10 Things You Should Know About VF Corporation's Acquisition of Supreme

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Yes, Supreme is now owned by a larger entity, but that doesn't mean its founder is going anywhere. Despite VF Corp acquiring 100 percent of the brand, Jebbia and all of Supreme's current leadership will still remain on staff and headquartered in New York City. 

Jebbia said in an official statement, "We are proud to join VF, a world-class company that is home to great brands we’ve worked with for years, including The North Face, Vans, and Timberland. This partnership will maintain our unique culture and independence, while allowing us to grow on the same path we’ve been on since 1994."

VF Corporation's portfolio is home to plenty of brands that Supreme's collaborated with over the years. The North Face, Vans, and Timberland are all currently under the VF umbrella. TNF has been under VF since 2000, Vans was acquired in 2004, and Timberland was bought in 2011.

Supreme is known for its brand collaborations with names like Nike, Stone Island, Champion, and more. Other major collaborators include VF-owned entities like The North Face and Vans. In case there was any worry, it doesn't appear that Supreme's collaborator pool will be limited in the future as a result of its new partner. 

During an investor call this morning, VF Corporation leadership stated that its purchase of Supreme will not affect Supreme's future footwear collabs, saying, "We do not dictate what our businesses do."

VF Corporation's $2.1 billion acquisition of Supreme comes with VFC hoping to increase revenue by eight to 10 percent over time, with an opportunity to reach $1 billion in annual revenue. While many immediately assume that type of growth means Supreme will end up in mall retailers like PacSun and Zumiez as part of a new wholesale strategy, VFC does not currently indicate that there is any plans to grow the brand that way. Instead, the plan is to grow Supreme by expanding its direct-to-consumer channels and international sales. Supreme might not be as limited in nature as it once was, but don't expect it to end up in your local mall anytime soon, either. 

While this may come as a surprise to many, considering the much more widespread sale of heritage brands like Timberland, Dickies, and The North Face around the world, Supreme actually has higher annual sales than each of these three brands. According to VF Corp's presentation, Supreme's annual sales in 2020 exceeded $500 million, while Dickies and Timberland each accumulated roughly $300 million, respectively. The North Face's sales totaled around $500 million. 

Chances are, most people reading this have ended up on Supreme's site at 11 a.m. on Thursday morning in hopes of copping something, only to be met with a glitchy checkout process and "sold out" sticker. Obviously, online sales are a big piece of Supreme's overall sales. In fact, digital sales account for over 60 percent of Supreme's total revenue. 

VF Corp states, "Supreme aligns well with core pillars of VF’s strategy; digitally-led, retail-centric business model; large international growth opportunity."

While Supreme currently operates flagship stores in major cities around the world like Paris, Tokyo, and London, VF's PowerPoint presentation announcing its acquisition of the brand indicates that the United States is still responsible for over half of Supreme's total revenue. 

In case you haven't noticed, Supreme's exposure and popularity have increased substantially over the past couple of years. What was once a niche brand for in-the-know New Yorkers is now everywhere. So it should come as no surprise that the brand is making a lot more money now. Since Carlyle Group's 50-percent purchase in 2017, Supreme has increased its annual revenue from around $200 million to over $500 million. 

VF Corporation's newest acquisition is the second time in the past three years that Supreme has been acquired by a larger entity. The other example was private equity firm Carlyle Group purchasing 50 percent of the company in 2017 for $500 million. When VF Corp's deal is fully completed, it will be acquiring 100 percent of Supreme, meaning Carlyle Group's stakes will be sold. 

Goode Partners, a secret investor that acquired a minority stake in Supreme in 2014 to help the streetwear giant expand, will also be selling any remaining stake it currently has in the company. 

While this sentiment has lately been echoed by multiple people, VF Corp's hefty investment into Supreme proves that the streetwear market is far from dead. VF Corp addresses the attraction to the streetwear market in its presentation, saying that it "provides deeper access to attractive consumer segments globally" and the deal with Supreme "broadens exposure to global growth opportunity in streetwear."