Women’s Wear Daily reports that Supreme has allegedly sold a 50 percent stake in its business to the Carlyle Group for just around $500 million.
And if that’s actually true that would mean Supreme’s enterprise valuation is at just around $1.1 billion.
- $1 billion in equity
- $100 million in debt
And according to WWD’s sources, James Jebbia, Supreme’s founder, wanted to keep the deal under wraps because he feared that if the sum became public knowledge, it could potentially hurt the street creditability it’s meticulosity cultivated over the years.
WWD’s report also claims that Supreme has projected $100 million in earnings.
So with the valuation being more than 10x that, the big question is: what does Supreme plan to do with all that money?
Supreme is brand that truly lives off of exclusivity and the fact that more people want their product than can actually have it.
And while Supreme’s true profitability is still unknown, WWD predicts that the projected earnings are a step up from the current revenue Supreme generates.
So what does that mean?
It means that some of the investment will need to be used to expand the business.
But that will immediately contradict its current business model of scarcity.
So where could they potentially expand to?
WWD believes that all signs point to expansion in Asia.
Because the brand currently holds six stores in Japan, but none in China, Korea or Hong Kong — which all provide massive markets that would allow Supreme to reach the projected revenue.
But wouldn’t more stores mean more stock?
And with more stock available that would make Supreme less exclusive and therefore, by definition, less “cool”.
Agenda tradeshow founder, Aaron Levant, told WWD:
“As long as the brand continues to create great moments, which they will be able to do with more capital, and follow the same business model and distribution strategy, they will be fine.”