It has been widely reported (see eg brancchannel
here) that Phillips-Van Heusen has paid somewhere in the region of $3 billion in cash and stock for fashion brand Tommy Hilfiger.
Is this money well-spent? Phillips-Van Heusen is no stranger to investment in fashion and clothing brands since its portfolio already contains Arrow, Calvin Klein and Izod, and the company's judgment appears to be backed by a respectable track record. However, there is always a risk that 1 + 1 will not always give you 2 and that the success of one brand in the stable may be at the expense of other brands held by the same owner. In a resurgent market, where consumer spending is on the rise, there is less danger of this happening -- but the market is not conspicuously buoyant at present. Likewise, where brands are geographically complementary, one is less likely to tread on the toes of the others -- but as globalisation and e-sales continue to shrink the world into an increasingly unitary marketplace, the benefits of geographic complementarity diminish. Let's watch and see what happens next.
It has been widely reported (see eg brancchannel here) that Phillips-Van Heusen has paid somewhere in the region of $3 billion in cash and stock for fashion brand Tommy Hilfiger.
Is this money well-spent? Phillips-Van Heusen is no stranger to investment in fashion and clothing brands since its portfolio already contains Arrow, Calvin Klein and Izod, and the company's judgment appears to be backed by a respectable track record. However, there is always a risk that 1 + 1 will not always give you 2 and that the success of one brand in the stable may be at the expense of other brands held by the same owner. In a resurgent market, where consumer spending is on the rise, there is less danger of this happening -- but the market is not conspicuously buoyant at present. Likewise, where brands are geographically complementary, one is less likely to tread on the toes of the others -- but as globalisation and e-sales continue to shrink the world into an increasingly unitary marketplace, the benefits of geographic complementarity diminish. Let's watch and see what happens next.
