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Unexpected Deal Sparks Questions and Speculations about Future Directions
Sectors & Markets
20 July, 2024
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In a surprising announcement, EssilorLuxottica SA, the global leader in the design, manufacture, and distribution of ophthalmic lenses and eyewear, has revealed its acquisition of Supreme, the iconic streetwear brand. The official statement highlights the strategic nature of this deal, aimed at leveraging the unique strengths of both companies to create innovative synergies. EssilorLuxottica’s CEO stated, This acquisition is a testament to our commitment to expanding our brand portfolio and reaching new consumer segments. We see immense potential in Supreme’s distinctive brand identity and loyal customer base.
The financial terms of the deal remain undisclosed, but industry experts speculate that the transaction involves a significant sum, reflecting Supreme's strong market position and cultural influence. The integration process will begin immediately, with Supreme expected to maintain its operational independence while benefiting from EssilorLuxottica’s vast resources and expertise in retail and marketing.
This acquisition has taken many by surprise due to the distinct differences in the core markets and brand identities of the two companies. EssilorLuxottica is renowned for its focus on luxury eyewear and optical products, boasting a portfolio that includes brands like Ray-Ban, Oakley, and Persol. In contrast, Supreme is a streetwear giant, celebrated for its edgy, urban fashion and collaborations with artists and designers.
Market analysts were not anticipating a move of this nature from EssilorLuxottica, given its historical focus on the eyewear sector. The streetwear market, while lucrative, represents a departure from EssilorLuxottica’s traditional business operations. This unexpected pivot suggests a strategic shift, indicating the company’s ambition to diversify its brand offerings and tap into new market segments.
Although, this is not the first time such an unexpected acquisition took place. A recent example is that of Tom Ford by Estée Lauder. Announced in November 2022 and valued at $2,8 billion, this deal marked Estée Lauder's largest acquisition to date. The purchase includes all of Tom Ford's intellectual property, extending Estée Lauder's influence beyond beauty products into fashion and accessories. Estée Lauder has historically focused on beauty brands such as MAC Cosmetics and Le Labo. With this acquisition, it now also manages Tom Ford's apparel and eyewear lines through extended licensing agreements with Ermenegildo Zegna Group and Marcolin S.p.A., respectively. It must be noted that this deal was not as surprising for the industry as Tom Ford Beauty had already been under its license, and had a strong position in the market already.
The rationale behind EssilorLuxottica’s acquisition of Supreme lies in the potential to blend Supreme’s cultural cachet with EssilorLuxottica’s market reach and retail acumen. Supreme’s strong brand identity and dedicated following among younger demographics offer EssilorLuxottica a unique opportunity to penetrate the streetwear market and enhance its appeal to a younger, fashion-forward audience.
It is noteworthy that Supreme was previously acquired by VF Corporation in 2020 for a staggering $2.1 billion. EssilorLuxottica’s acquisition of Supreme, however, is reportedly at a significantly lower valuation of around $1.5 billion. This price difference highlights shifts in market conditions and potential strategic adjustments by both VF Corporation and EssilorLuxottica.
Moreover, this acquisition aligns with EssilorLuxottica’s broader strategy of diversifying its portfolio. By integrating Supreme’s innovative approach to fashion and marketing, EssilorLuxottica aims to infuse fresh energy into its brand lineup. The deal also opens up avenues for cross-collaborations, potentially introducing co-branded products that blend eyewear with streetwear aesthetics, thereby capturing the attention of a broader consumer base.
For Supreme, this acquisition represents a significant milestone that could propel the brand to new heights. Backed by EssilorLuxottica’s extensive resources and global reach, Supreme stands to benefit from enhanced operational efficiencies and expanded market access. This partnership could lead to a broader distribution network, allowing Supreme to reach new customers across different regions.
Additionally, Supreme’s integration into EssilorLuxottica’s portfolio may result in innovative product offerings and collaborations that maintain the brand’s edgy appeal while exploring new creative directions. Despite the potential changes, Supreme is expected to retain its core identity and continue operating with a degree of autonomy, ensuring that its unique brand essence remains intact.
While many may think EssilorLuxottica is only now entering the apparel market, the company is no stranger to lifestyle brands. One of EssilorLuxottica’s portfolio brands is Oakley. Founded in 1975, Oakley has been known for its eyewear since 1984. Oakley entered the apparel market in the late 1990s, with the introduction of its first athletic shoe in 1998 marking a significant step towards expanding its product line beyond eyewear. In 2007, Oakley was acquired by Luxottica, which later became EssilorLuxottica in 2018. Oakley’s diversification continued to evolve under EssilorLuxottica, leading to the development of a comprehensive range of performance-driven clothing and accessories designed for athletes and outdoor enthusiasts. Additionally, under EssilorLuxottica, Oakley experienced strategic shifts including enhanced product development with advanced Prizm lenses, expanded retail presence through Luxottica’s global network, strategic collaborations with athletes and sports teams, sustainability initiatives introducing eco-friendly materials, and investments in digital innovation for improved e-commerce and customer engagement.
The acquisition of Supreme by EssilorLuxottica is a bold and unexpected move that reflects a strategic ambition to diversify and innovate within the fashion industry. This deal promises exciting possibilities for both companies, with the potential to reshape market dynamics and set new trends in the fusion of luxury eyewear and streetwear fashion.
See the financial performance of EssilorLuxottica Group report Here.
Cover Image Courtesy: Supreme, Facebook Page