be beneficial to VF Corp in the long run. However, it’s uncertain whether Supreme is the right choice for EssilorLuxottica.  Why does the deal make sense for VF Corp? “Supreme was never a good fit for VF,” said Neil Saunders, managing director of GlobalData. “The company overpaid for a trophy asset which it was not sure how to develop or nurture. During its time with VF, Supreme lost a lot of its lustre and struggled with numerous issues. “As a result, VF had to write down the value of the brand and sell it at a loss. However, as painful as it is, the disposal is correct as VF needs to focus on its core brands without the distraction of Supreme.” Supreme’s revenue was down from US$561.5 million in 2022 to US$523.1 million for the year ended March 2023, with net income dropping to US$64.8 million from US$82.4 million year on year. Meanwhile, VF Corp has been struggling to improve the performance of its core brands, all of which posted a decline in revenue in recent quarters.  “VF Corp sales were already starting to plateau when they acquired the business, resulting in Supreme being starved of investment to focus on turning around Vans and The North Face,” said Mathew Dixon, partner at DHR Global. “It never had a chance to integrate successfully into the group.” Dixon acknowledged the challenge that VF Corp faced in growing a cult brand like Supreme. “Supreme’s owners face a dichotomy in that it is almost impossible to maintain the scarcity and exclusivity which made Supreme desirable and scale the brand at the same time. Supreme was a cult brand which became mass and it is now hard to define the current customer. The focus now needs to be on great products again. There has been no creative vision since Tremaine Emory left resulting in too many lazy collabs and sub-standard design,” he said.  “Supreme has become a generic streetwear brand. It is essential they rediscover what made them so compelling in the first place as many customers have written them off. However, it is possible to do it – A Bathing Ape has regained momentum and Stussy is on fire despite the founders having long departed. EssilorLuxottica cannot be greedy, this process has to be a long-term strategy,” he added.  Is EssilorLuxottica a better fit? Saunders noted that Supreme is an unusual acquisition for EssilorLuxottica, an Italian-French optical giant that has an estimated 52.66 per cent of the luxury eyewear market. He added that the deal could be risky as it comes at a time when streetwear aesthetic has gone off the boil.  “It is not clear what EssilorLuxottica intends to do to revive Supreme’s fortunes. That said, EssilorLuxottica has strong distribution capabilities and is good at brand management, so Supreme fits better with them than it did with VF,” he said.  Meanwhile, Dixon believes Supreme can still prosper if EssilorLuxottica allows them to operate independently and doesn’t manage it with an FMCG mindset. The advantage is that the streetwear label is backed by an investor who is performing and knows global markets.  “They have given Oakley more freedom in recent years and the brand has bounced back in the footwear and apparel categories and acquired a new Gen Z customer base who had never engaged before. This should be the blueprint for Supreme,” he said.  “Scaling the Supreme sunglasses collection is the obvious low-hanging fruit and could open up huge distribution opportunities in all the world’s department stores. A Ray-Ban collaboration would easily lay the foundation for a full eyewear launch and the brand would sit comfortably in the space,” he added.  Dixon also noted Supreme’s positioning needs careful consideration. “Their original US and European customers have moved on and there is a lot of negative noise about the brand’s continual relevance. It is hard to claim to be a subculture label when you are looking to grow to US$1 billion. Having founder James Jebbia still on board adds credibility, but they may need to accept that the original customer has probably left,” Dixon said.  Opportunity in Asia In the past year, Supreme has ramped up its expansion in Asia. The label opened its first China flagship store in Shanghai and launched a WeChat Mini program in March after entering the country under the partnership with luxury brand retailer Dover Street Market in Beijing in 2022. The brand also forayed into South Korea last year,  opening its first store in the Gangnam district in Sinsa-dong.  Bracken Darrell, president and CEO at VF, said the investment in Asia had returned to delivering strong growth.  “Asia remains a big untapped market for the brand, and they are still under-represented in the space – I expect a huge investment in Asia retail,” said Dixon.  “VF has opened stores in South Korea and China, and they had a long-standing partnership with Dover Street Market in Shanghai, meaning the brand retains a great level of credibility in the region. Great products are now essential to build on this platform.” The deal is expected to close by the end of this year. Supreme currently has a network of 17 stores across the US, Asia and Europe.