On Monday, VF Corporation announced it would be buying streetwear giant Supreme in a deal worth $2.1 billion. Along with Goode Partners, The Carlyle Group will also be selling its 50 percent stake in the brand, which it acquired in 2017 for $500 million. As expected, The Carlyle Group was always looking to cash in (and out), with its investment now double its original value.
The addition of Supreme to its family of brands marks VF’s largest purchase since it bought Timberland in 2011 for $2.3 billion. The cash transaction boosted VF Corp's stock value as much as 17 percent, the highest it had jumped in 33 years. The question now is what VF’s plan for Supreme is: Will it maintain Supreme’s exclusivity or will we be seeing it at our local malls?
Who TF is VF? — Based in Denver, VF boasts a huge portfolio of apparel and footwear brands. The company controls 55 percent of the U.S. backpack market with brands like JanSport and Eastpak. Other brands like Dickies, SmartWool, and Kipling range from workwear products to activewear and luggage.
Supreme also joins brands like The North Face, Vans, and Timberland — all previous Supreme collaborators. “This partnership will maintain our unique culture and independence, while allowing us to grow on the same path we’ve been on since 1994,” said Supreme’s founder James Jebbia about the deal with VF. Though he and the senior leadership team will remain in charge of the brand, we might see more collabs with these now-sister brands down the road. Maybe we’ll see a back to school drop?
“This partnership will maintain our unique culture and independence.”
Let’s get down to business — Supreme is expected to contribute at least $500 million to VF in 2021 alone. The corporation also mentioned the streetwear label represents “a $1 billion global opportunity over time through international and direct-to-consumer expansion, core pillars of VF’s 2024 strategy.”
Steve Rendle — VF chairman, president, and CEO — shared similar optimism regarding the potential for this deal to ensure "long-term growth" for all involved. Per a report from CNBC, the deal sees VF paying the Supreme company an additional $300 million payment to be made "subject to satisfaction of certain post-closing milestones." The merge will be complete by the end of this year.
Bound to happen — Though fans of the streetwear brand worry that VF will make Supreme less “exclusive” by opening more stores, Rendle said Supreme “will further accelerate VF’s hyper-digital business model transformation.” Normally, online sales make up over 60 percent of Supreme’s revenue, but when the pandemic forced Supreme’s stores to close, the brand’s online sales soared to even greater heights.
Given the fact that VF brands like The North Face and Vans have already collaborated with Supreme, this acquisition makes sense. Rendle even noted Supreme’s “agility” to connect with customers both in brick-and-mortar locations and through its social channels. With this in mind, and with Jebbia still in full creative control, it would be unwise to market Supreme at stores like PacSun and Urban Outfitters.
Ultimately, VF is a corporation that will do what’s best for its bottom line, even if that means selling Supreme next to brands like Brandy Melville. We’re hoping instead for a Dickies x Supreme collab.