Supreme's next drop might sell out even faster than usual.
According to a report by Bloomberg, VF Corp is facing supply-chain disruptions that are disproportionally affecting the New York City streetwear brand.
VF Corp, which owns labels including Supreme, The North Face, and Vans, reportedly manufactures about 10 percent of its products at factories in southern Vietnam, where COVID-19 has precipitated shipping delays and constrained production capacity.
Manufacturing hiccups have posed a challenge to Supreme's drop model, which relies on a steady stream of product to satisfy consumer expectations for regularly scheduled releases. Bloomberg reports that the brand's inventory in each drop has declined by nearly 33 percent, with some planned releases falling through.
Looking ahead, VF Corp will explore "sourcing closer to where the distribution points are," a strategy CEO Steve Rendle anticipates will mitigate supply-chain constraints.
In the meantime, limited inventory means customers will likely have to wait on even longer lines (or finesse their online checkout speed) to secure the latest Supreme drop.
The brand's heightened scarcity might also lead to higher prices, a phenomenon that may deter some shoppers and attract others, as rarity inevitably generates hype.
Between the pandemic and a recent shakeup to its board of directors, VF Corp has faced substantial setbacks this year.
Still, the company expects to bring in approximately $12 billion in fiscal year 2022, $600 million of which Supreme is predicted to generate.
"As we move through the halfway point of our fiscal year, I remain encouraged by the underlying momentum across the portfolio," Rendle said. "Our ability to reaffirm our Fiscal 2022 revenue and earnings outlook is a clear testament to the resiliency and optionality of our model."
Fear not, Supreme isn't going anywhere.
