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Twitter is already flooded with more than enough baseless and terrible takes on VF Corp’s $2.1 billion acquisition of Supreme, but I’ll add my two cents. It’s not everyday that a streetwear brand is bought for over $2 billion!
If you need a primer on the streetwear industry, Justin Gage has a quality explainer. GQ penned one of the better articles I’ve seen on Supreme’s history and CNBC shot a video on the brand:
In 2017 private equity firm The Carlyle Group purchased a 50% stake in Supreme for $500 million, valuing the brand at $1 billion. Yesterday, VF Corp—parent company of The North Face, Vans, Timberland, Eastpak, Napapijri and Dickies—announced that it bought Supreme in its entirety, sending VF’s stock price up over 14% on Monday morning. Carlyle Group made a quick 3-year flip and doubled its money.
Supreme founder James Jebbia and the brand’s senior leadership team will stay with the company and continue to have creative control. Subject to certain conditions, Jebbia will receive a portion of the purchase price in VF equity over time.
Per Highsnobiety:
In fiscal year 2022, VF says it expects Supreme to contribute at least $500 million of revenue.
Bigger than Supreme alone, VF's big bet on the skate brand signifies the growing business, and structurally attractive category, streetwear continues to prove it is. According to projections by VF Corp, the global streetwear market size clocks in around $50 billion, growing double digits at CAGR (compound annual growth rate).
VF Corp believes streetwear is an attractive portfolio adjacency with a large market showing strong projected growth (8-10% CAGR). They also like Supreme’s DTC capabilities and opportunities. Digital sales account for more than 60% of the brand’s revenue.
From VF’s investor presentation:
VF has a long history of allowing its portfolio brands to maintain their heritage and DNA. They’ve also achieved success buying well-known brands and scaling them up globally. It’s worth noting that three of Supreme’s longest-running collaboration partners (The North Face, Vans and Timberland) are owned by VF.
Nordstrom Men’s Fashion & Editorial Director Jian DeLeon opined on the acquisition and I think I have to agree:
In all honesty, Supreme hit its cultural peak years ago. Could the label reposition itself under a top luxury conglomerate like LVMH or Kering? Maybe, but was either willing to extend a $2+ billion offer?
Ultimately, I see the VF acquisition as a scale play to accelerate international growth and squeeze as much as possible out of Supreme’s brand equity. The label will leverage VF’s operational expertise in supply chain management and digital to expand its store footprint and DTC sales.
Sure, Supreme is past its prime, but the brand remains desirable. It’s a legendary label that will forever be known as a pioneer of streetwear, collabs and hype culture.
Everyone wins. Carlyle and Goode Partners cashed out, VF shareholders are happy, Supreme’s leadership team turned an upstart skate shop into a multi-billion dollar payday and the masses gained easier access to the brand.
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