Streetwear M&A Dealing: VF Corp. Acquires Supreme Brand

The United States and much of the world watched all M&A activity grind to a halt during the first months of the coronavirus. The uncertainty of the US elections also slowed down the M&A market. Nevertheless, some notable deals did take place in certain sectors, including in streetwear.

VF Corp. (VFC) announced it would acquire streetwear brand Supreme in a transaction worth $2.1 billion. VFC is acquiring the New York-based company from its founder, James Jebbia, and private-equity firms Carlyle Group and Goode Partners.

Carlyle Group purchased 50% of the company for $500 million, valuing Supreme at $1 billion, in October 2017.

Supreme Makes Direct Sales of Streetwear

Jebbia and the senior leadership team of the brand will remain with the company. The company is based in New York City, New York.

VF Corp. is the owner of streetwear brands such as Vans, The North Face, Timberland, and Dickies. VF Corp. sole the Vanity Fair brand of lingerie to Fruit of the Loom in 2007. After that, the company changed its name to VF Corp. The company’s origins date back to 1899.

Streetwear jacket
Streetwear jacket
Image credit: Fashionista

The Company’s Backstory

Supreme grew to be a streetwear brand preference for skaters and local artists.

In 2017, it partnered with Louis Vuitton on a high-profile collaboration and was a well-known brand beyond the skate community. Sales had reached roughly $200 million and were still growing fast. Skaters and fashion insiders said that the brand’s subcultural appeal was long gone. Although many may cry “sellout,” it looks like VF Corp is going to allow Supreme to retain its brand identity — one that’s made it the biggest name in streetwear over the past 25 years. The partnership intends to extend the brand’s reach internationally by opening up more flagships in new cities. It will also leverage its existing direct-to-consumer market.

Supreme Embraces “Light-Touch” Integration

Supreme’s 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.”

No Big Streetwear Surge Likely, Some Say

But in August, there was another streetwear deal as Authentic Brands Group LLC (ABG), a global brand owner, marketing and entertainment company, and SPARC Group, LLC, a retail enterprise, announced that they’d acquired Lucky Brand. ABG partially owns SPARC. It’s the dedicated operating company for Aéropostale and Nautica.

The company said that with the acquisition, SPARC assumes the role of core licensee and operating partner for Lucky Brand and will oversee all sourcing, product design and development, wholesale, operations of the brand’s North American retail stores, and its e-commerce business.

Reebok as Target?

Reebok’s appeal to potential bidders is its comprehensive collection of classic footwear and apparel styles which may be a draw for younger consumers.

Adidas Concerned, Too

Adidas continues to evaluate its options for Reebok. Adidas purchased the German sportswear maker purchased in 2005 for $3.8 billion. The transaction gave Adidas roughly 20% of the U.S. market and greater potential to better challenge leader Nike. However, Adidas hasn’t been able to boost the group’s overall sales.

“This is a once-in-a-lifetime opportunity to combine two of the most respected and well-known companies in the worldwide sporting goods industry,” Adidas Chairman and CEO Herbert Hainer said at the time.

And now: “Overall as a company, we are not happy with the 2 per cent [sales] growth in 2019,” said Adidas chief financial officer Harm Ohlmeyer in March. “That is not according to our ambitions.”

Some in the industry say that other notable brands that could be targeted include Canada Goose and Deckers Brands.

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.