The Future of Supreme
Supreme, the renowned luxury streetwear brand, may be sold as VF Corp. reviews its portfolio with the assistance of Goldman Sachs. Financial sources indicate that VF Corp., which acquired Supreme for $2.1 billion in 2020, is exploring potential buyers. VF Corp. has publicly expressed interest in divesting parts of its business but hasn’t disclosed working with Goldman or targeting Supreme for sale.
A VF spokesman stated, “As a matter of policy, we don’t comment on market rumors or speculation.”
Supreme has captured fashion enthusiasts’ and dealmakers’ attention, especially after private equity giant Carlyle invested at a $1 billion valuation in 2017 and later doubled its investment with the VF deal. These sales raised questions about Supreme’s future under corporate ownership.
Despite growth, Supreme’s allure has diminished. VF’s management of Supreme faced challenges, including supply chain issues in 2022, surprising given VF’s historical strength in this area.
In fiscal 2023, VF took $735 million in charges against Supreme’s goodwill and indefinite-lived trademark due to higher interest rates and currency fluctuations. VF’s outgoing CFO, Matthew Puckett, acknowledged Supreme’s “uneven” performance but later reported double-digit growth and positive momentum, highlighting the successful August opening of Supreme’s new Seoul store.
Setbacks included the departure of creative director Tremaine Emory over “systemic racial issues,” which the brand disputed. Supreme’s founder, James Jebbia, remains at the helm, respected but navigating VF’s broader challenges.
VF’s extensive portfolio includes brands like Vans, Timberland, The North Face, and others. The company is already in the process of selling its backpack business, including Kipling, Eastpak, and JanSport. Activist investor Engaged Capital has pushed for VF to consider selling all its brands except Vans and The North Face.
Historically, VF actively managed its portfolio, spinning off brands like Lee and Wrangler in 2019 and acquiring new ones like Supreme. However, VF faces new challenges, including Vans’ downturn, an $875 million tax bill from the Timberland acquisition, and debt from the Supreme deal.
These issues have impacted VF, with its stock price dropping from over $100 in 2020 to $12.86 recently. CEO Steve Rendle left abruptly in 2022, replaced by Bracken Darrell of Logitech International. Darrell aims to revitalize VF by focusing on product innovation and trimming the portfolio.
Darrell admitted prior management bought brands benefiting from VF’s strong supply chain but “lost the plot a little bit.” He emphasized, “We probably didn’t keep the innovation lights on as strongly as we could have. My experience with products is, if you don’t have great product, you don’t have a great company for very long.”
Darrell’s strategy includes streamlining VF’s portfolio and enhancing product quality at the remaining brands.
