Less than three years ago, Supreme made headlines when the Carlyle Group announced it had purchased a 50 percent stake in the brand, valuing what was then a business with only 11 brick-and-mortar stores at roughly a billion dollars. Supreme is back in the news today after reports that VF Corporation—the Denver-based company behind brands like Vans, Timberland, and The North Face—is set to acquire the pioneering streetwear titan for a cool $2.1 billion.
The transaction is expected to conclude by the end of the year, and represents a tidy exit for the private equity group, which will double its initial investment. Supreme and VF Corporation have been partnering together in one way or another for years, often through limited-run collaborations with the latter's extensive roster of household-name brands. The move isn't a shocking one given the expected turnaround in a typical private equity investment strategy, but it's a particularly prescient one on VF's part when seen as an effort to bolster the company's all-important e-commerce presence, a portion of Supreme's business that already accounts for 60 percent of its sales. (That split typically skews far more heavily towards in-store purchases for other comparable brands.)
In a message relayed this morning, Steve Rendle—chairman, president, and CEO of VF Corporation—pointed to already existing similarities between the two parties (what the marketing executives in the room might refer to as "significant brand synergies"), and expressed his hope that Supreme "will further accelerate VF's hyper-digital business model transformation." Supreme has always made a concerted effort to keep distribution of its goods fairly limited, so partnering with a parent company looking to shore up its online presence—sans the pressure of expanding the brand's physical footprint at a rate that might not be sustainable— certainly seems like a savvy move.
VF, owner of Vans and the North Face, is buying Supreme for $2.1 billion https://t.co/OpkiH66Q0K
— Bloomberg (@business) November 9, 2020
Of course, questions arise over the brand's ability to retain its aura of cool even as wider distribution, in any form, dilutes its exclusivity. This morning, shares of VF Corporation rose 10 percent in premarket trading. Only time will tell if Supreme's actual customers will respond in kind, but the reports of Supreme's death have been greatly exaggerated before. It'd be wise not proclaim the brand dead quite so quickly again.
You Might Also Like