Why the owner of The North Face is going to pay $2.1 billion for Supreme
Technically, yes. Denver-based VF Corporation, which owns such regular Supreme collaborators as The North Face, Timberland and Vans, as well as workwear brands such as Dickies and Napapijri, announced this morning that it will acquire Supreme for $2.1 billion.
Supreme's current investors, The Carlyle Group and Goode Partners, will sell their stakes. You may recall that Carlyle paid $500 million for a 50% stake in Supreme in 2017; Which, as one writer has already quipped, makes The Carlyle Group the most successful Supreme reseller in the world.
Supreme is unlikely to feel any internal cultural backlash from the company's sale of The North Face, at least in the short term. Supreme founder James Jebbia and his team will remain on-site once the deal goes through later this year, meaning the think tank that ran the Lafayette Street skate shop in the early 90 to a position from which they dominate world fashion will continue as decision makers.
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Changes to the distribution model, such as starting to sell Supreme at other retailers beyond the equally cool Dover Street Market, seem unlikely: VF's press release touts Supreme's direct-to-consumer sales model and the confidence in their web store, which generates 60% of their income. The press release notes that Supreme is expected to add at least $500 million in revenue to VF's bottom line by 2022.
More broadly, as legions of couture clients around the world obsess over the mega-brands of LVMH and Kering with little awareness of who the current creative directors are, Supreme's millennial and Gen Z clients they are not ashamed of their devotion to the red label.
When they take issue with big brands, it tends to be over sustainability or human rights issues, not amorphous coldness or independence. There was very little discussion of Carlyle's investment, even though the private equity group had a minority stake in Combined Systems, Inc., a maker of military and police equipment, including tear gas. And Supreme's fans are already accustomed to unorthodox pairings with unknown or even suspect corporate partners, such as Post-Its, the fire safety manufacturing company Kidde, and the New York Post. At the risk of sounding cynical, this deal probably seems like little more than another gutsy collaboration.
From VF Corp's perspective, the company will likely make efforts to grow Supreme's customer base, while relying on the brand to burnish its iconoclastic profile with unusual collaborations.