What Happened: VF Corporation, which owns brands like Timberland and The North Face, is now purchasing the streetwear brand Supreme. The reported transaction figure values Supreme at over $2.1 billion (2 billion euros): almost double its pre-existing $1.2 billion (1 billion euros) estimate in 2017 when The Carlyle Group paid $600 million (500 million euros) for 50 percent of the brand’s shares. The deal is expected to happen before year’s end, and VF Corp. said it predicts Supreme will contribute at least $600 million of revenue by 2022. Shares of VF Corp. rose by 10 percent to $77.24 in pre-market trading.
The Jing Take: Streetwear is big news in China, particularly for US brands. The demand for its clothing — particularly hoodies and sneakers — jumped by 60 percent on Tmall, according to a 2019 report. Yet, Supreme has had its ups and downs in the country. This year, it finally won a lengthy legal battle to secure its iconic logo and trademark in China. In the meantime, Taobao was full of counterfeits, and one of the company’s largest domestic imitators, Supreme Italia, opened a store in Shanghai.
VF’s chairman, president, and chief executive officer, Steve Rendle, flagged the brand’s “approach to consumer engagement…” as a strong selling point, among others, and it will be interesting to see how this will play out in the China market. Currently, the brand’s official Weibo account is surprisingly small (26,000 followers), while much of its social chatter comes from organic amplification from the country’s young streetwear fans. China’s netizens reacted to the news with surprise, while some commented on the whopping amount of money involved. But the next question is: When will Supreme open a flagship store on the Mainland, for which this deal paved the way?
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.