Everything You Should Know About VF Corporation's Sale of Supreme, Insights from Chinese Media
VF Corporation (VFC.US) announced this week that it has agreed to sell its brand Supreme to EssilorLuxottica for $1.5 billion in cash. The transaction is expected to be completed by the end of this year, pending certain closing conditions and regulatory approvals.
This news has sparked significant attention in Chinese media. Here are the viewpoints from the media:
The Paper reported that Supreme’s development in China seems to have missed the peak years of the trendy play industry. Supreme broke into the Chinese market in 2017 through a collaboration with luxury brand LV, initially testing the waters through buyer shops.
However, after VF Corporation acquired Supreme in 2020, the brand’s direct store expansion plan progressed relatively slowly over nearly four years, only entering the markets of South Korea and China. Supreme officially opened its first direct retail store at the end of March 2024 and has not opened a second store to date. Supreme’s performance has consistently fallen short of expectations and has not significantly contributed to VF Corporation’s profits. Therefore, its sale appears to be inevitable.
The 21st Century Business Herald reported that VF Corporation’s brand revenues have significantly declined, and the group expects sales to further decrease this year, with total revenue for 2024 projected to drop by 10% to $10.5 billion. Choosing to shed the burden of Supreme at this time reflects VF Corporation’s attempt to “cut off a limb to save the body.”
Jiemian News, in an analytical article, pointed out that it is surprising for EssilorLuxottica to take over Supreme. Although EssilorLuxottica has ample experience in high-end retail, it has not focused on apparel brands. Jiemian News emphasized, “Professional tasks should be handled by professionals.”
Regarding Supreme’s development status, Jiemian News believes that street fashion had already shown signs of decline by the end of 2020, and VF Corporation failed to set a clear development path for Supreme. General consumers felt that the brand’s indecisive stance was neither trendy nor cool, lacking sincerity, while original loyal street fashion enthusiasts believed that the brand’s value had been diluted.
Social media has allowed brand trends to be disseminated simultaneously across different markets, reducing information asymmetry. Before Supreme opened its store in Shanghai, Chinese consumers had already perceived its outdated image.
For VF Corporation, selling Supreme, a highly recognized but poorly managed asset, undoubtedly demonstrates to investors its determination to pursue performance growth, with more positive effects than negative ones.
Beijing Business Today stated in a report that after being acquired by VF Corporation, Supreme began to cater to consumers and continuously expand, resulting in a “one-size-fits-all” characteristic. Supreme’s “rebellious” brand gene is no longer applicable, with limited editions and purchase restrictions being removed, and the range of collaborations expanding to the extent that “everything can be Supreme.” This led to a sharp decline in market recognition for Supreme, and its performance fell short of expectations. Given VF Corporation’s own poor performance, selling Supreme is currently the best option.
LinkShop pointed out in an article that Supreme’s repeated concessions to capital have led some fans to abandon the brand. In the Chinese market, Supreme’s influence is also gradually weakening. For example, a Shanghai exclusive box logo hoodie, originally priced at 1,750 RMB, was bought by a consumer from a scalper for 5,000 RMB, only to see its price drop to over 3,000 RMB in the afternoon. The next day, he learned from a familiar scalper that the same hoodie could be bought for 1,500 RMB. Additionally, some netizens revealed that two months after the store opened, there was no need to queue to enter Supreme’s store except on new product release days during weekends.
Hypebeast expressed concern about Supreme’s future in its report. The article pointed out that despite changing hands multiple times, Supreme has always remained at the pinnacle of streetwear. VF Corporation’s acquisition brought Supreme more attention, but over time, it seems to have lost its original charm. In recent years, Supreme has been plagued by negative news, casting a shadow over the brand. Nevertheless, Hypebeast stated in the article that they still look forward to seeing collaborations such as Supreme x Ray-Ban or Supreme x Oakley.