Nike Disposes Cole Haan - Analyst Blog
February 04 2013 - 5:40AM
Zacks
Global athletic footwear retailer, Nike Inc.
(NKE) has successfully sealed the previously agreed upon deal to
sell its Cole Haan affiliate brand in Apax Partners. The company
will receive $570 million for the sale of its Cole Haan brand to
Apax Partners.
Apax Partners views Cole Haan as an iconic brand with a broad
consumer appeal and projects immense growth opportunities for it.
Apax has joined forces with Jack Boys in order to facilitate the
growth of the Cole Haan brand in the U.S. and internationally.
In an effort to cut costs and sharpen focus on its NIKE, Jordan,
Converse and Hurley brands, Nike, in May 2012, revealed its
intention of divesting two of its brands – Cole Haan and Umbro. The
company’s decision to sell these brands is guided by the fact that
the performances at Cole Haan and Umbro brands failed to match up
to that of its other brands. Additionally, Nike had been facing
numerous challenges such as rising labor and material costs along
with uncertainty in the European economies and decelerating future
orders in China due to poor performances by these brands.
On Oct 24, 2012, Nike signed an agreement with Iconix Brand
Group Inc. (ICON) to sell its Umbro brand for $225
million. The deal was completed by year-end 2012.
About Apax Partners
Apax Partners, a leading global private equity investment group,
has been in the business for more than 30 years, providing
long-term equity financing to build and strengthen world-class
companies. Funds under the advice of Apax Partners aggregate over
US$35 billion around the world. Funds advised by Apax Partners are
invested in companies across its global sectors of Tech &
Telecom, Retail & Consumer, Media, Healthcare and Financial
& Business Services.
Our Recommendation
We believe Nike’s decision to divest two of its underperforming
brands will boost its bottom line. Meanwhile, in an attempt to
expand its global reach and market share, Nike is capitalizing on
growth opportunities in emerging markets, especially China. The
company is focusing on other tools, such as a direct-to-consumer
business model, to expand geographically. We believe Nike’s
continued investment in China and focus on the direct-to-consumer
business will not only help expand market share, but will
facilitate the strengthening of its competitive position.
Nike currently has a Zacks Rank #2 (Buy). Other specialty retail
stocks that are performing well include Francesca's
Holdings Corporation (FRAN), which has a Zacks Rank #1
(Strong Buy), and Adidas AG (ADDYY), which has a
Zacks Rank #2 (Buy).
(ADDYY): ETF Research Reports
FRANCESCAS HLDG (FRAN): Free Stock Analysis Report
ICONIX BRAND GP (ICON): Free Stock Analysis Report
NIKE INC-B (NKE): Free Stock Analysis Report
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