Tom Ford Seeking At Least $50 Million


Tom Ford International is on the hunt for financial backers, two sources familiar with the situation told peHUB. The New York-based fashion house entered the market within the past two weeks seeking a $50 million or greater investment, the sources said. Credit Suisse is managing the process.

The capital would be used to expand the company’s line into women’s apparel, as Tom Ford currently offers meanswear, eyewear, beauty, fragrances, and men’s and women’s accessories.

Tom Ford is famous for implementing the turnaround of the House of Gucci, which is owned by the French luxury goods company, PPR. In 2004, he left to launch Tom Ford International. The company’s products are carried at luxury retail chains worldwide, as well as in four freestanding Tom Ford stores.

That a luxury brand would enter the market seeking financing is a sign of either optimism or foolishness. Luxury apparel brands have been battered by the recession as consumer trade down for less extravagantly-priced clothing. According to Time, luxury department store sales are down 25% to 30% on average from their peak in early 2008. Luxury retailers like Saks Fifth Avenue, Neiman Marcus, and Bloomingdale’s have reduced inventories and slapped giant discounts on their goods. Saks in particular has sought out ways to reverse a years worth of double digit declines in same-store sales. One way is price cuts. From the Associated Press:

Gucci and other European designer brands would have bristled a year ago about lowering prices. Now, they are working with Saks and other luxury stores to reduce prices on some goods.

Then again, Ben Bernanke recently declared the recession to be over. If the Tom Ford deal generates excitement from investors, it would back up Bernanke’s recovery talk, which right now sounds a lot more like wishful thinking.

Young designer apparel companies often sell minority stakes to investors before selling to a luxury conglomerate such as LVMH or PPM. But the capital hasn’t flowed quite as easily since the onset of the recession. Earlier this year luxury goods designer Tory Burch went all the way to Mexico City to find an investor after a long search that included at least one false start. In July the company sold a 20% to 25% stake in itself to Tresalia Capital, a private equity firm run by the heiress to Corona.

Press representatives for Tom Ford have not responded to requests for comment.

Earlier: Tory Burch Reopens Stake Sale Process

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