On Monday, VF Corporation agreed to buy streetwear apparel company Supreme for about $2.1 billion, a move expected to add another popular brand to its portfolio, according to Reuters. VF would pay an additional $300 million subject to certain post-deal closing milestones with a deal expected to close in late 2020.
- VF Corp expects the deal to bolster its e-commerce business since Supreme gets over 60% of its revenue from the online business.
- The deal is expected to contribute to about $500 million of revenue and adjusted earnings per share of 20 cents in fiscal 2022.
- The acquisition of Supreme adds to VF corporation’s portfolio which already includes house brands such as The North Face and Timberland.
- Supreme has gained a following among “hypebeasts” or streetwear style fans comprising mainly of young people, allowing it to charge higher prices than other streetwear brands
- At the end of January 2019, Supreme’s European business earned $130 million in revenues and profit margin, before interest expenses, of 44% despite having just two stores.
- The acquisition of Supreme adds to VF corporation’s portfolio which already includes house brands such as The North Face and Timberland.
VF Corp. shares rose 13% to $78.94 in afternoon trading after the news. VFC: NYSE is currently down 1.04%.
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