EssilorLuxottica has agreed to buy streetwear brand Supreme from VF Corporation, opens new tab for $1.5 billion, both companies said on Wednesday, marking the first acquisition of an apparel company for the French-Italian eyewear maker.

In a separate statement, EssilorLuxottica said it had agreed to buy an 80% stake in family-owned Heidelberg Engineering, a German company specialising in diagnostic solutions and healthcare IT for clinical ophthalmology, strengthening its push into medical technology. The companies did not disclose financial details.

Vans and North Face owner VF Corp bought clothing and skateboarding streetwear brand Supreme in 2020 for $2.1 billion.

The sale of Supreme is expected to be dilutive to VF’s earnings per share in fiscal 2025, according to the companies’ joint statement.

EssilorLuxottica shares were down 2.5% at 0720 GMT. A Milan-based trader said that the acquisition was out of EssilorLuxottica’s core business and in a category that is struggling.

“It appears to be geared towards streetwear, at a time when streetwear brands seem to be seeing significant lower engagement from consumers worldwide,” Bernstein analysts wrote in a note.

The deal is expected to close by the end of 2024, the companies added.

Essilorluxottica said that Supreme offers the group a direct connection to a new audience.

“With its unique brand identity, fully-direct commercial approach and customer experience – a model we will work to preserve – Supreme will have its own space within our house brand portfolio and complement our licensed portfolio as well,” said EssilorLuxottica’s CEO Francesco Milleri and deputy CEO Paul du Saillant in a statement.

VF Corp said that a strategic portfolio review concluded there were limited synergies between Supreme and VF, making a sale a natural next step.

“This transaction… supports our overall program to better position the company for long-term growth and more normalized debt levels,” said Bracken Darrell, president and CEO of VF, in the statement.