Umbro
England
failure hits Umbro and Sports Direct
Sports kit manufacturer and retailer say their financials will suffer after England's European Championship disaster
Shares in Sports Direct today crashed through £1 after England's failure to qualify for the European Championship 2008 and Umbro, the replica football kit maker, warned the impact on sales would be "more pronounced" next year.
Sports Direct's shares are now worth just under a third of their 281p float price in February, after falling 13.3 per cent to 97.5p this morning.
Sports Direct has an agreement to buy 65 per cent of all England shirts that Umbro expects to sell in the UK in any given year, although Sports Direct's founder, Mike Ashley, told analysts just before its flotation that he would not be forced to stick by the deal.
The company said this morning: "As England have not qualified for the 2008 European Football Championships, the company can no longer be confident of achieving that level of financial performance and believes at this stage that pre-exceptional ebitda for the current financial year is likely to be below that achieved in the last year."
Umbro, which generates nearly 50 per cent of its total revenue from the sale of England replica kit, has already issued a profit warning this year, after poor summer sales of England "home" kit.
Trading has failed to improve and after last night's disastrous performance from the England team, Umbro will reduce the amount of "away" kit produced.
It said: "The effect on 2008 revenues, though still unclear, will be more pronounced due to a substantial reduction in our expected sales volumes for the new Away jersey."
Umbro is being acquired by Nike, the sports giant, which is offering 193.06p a share in cash for the UK company, valuing the business at £285 million.
The deal has been complicated by Mr Ashley building up a 29.9 per cent stake in Umbro, which is the limit an investor can buy into a company before being forced to make an offer.
JJB Sports, which saw its shares fall more than 8 per cent to 133.75p this morning, owns a 9 per cent stake in Umbro.
Tomorrow, shareholders will be sent the deal's scheme of arrangement document, which requires that investors with 75 per cent of Umbro's stock to vote through the deal.
Together, with 38.9 per cent of the stock, Sports Direct and JJB could block the takeover.
(Published by Times Online, November 22, 2007)
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