NEW YORK — Swimming against the tide of designers exerting greater control over their overseas businesses, Nautica Enterprises Inc. will discontinue its wholesale ventures in Europe and attempt to conquer the continent through...
NEW YORK — Swimming against the tide of designers exerting greater control over their overseas businesses, Nautica Enterprises Inc. will discontinue its wholesale ventures in Europe and attempt to conquer the continent through licensing.
The firm said Monday it would take a $6 million to $7 million aftertax charge to close its remaining European offices and transition its business there to licensing or other arrangements. Europe currently accounts for about 2 percent of Nautica’s sales.
About $1.6 million, or 5 cents per share, of the charge will be recorded in the recently finished fourth quarter. The balance of $4.4 million to $5.4 million, or 13 to 16 cents a share, is expected to be taken in the first half of fiscal 2004. The charge is for certain wind-down and closure costs; the impairment of goodwill; the write-down of fixed assets and the termination of certain lease obligations, Nautica said.
Under the plan, Nautica will close its sales office in France and its London headquarters. A German sales office has already been closed. To build its business in Europe, Nautica will try to expand its relationship with Ridenco — which holds the licenses for Greece, Turkey and Eastern Europe — to include Italy. The company is also evaluating a proposal from its management team in Spain and Portugal to license the brand in those territories.
Christopher Heyn, president of the firm’s Nautica Apparel global licensing subsidiary, will lead the efforts to license the brand or find alternative arrangements. "We remain committed to Europe and strongly believe in the long-term global opportunities for the Nautica brand," Harvey Sanders, Nautica chairman, president and chief executive, said in a statement.
Excluding the charge, Nautica expects to meet analysts’ estimates of profits of 21 cents a share in the fourth quarter, against profits of 2 cents a year earlier, also excluding special charges.
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