SBD/June 1, 2012/Marketing and SponsorshipPrint All
Nike Thursday announced its intention to divest two of its wholly-owned affiliate brands -- Cole Haan and Umbro -- to turn its focus on driving growth in the Nike, Jordan, Converse and Hurley brands. Nike President & CEO Mark Parker said in a statement, "Divesting of Umbro and Cole Haan will allow us to focus our resources on the highest-potential opportunites for Nike, Inc. to continue to drive sustainable, profitable growth for our shareholders." The process of divesting the two will begin immediately and is expected to be complete by the end of Nike's FY '13 (Nike). The WALL STREET JOURNAL's John Kell noted these are Nike's "first planned divestitures in roughly four years." Financial terms and potential buyers "weren't named." Nike bought Umbro in '08 for $565M. Umbro and Cole Haan "make up a relatively small portion" of Nike. Both brands are "listed under 'other businesses' along with Hurley, Nike Golf and Converse, contributing roughly" 13% to Nike's $17.7B in sales for the first nine months of the latest fiscal year. The sale of Umbro "suggests to some that Nike believes the namesake soccer line is well positioned to court consumers." Nike last "unloaded an individual brand, Bauer Hockey, in April 2008," shortly after it sold off Starter in late '07 (WSJ.com, 5/31).
TIMING IS EVERYTHING: In Portland, Allan Brettman writes, "While the decision to sell appeared to make sense, the bigger question may be why the company acquired either Cole Haan or Umbro in the first place." Prior to buying Umbro, Nike's "presence on the greater soccer pitch had been viewed with some skepticism." Sterne Agee analyst Sam Poser said, "Umbro was a good idea before they had fully developed the Nike soccer business. Now that they've fully developed Nike soccer, Umbro detracts from their business." Brettman writes the timing of the Umbro announcement "is curious as one of the two major sporting events of the summer -- the European Football Championship -- will get underway next week." Nike "has been building anticipation for both with major marketing campaigns; how Umbro figures into the mix remains to be seen" (Portland OREGONIAN, 6/1). Susquehanna Financial Group analyst Chris Svezia said, "They really haven't done the best job on execution with acquisitions. Nike bought Umbro at the peak of the market, they've already taken a writedown, it's not a profitable business, so why bother keep throwing money at it? They are looking to cut their losses and move on." BLOOMBERG NEWS' Matt Townsend noted the Umbro acquisition "took a wrong turn, about a month after it was announced, when the England national soccer team failed to qualify for the 2008 European Championships finals, causing a decline in sales." Umbro "has the sponsorship" through '18 and Nike "declined to comment on the future of its relationship with England." SportsOneSource analyst Matt Powell said that Nike "never figured out how to make Umbro into more than a middle-tier brand." Umbro and Nike also "competed against each other because they had many overlapping products" (BLOOMBERG.com, 5/31). Nike said that its decision "was not in response to an announcement in April by Adidas, which said it planned to drop a quarter of its products to improve profitability" (AJC.com, 5/31).
Capital One “has been confirmed as the title sponsor of the League Cup after signing a four-year deal with the Football League,” according to Russell Parsons of MARKETING WEEK. The credit card brand “will replace Carling" from the start of the '12-13 season. The value of the deal is undisclosed but the Football League “had been pushing hard to improve" the three-year, US$30.7M deal Carling reportedly had. The league "cast its net globally to find a sponsor”(MARKETINGWEEK.co.uk, 6/1). GOAL.com's Jay Jaffa noted the tournament has been sponsored “by various companies over the years, including Coca-Cola, Worthington's and Carling -- a brand of parent brewing company Molson Coors.” The tournament has been known as the Carling Cup since '03. The League Cup “is widely seen as a lesser title than the more storied FA Cup, but has been used by many Premier League clubs in recent years as a method of handing young prospects valuable first-team experience” (SPORTS.YAHOO.com, 5/31).
The biggest risks from Europe's economic problems for Foot Locker “are chastened consumers and a hit to sales,” as company CEO Ken Hicks indicated that “fewer people have been shopping in the company's European stores,” according to Dana Mattioli of the WALL STREET JOURNAL. Hicks said that Europe “was the only region where Foot Locker experienced a drop in same-store sales in its most recent quarter, with sales declining roughly 5%.” The company has responded “by keeping its inventory in Europe lean.” Foot Locker's core customers in the region are “males between the ages of 15 and 25, a group that has been hit hard by high unemployment.” Hicks said that in a sign that such customers are “trading down to lower-priced sneakers, sales of Converse shoes and lightweight running shoes have been higher in Europe in recent months, something Foot Locker saw in the U.S. during the depths of the recession” in ‘08 and ’09. Despite the downturn, Hicks said that Foot Locker's European stores “are still profitable and the company continues to expand in the region.” He added that Foot Locker's European stores “have some of the highest operating-profit margins in the company, with sales per square foot and sales per hour higher than in the U.S.” The company is “continuing to expand in Europe, with plans to open 40 new stores this year” and is “considering the acquisition of real estate outside of the euro zone in Turkey, Poland and the Czech Republic” (WALL STREET JOURNAL, 6/1).
GM Global CMO Joel Ewanick Thursday said that soccer “has a much larger global fan base than American football, underscoring why a five-year Chevrolet marketing deal with global soccer powerhouse Manchester United is a better way to promote cars than a Super Bowl ad.” Ewanick said that the NFL has about 400 million fans “compared with about 3.5 billion fans of soccer.” Of those, about 659 million "are fans of Manchester United.” Ewanick said that GM “isn't cutting back on its advertising during NFL games, or in the U.S.,” but that GM will “boost total advertising with the NFL” (DETROIT FREE PRESS, 6/1).
WHERE'S WALDO? In N.Y., Sam Borden noted the U.S. Soccer Federation “has experienced the expected reaction -- both positive and negative -- after the recent debut of its new home uniforms for the men’s and women’s national teams.” After using a “relatively standard design for its last iteration, the latest versions have drawn criticism for, among other things, looking a little bit too much like something out of ‘Where’s Waldo?’” Nike Global Design Dir for Soccer Thomas Walker said that “from a design standpoint the lack of an established precedent is liberating” (NYTIMES.com, 5/31).
HONORING THE PAST: Warrior debuted the new EPL club Liverpool home jersey with features that honor the team’s past. Designs were inspired by the team’s ’64-65 uniform and the amber yellow Liver Bird emblem has been re-introduced, reminiscent of the strip worn for the ’76-85 seasons (Warrior).
OFF THE BENCH: MLB has selected Baseball HOFer Johnny Bench as its '12 spokesman for its Play Sun Smart Program aimed at raising awareness toward skin cancer prevention. Bench will take part in a variety of promotional appearances on behalf of the Play Sun Smart effort, including ones on "Fox & Friends," WFAN-AM, MLB Network, SiriusXM and at AT&T Park in S.F. Bench was recently diagnosed and treated for basal cell carcinoma, the most common type of skin cancer, on his lower eyelids (Eric Fisher, SportsBusiness Journal).