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Supreme is acquired by EssilorLuxottica for $1.5 billion.
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CNN
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Supreme, the trendy streetwear brand beloved by celebrities and cool kids alike, has been sold to an eyewear maker for significantly less than it sold for just four years ago.
Italian company EssilorLuxottica announced Wednesday that it is acquiring Supreme for $1.5 billion in cash from VF Corp. (VFC), the parent company of Vans and Dickies, which bought the brand for $2.1 billion in 2020.
EssilorLuxottica said in a statement that Supreme “fits perfectly into our journey of innovation and development, offering us a direct connection with new audiences, new languages and new creativity.” that the brand will have its “own space” in its portfolio and will mark its first-ever clothing brand acquisition.
The name EssilorLuxottica may not be well-known to consumers, but the eyewear the company makes is. Its collection includes brands such as Oliver Peoples, Ray-Ban, Oakley and Persol. The company also has licensing agreements with Chanel, Coach and Dolce & Gabbana.
Founded in 1994 in a New York skateboard shop, Supreme has won over skaters and hip-hop fans with its clothing, which is also popular with other millennial and Gen Z consumers. The Carlyle Group acquired half of the company in 2007 for $500 million.
Shares of VF Corp. rose nearly 7% in premarket trading. The company said there were “There are limited synergies” between Supreme and its own brands, making a sale a “natural next step.”
The sale makes sense, according to Neil Saunders, retail analyst at GlobalData, who said CNN said the company had previously “overpaid for a trophy asset it didn’t know how to grow or maintain,” resulting in a loss.
“Buying a streetwear brand at a time when that aesthetic is losing momentum is risky, and it’s unclear what EssilorLuxottica plans to do to revive Supreme’s fortunes,” Saunders said. He added that the Italian company has “strong distribution capabilities and is good at brand management.”
Observers say the brand’s ubiquity, as well as its declining resale value on websites like StockX, has hurt its popularity.
News Source : amp.cnn.com
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