Vans owner VF Corp to buy streetwear brand Supreme for about $2.1
billion
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[November 10, 2020] By
Aishwarya Venugopal and Melissa Fares
(Reuters) - VF Corp <VFC.N> said on Monday
it would pay $2.1 billion to buy streetwear apparel company Supreme,
adding another popular brand to the Vans shoe maker's roster.
VF Corp, which also houses brands such as The North Face and Timberland,
said it would make an additional payment of up to $300 million, subject
to satisfaction of certain post-deal closing milestones.
Shares of VF Corp surged about 13% to $78.94 in afternoon trading.
It said current investors Carlyle Group and New York-based private
equity firm Goode Partners were selling their stakes in Supreme, founded
by American-British businessman James Jebbia in 1994.
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Known for its red box logo with "Supreme" written in white, the brand
has gained a following among "hypebeasts," or fans of the streetwear
style, with product launches of everything from hoodies to burner phones
selling out in minutes and people lining up outside its 12 stores
worldwide for hours.
Perceived scarcity has helped Supreme to acquire a cachet among young
people and allowed it to charge far higher prices than other streetwear
brands like VF's Vans and Nike.
"This scarcity, novelty and strong social influence model supports
meaningful pricing power resulting best in class profitability," VF Corp
Chief Executive Steve Rendle said.
VF Corp estimated the broader streetwear market to be a roughly $50
billion global opportunity and that Supreme was at the epicenter of this
market, he said.
VF Corp executive said its deal with Supreme will help bolster its
e-commerce business, which has become more urgent for apparel and
footwear makers due to the COVID-19 pandemic.
Supreme, which has collaborated with many prominent fashion names
including Louis Vuitton as well as Nike, Levi and Vans, gets over 60% of
its revenue from the online business.
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![](../images/111020PIX/busine35.jpg)
A shopper with a bag full of purchases walks past ticketed shoppers
waiting on the sidewalk outside the Supreme clothing store on
Fairfax in Los Angeles, California, October 31, 2019. Picture taken
October 31, 2019. REUTERS/Mike Blake
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The deal, which is expected to be completed late in 2020, is anticipated
to contribute at least $500 million of revenue and adjusted earnings per
share of 20 cents in fiscal 2022.
Supreme does not provide group sales or profit figures but its UK-based
European arm is obliged to publish annual accounts and these have showed
rapid growth and industry-leading margins in recent years.
In the year to the end of January 2019, Supreme's European business
racked up revenue of 100 million pounds ($130 million) despite having
just two stores and a profit margin, before interest expenses, of 44% -
a multiple of the margins earned by other streetwear brands like Vans,
Abercrombie & Fitch or even luxury brands like Gucci, company filings
show.
Analysts have wondered whether Supreme will be able to maintain its
premium pricing as its products become more ubiquitous, but were more
sanguine after Monday's announcement.
![](http://archives.lincolndailynews.com/2020/Nov/10/images/ads/current/rohlfs_lda_072017.png)
"Supreme is a strong streetwear brand .... and while the brand has built
its appeal on scarcity, we believe the market will be excited at the
margin and growth profile and its contribution to VFC," Bernstein
analyst Jaime Merriman said.
(Reporting by Aishwarya Venugopal in Bengaluru and Melissa Fares in New
York; Additional reporting by Tom Bergin in London; Editing by Maju
Samuel and Bernadette Baum)
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