The Sale of Supreme: VF Corporation Sells Streetwear Brand to EssilorLuxottica for $1.5 Billion

Key Takeaways

• VF Corporation sold its Supreme streetwear brand to French eyeglass retailer EssilorLuxottica for $1.5 billion.
• VF CEO Bracken Darrell said the company’s strategic portfolio review determined that selling Supreme was logical.
• The parent of Vans and North Face brands has been attempting a turnaround as it faced falling demand and too much inventory.

VF Corporation (VFC) shares soared Wednesday after the struggling clothing retailer announced that Paris-based retailer EssilorLuxottica purchased its Supreme streetwear brand for $1.5 billion in cash. VF’s chief executive officer, Bracken Darrell, said that because of Supreme’s “distinct business model and VF’s integrated model, our strategic portfolio review concluded there are limited synergies” between the two. He called the decision to sell the unit “logical.”

Bracken has been leading turnaround efforts for the company behind Vans and North Face, cutting inventory and “rebuilding the leadership team” as demand sank. VF posted a surprising quarterly loss in May, with sales tumbling 13%.

For Ray-Ban and Oakley parent EssilorLuxottica, the move expands its portfolio beyond eyewear. CEO Francesco Milleri, and Deputy CEO Paul du Saillant said that adding Supreme “perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity.” The transaction is expected to be completed by the end of the year.

VF shares rose 14% to close Wednesday’s session at $16.15. Despite today’s advance, shares of VF shares are down about 13% year-to-date.

Implications of the Sale

The sale of Supreme by VF Corporation to EssilorLuxottica for $1.5 billion marks a significant shift in the streetwear and fashion industry. Supreme, known for its limited-edition drops and cult following, has become a powerhouse in the world of streetwear since its founding in 1994. The acquisition by EssilorLuxottica, a major player in the eyewear industry with brands like Ray-Ban and Oakley, signals a diversification of their portfolio and entry into a new market segment.

For VF Corporation, the sale of Supreme represents a strategic decision to streamline its operations and focus on core brands like Vans and North Face. By divesting Supreme, VF can reallocate resources and attention to areas where it sees greater potential for growth and profitability. The move comes at a time when VF has been facing challenges such as falling demand and excess inventory, prompting a reevaluation of its business strategy.

Market Response and Future Outlook

The market response to the sale has been positive, with VF Corporation’s stock price seeing a significant increase following the announcement. Investors seem to view the divestiture of Supreme as a step in the right direction for VF, allowing the company to refocus its efforts on core brands and operational improvements. The partnership with EssilorLuxottica also opens up new opportunities for both companies to leverage their respective strengths and drive innovation in the market.

Looking ahead, VF Corporation will likely continue its efforts to revitalize its business and adapt to changing consumer preferences. By optimizing its portfolio and investing in key growth areas, VF aims to position itself for long-term success in a competitive retail landscape. The sale of Supreme may be just the beginning of a larger transformation for VF as it seeks to navigate challenges and capitalize on new opportunities in the market.

In conclusion, the sale of Supreme by VF Corporation to EssilorLuxottica for $1.5 billion represents a strategic move that reflects changing dynamics in the fashion industry. As both companies move forward with this transaction, the implications are far-reaching and could reshape the landscape of streetwear and eyewear markets. With a focus on innovation and growth, VF Corporation and EssilorLuxottica are poised to drive value for shareholders and consumers alike.

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