VF Corporation Acquires Streetwear Brand, Supreme

A $2.1 Billion Acquisition

VF Corporation (VFC), a Denver-based apparel and footwear conglomerate, agreed to acquire the streetwear fashion label, Supreme, for $2.1 billion. VF Corporation owns a number of other popular brands including The North Face, Vans, and JanSport. The Supreme deal is the company’s largest purchase since it acquired footwear company Timberland in 2011 for $2.3 billion.

VF Corporation will buy Supreme from Carlyle Group (CG) and other investors including Goode Partners. The all-cash deal is expected to be closed by the end of the year. VF has said that Supreme could generate at least $500 million in revenue for the company by 2022.

Supreme’s Unconventional Marketing

Supreme is famous for its shirts, hats, and sweatshirts bearing its bold, red and white logo. The company started in 1994 as a skateboarding shop in New York. It is now renowned around the world, but it still operates just 12 retail stores. Supreme also manufactures a limited amount of its products to generate buzz. When Supreme releases new products, they tend to sell out extremely quickly and often cause consumers to line up for hours.

Instead of relying on celebrity endorsements and expensive marketing campaigns, Supreme has achieved a cult-like following through more grassroots efforts on social media and at its brick-and-mortar stores. Supreme’s main Instagram (FB) channel has 13.8 million followers. There is also a slew of independent Facebook pages, Instagram accounts, and Reddit threads centered around Supreme and its product drops. The brand is particularly popular among younger millennial and members of Generation Z.

VF Corporation Looks Ahead

The COVID-19 pandemic has upended the apparel industry. Consumers are doing far less in-person shopping. They are also spending more time at home in comfortable clothing, and are not buying as many new clothes for work or special events. VF sees Supreme as a way to stay competitive in a changing industry. Though Supreme’s in-person stores are famous for long lines and dramatic product drops, online sales generate over 60% of the company’s revenue. Supreme also has such a strong social media presence that word-of-mouth marketing can happen even as people do much of their socializing online.

Investors seem to agree that VF has made a good choice. The company’s shares surged as much as 17% on news of the deal with Supreme yesterday after falling about 30% this year. Monday’s spike marked the biggest gains for VF’s shares since 1987.

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