Supreme Finds a New Home
Supreme, the cult streetwear and skateboarding brand, has been acquired by Denver-based apparel company, VF Corporation. VF, the parent of Vans, The North Face, and Timberland, has been on the lookout for expansion via external acquisitions. On 9 November this year, a deal was struck with the current Supreme owners, The Carlyle Group and Goode Partners, with VF acquiring a 100% stake in the brand for $2.1 billion.
Big Money for VF
When The Carlyle Group and Goode bought half of the Supreme business capital in 2017 for approximately $500 million, its revenue for 2016 was only an estimated $100 million. VF claimed that this turnover quickly doubled, with Supreme reporting $200 million in sales for the financial year ending January 2017.
For the fiscal year ending January 2021, Supreme is expected to file accounts with an impressive $500 million annual turnover. This is much the same as that of The North Face but not in the same league as Vans, which has projected year-end sales of $1.9 billion, more than 60% of VF’s revenue.
A Good Fit
Supreme has successfully partnered with many brands, including Louis Vuitton and VF’s iconic staple of Vans, The North Face and Timberland. As such, the streetwear label couldn’t have found a better new home. VF CEO, Steve Rendle, remarked:
Supreme Street Appeal
Would you get up at 4 am on a cold wintery morning, queuing outside a Supreme store for 12 hours? We think not. But that’s exactly what American teenage boys do. Logo maniacs, fuelled by the desire to own a piece of the brand, will do almost anything to get their hands on a Supreme limited edition or controlled product release. Such is the brand’s popularity that its T-shirts and hoodies often sell out on the spot and are later resold as preloved items, fetching significantly more than the RRP. It’s not surprising that the brand is sometimes monikered ‘the Chanel of streetwear.’
Don’t Lose the Secret Sauce
VF estimates the global streetwear market to be worth around $50 billion in sales, and Supreme is the incontestable leader for the moment. In a statement to clients, Wells Fargo Securities issued a word of caution:
“ Supreme needs to be careful about driving growth without losing the brand’s ‘secret sauce’.”
Nevertheless, VF predicts Supreme’s revenue to grow annually by 8 to 10% over the next 3 years, with more than 60% of sales being online. The brand’s founder, James Jebbia, a UK-raised child actor turned skateboarder, told Business of Fashion:
“I think a lot of people still want us to be this exclusive, precious brand, but we’re not at all.”
