By Adria Calatayud and Andrea Figueras


Ray-Ban maker EssilorLuxottica agreed to buy streetwear brand Supreme from VF for $1.5 billion, looking beyond eyewear to reach new customers.

The all-cash acquisition is EssilorLuxottica's biggest since the European eyewear and lenses company took a majority stake in Dutch optical retailer GrandVision for about $6 billion in a deal that was struck before the pandemic and completed in 2021.

The acquisition will let EssilorLuxottica connect with new customer groups and aligns with its goals in innovation and development, the company said Wednesday.

"We see an incredible opportunity in bringing an iconic brand like Supreme into our company," EssilorLuxottica Chief Executive Francesco Milleri said.

The move left analysts wondering about the rationale for EssilorLuxottica. Analysts at Bernstein called it a surprise that would take the company out of its "comfort zone," while Equita Sim analyst Domenico Ghilotti wrote in a note to clients that the reasoning behind an investment in a consumer brand with no eyewear DNA needed further explanation.

In European early afternoon trading, EssilorLuxottica shares fell more than 4%.

Vans and North Face owner VF said the sale follows a portfolio review, which found the move to be a logical step given limited synergies with Supreme. The company expects the sale to dilute its earnings per share in fiscal 2025.

The deal is expected to be closed by the end of 2024, the companies said.

Supreme was founded by James Jebbia in New York in 1994. Known for its hoodies, T-shirts and accessories, the streetwear brand has been popular among skateboarders as well as celebrities such as Justin Bieber and Rihanna. It runs a digital-first business and has 17 stores in the U.S., Asia and Europe.

The deal is set to mark the New York brand's second change of ownership in less than four years. U.S. apparel brand VF bought it in 2020 for $2.1 billion from its founder and a pair of private-equity firms, Carlyle Group and Goode Partners. Both companies launched collaborative collections with VF's Vans, North Face and Timberland brands.

The SoHo-based brand's products were seen as somewhat exclusive, as they were dropped into stores every Thursday, creating hype among customers and long lines outside the shops. In 2006, Supreme launched an online shop, allowing it to ship its products.

Supreme has also collaborated with U.S. sneaker and sportswear giant Nike and French luxury conglomerate LVMH Moet Hennessy Louis Vuitton.

EssilorLuxottica also owns the Oakley brand, which has a significant exposure to products outside of eyewear such as clothing and backpacks, and it could see a similar opportunity with Supreme, Bernstein analysts wrote in a note to clients.

Supreme complements EssilorLuxottica's portfolio and, together with a separate deal of an undisclosed size for a majority stake in German medical-technology company Heidelberg Engineering, represents its return to pursue growth through acquisitions, Equita's Ghilotti said.


Write to Adria Calatayud at adria.calatayud@wsj.com and to Andrea Figueras at andrea.figueras@wsj.com


(END) Dow Jones Newswires

07-17-24 0708ET