Aomori Group – Nike to Sell Umbro.
Aomori Group: After failing to convert their acquisitions into growth, Nike Inc. is to sell Cole Haan and Umbro brands.
Nike, the world’s largest sports shoe manufacturer, expects to complete the sale of the two brands within a year, according to a statement leaked to Aomori Group. Umbro, based in the UK, had been purchased by Nike for $567 million in 2008.
Nike is selling the Cole Haan and Umbro in order to increase its focus on its core Nike brand. Umbro’s sales for 2011 showed little growth, at $224 million, and Nike had wiped $240 million of its value off of its balance sheet in 2009. According to an analyst at Aomori Group, “Umbro just wasn’t profitable for them.”
One analyst commented that “Nike’s acquisitions have been a letdown. Umbro was purchased during a market peak and since then they have had to a write down. It just hasn’t been profitable for them so why keep investing time and money in it? They believe it is time to cut their losses.”
Cole Haan is a chain of stores specializing in dress shoes which Nike bought in 1988. While it has been posting a profit, there has been very little growth. Combined, the two units accounted for 3.5% of Nike’s 2011 revenue of $21 billion.
“It’s a smart move to dispose of brands that are not working out and to devote more time and energy to the brands that are working”, said Aomori Group analyst.
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