On July 17th, EssilorLuxottica, a global leader in the eyewear industry, announced that it has entered into a definitive agreement to acquire the fashion brand Supreme from VF Corporation for $1.5 billion.
With this acquisition, Supreme will join EssilorLuxottica’s extensive brand portfolio, and it is expected to continue growing while maintaining its unique brand identity. The transaction is expected to be completed by the end of this year, pending regulatory approvals, and will be paid entirely in cash.
The Acquisition’s Impact and Expectations
This acquisition will integrate Supreme into EssilorLuxottica’s extensive brand portfolio, allowing the brand to maintain its unique identity while achieving further growth.
EssilorLuxottica’s Chairman and CEO, Francesco Milleri, and Deputy CEO, Paul du Saillant, expressed their excitement in a statement: “We see an incredible opportunity in bringing an iconic brand like Supreme into our Company. It perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity. With its unique brand identity, fully-direct commercial approach and customer experience – a model we will work to preserve – Supreme will have its own space within our house brand portfolio and complement our licensed portfolio as well. They will be well-positioned to leverage our Group’s expertise, capabilities, and operating platform.”
Bracken Darrell, President and CEO of VF Corporation, stated, “Under VF, Supreme expanded its presence in the key markets of China and South Korea and has returned to delivering strong growth. However, given the brand’s distinct business model and VF’s integrated model, our strategic portfolio review concluded there are limited synergies between Supreme and VF, making a sale a natural next step. Alongside the other notable brands in EssilorLuxottica’s portfolio, Supreme and its talented team will be well-positioned for continued success.” Darrell added, “While we will always look to adjust the VF portfolio from time to time, this transaction gives us increased balance sheet flexibility. It also supports our overall program to better position the company for long term growth and more normalized debt levels.”
Supreme’s founder, James Jebbia, commented, “In EssilorLuxottica, we have a unique partner that understands that we are at our best when we stay true to the brand and continue to operate and grow as we have for the past 30 years. This move lets us focus on the brand, our products, and our customers, while setting us up for long-term success.”
History and Recent Developments of Supreme
Supreme was founded in 1994 in New York City by James Jebbia as a skateboard shop and fashion brand. The brand has gained immense popularity among young people by regularly releasing limited edition clothing and accessories, and through collaborations with other brands. On release days, it was common to see long lines of customers outside the stores. In 2017, Supreme sold 51% of its shares to the American investment fund The Carlyle Group for $500 million, and in November 2020, it became a subsidiary of VF Corporation.
However, Supreme has lost some of its former momentum, and sales have slowed recently. This slowdown can be attributed to the rise of luxury street fashion brands, increased competition, and a saturated market. Additionally, Supreme’s designs have seen little innovation in recent years, leading to a decline in consumer interest.
Previously, Supreme’s new products would sell out immediately upon release, thanks in part to resellers looking to profit from the secondary market. However, the 2023 spring-summer collection saw items remaining unsold for several days on the online store.
Supreme currently operates as a digital-first business with 17 stores in the U.S., Asia, and Europe. The sale of Supreme is expected to dilute VF’s earnings per share in the fiscal year 2025.