Fashnopsis:
- VF Corp. considering selling Supreme due to struggles after 2020 acquisition.
- Supreme lost its “cult” brand status with wider distribution and declining hype.
- Internal issues like creative director’s departure fueled speculation about Supreme’s woes.
- VF Corp.’s overall portfolio faces challenges, with core brands like Vans and The North Face also experiencing decline.
- New VF Corp. CEO emphasizes product quality, hinting at a potential shift in focus.
VF Corporation, owner of The North Face and Vans, is reportedly exploring the sale of streetwear brand Supreme, acquired in 2020 for a staggering $2.1 billion. This potential divestment comes amidst a broader portfolio review by VF Corp. and follows challenges Supreme has faced since the acquisition.
Loss of Niche Appeal and Declining Sales
Analysts suggest Supreme’s post-acquisition performance has been volatile. The brand struggled to maintain its “cult” status with wider distribution, as its once-hyped product drops no longer generate the same buzz. Collaborations with luxury brands like Louis Vuitton, Missoni, and Gucci, while notable, couldn’t recapture the exclusivity crucial for streetwear’s appeal.
Internal Turmoil and Financial Performance Woes
Supreme’s creative director Tremaine Emory’s departure in 2023 after just 18 months, citing “systemic racism,” further fueled speculation about internal struggles. VF Corp.’s 2023 financial report mirrored these issues, reflecting a 2% decline in revenue and mirroring a 3% drop in the fourth quarter. This highlights ongoing challenges faced by the conglomerate.
“Too Big to Stay Cool” – Reevaluating Brand Strategy
VF Corp.’s new CEO, Bracken Darrell, aims to streamline the portfolio and prioritize innovation. Industry experts echo this sentiment, with an investment banker quoted by WWD stating, “Supreme has become too big to continue to be cool.”
Potential Sale and Rumors of Buyer Search
According to reports, VF Corp. is considering partnering with Goldman Sachs to find a buyer for Supreme as part of its portfolio revaluation. While neither company has confirmed these rumors, Supreme’s diminished allure among its core audience since the acquisition is undeniable.
Supply Chain Issues and Executive Departures Further Complicate Matters
The brand’s struggles are further compounded by supply chain problems reported in 2022 and the aforementioned departure of creative director Emory. Additionally, VF Corp.’s February 2024 quarterly report revealed a 7% decline in the “other brands” division, which includes Supreme.
Limited Bright Spots and Investor Concerns
Despite positive outcomes reported by VF Corp. CFO Matthew Puckett regarding the Seoul store opening in August 2023, concerns remain. Notably, a February 2024 activist investor push by Engaged Capital, supported by VF’s founding Barbey family, called for divesting all brands except Vans and The North Face.
Financial Woes Across the Portfolio
Further complicating matters, VF Corp.’s core brands, Vans and The North Face, also experienced declines in the February 2024 quarterly report. Vans sales dropped 29% ($668 million) and The North Face dropped 11% ($1.2 billion). Timberland also saw a 22% decline ($473 million).
New Leadership and Focus on Product Excellence
VF Corp.’s new CEO, Bracken Darrell, acknowledges the importance of product quality. He stated to WWD.com, “From my experience I can say one thing: if you don’t have a great product, you don’t even have a great company for very long.” This statement underscores the potential shift in focus for VF Corp. moving forward.
Image Source: Supreme/ VF. Corporation
