V.F. Corporation sells Supreme brand to EssilorLuxottica for $1.5 billion

V.F. Corporation (VFC) has recently struck a deal to sell its Supreme brand to EssilorLuxottica for $1.5 billion in cash. The company anticipates this transaction to have a negative impact on its earnings per share in the 2025 fiscal year. Despite Supreme’s contribution of $538 million in revenue and $166 million in operating income during VF’s 2024 fiscal year, VF’s CEO, Bracken Darrell, emphasized the lack of synergies between the two brands as the primary reason for the sale. VF shares saw a significant boost of 13.6%, closing at $16.15 the day after the announcement was made.

The sale of Supreme marks a strategic decision by VF to divest from a brand that, while successful and showing growth, does not align closely enough with VF’s integrated business model. By focusing on markets such as China and South Korea, Supreme has achieved impressive growth under VF’s ownership. However, the company’s review identified limited synergies between Supreme and VF, leading to the decision to pursue a sale. Analysts have since adjusted their price targets on VF, reflecting the changing dynamics within the company following the sale of Supreme.

Overall, the sentiment surrounding V.F. Corporation following the announcement of the Supreme brand sale has been positive. Despite the expected dilution to earnings, investors have reacted favorably to VF’s strategic move to streamline its portfolio and focus on brands that align more closely with its integrated model. The surge in VF’s stock price post-announcement suggests that the market views this divestiture as a step in the right direction for the company’s long-term growth and profitability.