Supreme Cool Under Fire for Carlyle Group Sponsorship

Inside Hook reported:

Supreme is a streetwear brand with over two decades of history that just made a $500,000 contribution to Black Lives Matter, Equal Justice Initiative and other like-minded causes.

Dig deeper into the brand, however, and you find a company with a troublesome ownership group very much at odds with the brand’s purported ethos.

As Monster Children pointed out, Supreme founder James Jebbia sold half the business to The Carlyle Group in 2017, a global investment firm with ties to the defense industry — including ownership of Combined Tactical Systems, a company that (as MC suggests) “specializes in the manufacture of military and police equipment such as tear gas canisters, flash grenades, breaching munitions (rubber bullets), and handcuffs.”

 Carlyle bought half of Supreme in October 2017.  Pitchbook noted:

Which brings us back to why a firm in the decidedly uncool realm of private equity would pursue a brand that exists at the intersection of fashion, music, sports and pop culture. 

By backing an apparel company that does things differently, Carlyle is hoping to find a different result (than the string of private equity owned retail bankruptcies). 

CNBC reported Supreme's popularity arises from youthful rebellion:

One explanation for Supreme’s popularity with young consumers — enough so to make them line up for hours at a time — has to do with the idea that the brand’s products are “emblematic of rebellious youth culture,” according to Gage.

“I would call it a brand that’s heavily integrated with art and culture that tends to drive demand through consumer desire and consumer passion as opposed to explicit marketing.”

What happens when youthful rebellion realizes Supreme is 50% owned by a war profiteering private equity underwriter (PEU)?  Carlyle affiliate Combined Tactical Systems sells crowd control and suppression products to militarized police departments, as well as armies around the world.

Carlyle invested in Combined Tactical Systems in 2005, via debt and a minority equity interest.  Carlyle's press release stated:

"Under the brand name Combined Tactical Systems, develops and manufactures "less-lethal" munitions for the defense and law enforcement industries". "

With our expertise in the defense industry, we are excited about this investment and look forward to pursuing acquisitions alongside Point Lookout to grow CSI’s business," said Leo Helmers, Managing Director of Carlyle Mezzanine Partners. 

Headquartered in Plainview, New York, CSI develops, manufactures and sells its products to the U.S. armed forces and other federal agencies, state and local police departments, and foreign military and police agencies around the world. 

Egyptian "Arab Spring" protesters in Tahir Square felt the sting of Combined Tactical Systems teargas in November 2011.  The last week of White House protests included a mass assault of peaceful protesters with products like those made by Carlyle's CTS.

Supreme announced it will donate $500,000 in the fight for racial equality.

How will youthful protestors resolve the Supreme-Carlyle Group disconnect?

Maybe a bottle of $300 Supreme cologne will take the sting out of any lingering teargas effects.  That's Carlyle's hope.

Update 8-17-20:  In a six-minute Instagram video sponsored by skateboarding and clothing brand Supreme, comedian Katt Williams addressed the major events highlighting a chaotic 2020, including the coronavirus pandemic, racial injustice and the upcoming presidential election. Williams said "Things in this world are starting to not fit" and "Civil unrest is what happens every time when a place is ruled by the people and the people's needs are not being met."  He missed the fact that private equity greed is part of the not fitting and Supreme's PEU ownership.  Carlyle has a smattering of COVID-19 profit making ventures and is using the pandemic to sell remote hiring (HireVue) and Supreme products. 

Update 11-10-20:  Carlyle will flip its stake in Supreme for at least a double.  VF Corp announced it purchased Supreme in a $2.1 billion deal.  Carlyle's website has no news story on the deal.