO, the first to succeed Armani. Marsocci has been an executive of the fashion group for 23 years. Leo Dell\u2019Orco, Armani\u2019s longtime partner in charge of the men\u2019s division, was named chairman of the board.<\/p>\n \n\tL\u2019Or\u00e9al, LVMH and EsselorLuxottica have all shared praise for Armani. Other suitors could be in the wings.<\/p>\n \n\t\u201cEverybody wants Armani,\u201d one industry expert said.<\/p>\n","protected":false},"excerpt":{"rendered":"Updated 3:24 p.m. ET Oct. 21 The playbook for Giorgio Armani could change now that L\u2019Or\u00e9al has a…\n","protected":false},"author":2,"featured_media":28686,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12905],"tags":[12995,2514,1580,7405,7407],"class_list":["post-28685","post","type-post","status-publish","format-standard","has-post-thumbnail","category-loreal","tag-armani","tag-kering","tag-loreal","tag-lu2019oru00e9al","tag-wwdbeautyinc"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/posts\/28685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/comments?post=28685"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/posts\/28685\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/media\/28686"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/media?parent=28685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/categories?post=28685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/tags?post=28685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"S\u00ec](\"https:\/\/wwd.com\/wp-content\/themes\/vip\/pmc-wwd-2021\/assets\/public\/lazyload-fallback.gif\")
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