After 4 Years, Nike Divorces Umbro

Hi all,
According to Sport Business, Nike has announced its intention to sell Umbro and focus its efforts on driving growth in its own brand along with Jordan, Converse and Hurley, just four years after having acquired the football-focused company.

Following Thursday’s announcement, Nike will also look for a buyer for its Cole Haan footwear and bag brand, with the American firm stating that the process will begin immediately with a goal of completion by the end of the 2013 financial year.

Umbro was acquired by Nike in 2008 for a reported £285 million, but the parent company wrote down the value of the unit in 2009.

The announcement comes just weeks after Barclays Premier League champion Manchester City switched its kit supplier deal from Umbro to Nike, with the agreement set to start in the 2013-14 season.

City’s Umbro sponsorship, which has been in place since June 2009, will continue until the end of the 2012-13 season, after which all kit, training wear and related products will be designed, manufactured and distributed by Nike. The contract will run until 2019.

Commenting on the decision to sell Umbro and Cole Haan, Mark Parker, president and CEO of Nike, said: “We see tremendous opportunity to accelerate profitable growth around the world by continuing to deliver innovation and inspire consumers through the Nike brand.

We also see significant potential in Jordan, Converse and Hurley, which have unique consumer relationships that complement the NIKE Brand. 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.” [Source: Sport Business]

I had a discussion the other day with a football marketer, and also a friend. It was the day after Nike announced its partnership with Manchester City. I was telling him that the only major football asset Umbro has left is England, and since I do not see Nike stripping Umbro from its national/historical icon, what is the point of still keeping Umbro within the Nike Group?

There could be other reasons, but if we are pragmatic, Nike does not need Umbro (now) to grow. Better focusing on in house assets.

Karl Lusbec