Colorado-based apparel and footwear company VF Corp has recently announced its acquisition of New York streetwear brand Supreme for a whopping $2.1 billion. This move comes as VF Corp CEO Steve Rendle has expressed the company’s intentions to expand through external acquisitions. The parent company of popular brands like Vans, The North Face, and Timberland, VF Corp will now add Supreme to its portfolio.

As part of the deal, current Supreme investors, The Carlyle Group and Goode Partners, will be selling their stakes in the brand. However, founder James Jebbia and the brand’s senior leadership team will remain with the company at its New York headquarters.

Supreme has gained a strong reputation in the market, particularly known for its collaborations with iconic brands such as Vans, The North Face, and Timberland. These partnerships, combined with the brand’s successful international expansion, have firmly established Supreme as the leader in the global streetwear market. VF Corp estimates that the streetwear market brings in approximately $50 billion in revenues.

This acquisition of Supreme aligns perfectly with VF Corp’s vision of evolving its brand portfolio and capitalizing on the opportunities within the apparel and footwear sector. VF Corp foresees that Supreme will contribute $500,000 in earnings for fiscal 2022 and predicts that the brand will achieve over $1 billion in revenues by 2024.

Investing in streetwear is in line with VF Corp’s commitment to the growing market segment. In fiscal 2020, Vans, The North Face, Timberland, and Dickies brands achieved $3 billion in sales within the streetwear segment. Supreme’s strong direct-to-consumer sales model and impressive margins make it a valuable addition to VF Corp’s portfolio.

Supreme also has exciting growth prospects, including expanding its store network and exploring new product categories. Currently, apparel accounts for around three-quarters of Supreme’s business, leaving room for growth in other areas. With its global recognition and popularity, Supreme has considerable potential for international expansion, especially as the US still represents over half of its business.

Founder James Jebbia is optimistic about Supreme’s future under VF Corp’s ownership. He believes that this partnership will help maintain Supreme’s unique culture and independence while allowing for continued growth.

The transaction between VF Corp and Supreme is expected to close by the end of this year. Looking ahead, VF Corp anticipates annual sales growth of 8% to 10% for Supreme, with revenues surpassing $1 billion by 2024. This acquisition is a significant move for VF Corp in solidifying its presence in the streetwear market and creating long-term value for its shareholders.

Useful links:
CNBC: VF Corp to acquire New York streetwear brand Supreme for $2.1 billion
Supreme Community: Supreme Collaborations