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VF Reigns With Supreme

  • Categories:Industry news
  • Author:Vicki M. Young
  • Origin:Sourcing Journal
  • Time of issue:1605255516000
  • Views:0

(Summary description)

VF Reigns With Supreme

(Summary description)

  • Categories:Industry news
  • Author:Vicki M. Young
  • Origin:Sourcing Journal
  • Time of issue:2020-11-13 16:18
  • Views:0
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By Vicki M. Young                   November 9, 2020 11:26AM ET                FM:Sourcing Journal

VF Corp. has made some noise about snapping up new brands this year, and now it’s making good by acquiring streetwear sweetheart Supreme in a $2.1 billion deal.

 

Earlier this year, before Covid-19 struck, the Denver-based apparel giant leared out much of its workwear portfolio—part of its consumer-oriented makeover, it said. The deal to acquire Gen Z-beloved Supreme, which is expected to close at the end of the year, would give VF another jewel in a crown that includes opular powerhouses from The North Face to Timberland to Vans—brands that have already collaborated with the hype-driven streetwear standout.

 

Supreme’s collection of apparel, footwear and accessories, VF says, could drive $1 billion annually once it fully fleshes out the brand’s international and direct-to-consumer presence. The deal, says VF CEO Steve Rendle, is “further validation of our vision and strategy to further evolve our portfolio of brands to align with the total addressable market opportunities we see driving the apparel and footwear sector.” Incorporating Supreme into its stable of brands will “accelerate VF’s hyper-digital business model transformation” and also drive shareholder value, he added.

 

The acquisition gives VF the stakes owned by private equity firms The Carlyle Group and Goode Partners, as well as by founder James Jebbia, who will remain at the New York City-based brand’s headquarters along with the rest of its senior leadership team. The new relationship with VF, Jebbia says, “will aintain our unique culture and independence, while allowing us to grow on the same path we’ve been on since 1994.”

 

Since founding Supreme as a store on downtown Manhattan’s Lafayette Street rooted in skate culture, Jebbia has grown the label into a $500-million-plus global lifestyle brand. Carlyle acquired a 50 percent stake from Jebbia in 2017 for $500 million, for a valuation $1 billion though annual volume was just $200 million.

 

In a conference call Monday, Rendle said VF and Supreme focused on creating synergies rather than slugging it out through a competitive bidding process, noting the streetwear market’s “$50 billion global opportunity.” The “marquee property” boasts a diverse following in youth culture, he added. It also ioneered the weekly drop model that thrives on scarcity, driving full-priced product sell-throughs with “gross margins over 60 percent and operating margins over 20 percent,” noted VF chief financial officer Scott Roe—similar to the metrics at Vans.

 

Supreme, Rendle says, is especially relevant at a time when fashion casualization, social influence and creative self-expression are trends that continue mold the consumer landscape. VF can leverage Supreme’s strong international platforms, while Supreme will gain deeper access to the ompany’s consumer segments as well as VF’s supply chain and analytics’ capabilities, he added.

 

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