Supreme’s performance has fallen short of expectations set by its parent company.
The New York City streetwear brand generated a total revenue of $523 million for the year ending in March 2023, according to VF Corp’s annual report, shy of the $600 million projection that had been set. The mark is also down from $561.5 million in revenue for the year prior, while net income decreased from $82.4 million to $64.8 million over the same period.
VF Corp acquired Supreme in 2020 for $2.1 billion, a staggering price that would establish lofty expectations for the nearly 30-year-old streetwear brand, no matter how much hype it’s driven as an industry leader.
The footwear and apparel conglomerate even acknowledged the inherent risk, as the yearly report says Supreme is “subject to unique risks because of its focus on frequent, weekly, and limited product drops through the direct-to-consumer channel.” The report went on to say VF Corp’s “failure to make necessary adaptations” to address characteristics including volume requirements, product seasonality, and consumer concentrations and demand “could adversely affect VF’s revenue, business condition, and results of operations.”
To make good on VF Corp’s $2.1 billion purchase, Supreme was always going to have to sell more product. Scarcity, however, has been crucial to the very appeal of Supreme since the very beginning. Therein lies the paradox for the parent company: it needs to make Supreme more widely available without oversaturating the brand and decreasing its appeal. A delicate balance is required, and the earnings report makes it clear VF Corp hasn’t quite figured out the formula yet.
Tremaine Emory has brought some fresh design ideas to Supreme since being named creative director in February 2023, but the brand still isn’t resonating with the zeitgeist the way it was five or even ten years ago.