Nike Aiming to Sell Cole Haan, Umbro Brands
Nike Inc (NYSE:NKE) is looking for a buyer for its Cole Haan and Umbro brands in order to focus on its core namesake, Jordan, Converse and Hurley brands, the company said on Thursday.
The process will begin immediately and be completed by the end of May 2013, Nike said.
"Nike is ... looking at its business to understand where to invest and prioritize. It is now time to seek a buyer for Umbro and Cole Haan to further focus ... on driving growth in the Nike brand, Jordan, Converse and Hurley," the company said in an email to Reuters.
In April, smaller rival sportswear group Adidas of Germany said it planned to slash the number of products it offers by a quarter to improve profitability. The company is the market leader in the soccer category and has forecast sales of soccer-related products this year of more than 1.5 billion euros.
Nike said its decision to sell the Cole Haan and Umbro brands was not a reaction to Adidas' move and that it would give out details on the financial impact of the move when it announces financial results on June 28.
"It is too early for us to estimate the impact of these transactions," the company said in the email.
Beaverton, Oregon-based Nike is the top sportswear company in the world and anticipates strong demand for its swoosh-marked clothing and shoes. However, there have been concerns about margins as sales have not been able to offset rising prices of materials including cotton, plastic and fuel.
Most of Nike's sales come from its namesake brand. The Jordan, Converse and Hurley brands, which also sell sports and casual wear, are seen as natural complements to the core Nike line.
Morningstar analyst Paul Swinand said it was likely the Cole Haan and Umbro brands would be picked up by Nike rivals rather than by private equity. He said Cole Haan would make a good fit for a company like Wolverine World Wide Inc.
He said of Nike's move, "To me, it's a mild positive. (It says) Nike doesn't need side brands and they get better returns from the core Nike brand."
Rivals Adidas and Puma declined to comment on whether they would be interested in buying Manchester, England-based Umbro, which makes soccer shoes.
Nike acquired New York-based Cole Haan, which specializes in leather shoes and bags, in 1988. It acquired Umbro in 2008.
Nike shares were down 0.8 percent to $107.38 in morning trading.