EssilorLuxottica Acquires Supreme Brand from VF Corporation for $1.5 Billion
In an unexpected announcement, leading eyewear group, EssilorLuxottica confirmed its intent to buy the Supreme brand from VF Corporation for $1.5 billion in cash.
“We see an incredible opportunity in bringing an iconic brand like Supreme into our company,” expressed Francesco Milleri, chairman and CEO of EssilorLuxottica, alongside Paul du Saillant, deputy CEO. “It perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity.”
Praising Supreme’s unique brand identity and customer experience, Milleri stated that Supreme would exist independently within their house brand portfolio, effectively utilizing their group’s expertise, capabilities and operating platform.
The deal is expected to finalize by the year end, pending customary closing conditions and regulatory approvals.
With a digital-first business model, the Supreme brand operates 17 stores across U.S., Asia, and Europe and is expected to bring down VF’s earnings per share in fiscal 2025. “Under VF, Supreme expanded its presence in the key markets of China and South Korea and has returned to delivering strong growth,” commented Bracken Darrell, president and CEO at VF.
Pointing out limited synergies between Supreme and VF, Darrell explained that selling the brand was a sensible progression. He expressed confidence in the continued success of Supreme under EssilorLuxottica’s portfolio.
As disclosed in May, luxury streetwear brand Supreme was being subtly offered to potential buyers with VF Corp. consulting Goldman Sachs for a portfolio review.
VF Corp. has had a known interest in divesting parts of its business, although it did not confirm its collaboration with Goldman Sachs or that Supreme was one of the brands considered for a sale.
“While we will always look to adjust the VF portfolio from time to time, this transaction gives us increased balance sheet flexibility,” Darrell concluded. He also added that it supported their program to better position the company for long term growth and more normalized debt levels.
Supreme founder, James Jebbia expressed his trust in EssilorLuxottica as a partner that respects Supreme’s brand identity and this move would enable them to focus on their products and customers, paving the way for long-term success.
The transaction solicits exclusive financial and legal advisories from J.P. Morgan and Latham and Watkins for EssilorLuxottica respectively. Meanwhile, Goldman Sachs & Co. LLC is the leading financial advisor and UBS Investment Bank is the financial advisor to VF. Legal advice for VF is being provided by Davis Polk & Wardwell LLP.
EssilorLuxottica was established in 2018 as a merger between France’s Essilor and Italy’s Luxottica Group. Reporting consolidated revenues of 24.5 billion euros in 2022, the company represents a number of renowned brands including Michael Kors, Giorgio Armani, Brunello Cucinelli, Burberry, Chanel, and many more.
Difficulties were encountered by Jebbia at VF, where Supreme was just a fraction of a much larger picture. With annual sales of approximately $11 billion, VF owns brands like Vans, Timberland, and Altra among others. The company’s backpack business, including Kipling, Eastpak and JanSport, is currently under the process of sale.