Nike seeks buyers for Umbro, Cole Haan brands | WPN World People News

NEW YORK Global athletic-shoe maker Nike is offloading the Umbro and Cole Haan brands after failing to chart profitable growth with the two acquisitions.

The transactions are expected to be completed within a year, the Beaverton, Oregon-based company said in a statement Thursday.

Nike acquired Umbro, the UK-based soccer-apparel and footwear brand, in 2008 for $567 million, while Cole Haan, a chain of dress-shoe stores, was acquired in 1988.

The sale is expected to help Nike to focus more on its biggest brands, according to the company statement.

Umbro's sales in the fiscal year ended May 31, 2011, were little changed at $224 million, and Nike wrote down the value of the unit by $240.7 million in 2009.

Haan and Umbro accounted for just 4 per cent of Nike's $20.9 billion in revenue in its most recent fiscal year.

The maker of Air Jordans said while that the Cole Haan unit increased revenue 12 per cent to $518 million in 2011, sales were little changed in the quarter ended Feb. 29 as the company's total sales advanced 15 per cent.

Both Cole Haan and Umbro posted net losses in the last quarter.

Nike's plan to sell Cole Haan and Umbro continues what has been subpar performance in acquisitions.

While the decision to sell appeared to make sense, analysts have wondered why the company acquired either Cole Haan or Umbro in the first place.

Nike Chief Executive Mark Parker said, "Divesting of Umbro and Cole Haan will allow us to focus our resources on the highest-potential opportunities for Nike, Inc. to continue to drive sustainable, profitable growth for our shareholders."

Before Umbro, Nike's presence on the greater soccer pitch had been viewed with some skepticism the usual treatment for the world's largest sporting goods company when it ventures onto new turf.

According to Sam Poser, analyst with Sterne Agee, "Now that they've fully developed Nike soccer, Umbro detracts from their business."

Whatever legitimacy Umbro added upon its acquisition, it proved to be an instant money loser, in large part because the purchase was made at the start of the Great Recession, said Sara Hasan of McAdams Wright Ragen in Seattle.

While Umbro was Parker's first acquisition, Cole Haan's 1988 purchase was the first for his boss, then Chief Executive Phil Knight. The company paid $80 million plus the repayment of $15 miliion in debt for New York-based Cole Haan.

Source: United States News.Net