Supreme is supreme
It was recently announced that the Carlyle Group bought 50% of the Supreme for $500M after being an investor for years. There are so many genius things about Supreme starting with the founder, James Jebbia. He saw the future and built a brand riding that wave. He appealed to a new generation of young men, cool kids who wanted to create their own look. Those people were millennials who happened to be 12 when Supreme first opened.
Supreme is the master of small editions that drop on a certain day of the week to create a buzz for their clients to buy it now or it will be gone later. They are giving customers value and edge at the full price. So, what does Supreme do now with $500M in the bank?
I can’t help but think of cycles of history. What made Macy’s so successful back in the day was that they gave the buyers plenty of autonomy to run their own departments. If you bought the right clothes, had the right mix, knew how to get back into the right items, aka ran a profitable growing business, you were rewarded. If you didn’t, you were gone. It was not micro-managed until they went private and freaked over their debt. They didn’t think forward, they went backward. They managed out of fear.
How does Supreme go from $100M a year in revenue to $250M in revenue? They open more stores around the globe from China to Japan to Korea. They should also start to rethink their work org chart. You have to have a lot of creative buyers and merchants to continue to manufacture small runs of cool clothing and have a run rate of $250M. The organization will have to look different and there has to be faith in giving people boundaries yet freedom to run with ideas. Probably buying companies that have built secondary markets with the same customers, aka the sneakerheads would be an added bonus.
Supreme has really been the first bust out successful new (even though they have been around from 1994) to become a major force that is in line with brands that have evolved for decades such as Gucci, YSL, etc. They have the capital to scale big but they have to be smart about how they keep loyal to how they got here in the first place. That’s the biggest challenge and it will be interesting to watch how they do it.