Nike Inc. is trimming its portfolio to focus on its four core athletic brands.
The company said Thursday it will sell the Cole Haan and Umbro brands. The move will allow it to focus on growing the Nike, Jordan, Converse and Hurley divisions. The group will begin the divestment process immediately, and it expects to complete the sales by the end of the fiscal year on May 31, 2013.
Mark Parker, president and chief executive officer, said, “We see tremendous opportunity to accelerate profitable growth around the world by continuing to deliver innovations and inspire consumers through the Nike brand.”
Parker added that the company also saw “significant potential” in the Jordan, Converse and Hurley brands, which he said have “unique consumer relationships that complement the Nike brand.”
Cole Haan was acquired by Nike in 1988. The brand specializes in casual and dress leather footwear, bags and outerwear. But the company has suffered ups and downs under Nike, bringing in a string of ceo’s to build the brand in the U.S. and internationally with mixed success. While Cole Haan has adopted Nike Air technology for many of its shoes, and worked with Maria Sharapova on a collection, it remained a small part of the overall Nike business.
British soccer brand Umbro was acquired in 2008 and was trumpeted at the time by Nike as a move to build its global business in the key category.
In its last conference call to Wall Street on March 22 when the firm posted third-quarter earnings, Donald W. Blair, chief financial officer and vice president of Nike Inc., said earnings before interest and taxes for its other-businesses category rose 2 percent due to solid profit growth at Converse and Nike Gold, although that was mostly offset by losses at Umbro, Hurley and Cole Haan. He noted that while revenues have risen for the smaller business, profitability was challenged primarily by lower gross margins. He also noted that as the company was heading into the fourth quarter, it expected strong revenue growth driven “largely by the strength of the Nike brand and Converse.”
For the third quarter ended Feb. 29, the Beaverton, Ore.-based athletic footwear and apparel giant expanded net income 7.1 percent to $560 million, or $1.20 a diluted share, above the $1.17 analysts’ estimate as well as the year-ago mark of $523 million, or $1.08. Total revenues were up 15.1 percent to $5.85 billion from $5.08 billion, as Nike brand footwear sales rose 16.7 percent to $3.35 billion, and apparel volume was up 12.2 percent to $1.46 billion.
For the nine months, net income rose 8.8 percent to $1.67 billion, or $3.56 a diluted share, as revenues added 17 percent to hit $17.66 billion.