New Nike Moves

Nike to Sell Cole Haan for $570 Million

Updated November 16, 2012, 1:09 p.m. ET

By JOHN KELL

        According to John Kell in his article "Nike to Sell Cole Hann for $570 Million, the readers of the Wall Street Journal learn about Nike's plan of action to sell off subsidiary business interests. The plan was iniated in May of 2012, with their most recent selling being the release of the company's leather bag and shoe brand Cole Hann.

       The company has agreed to sell Cole Hann, as well as, Umbro for hundreds of millions of dollars because of their decision to focus on key brands within the company's product mix. Some of those key brands are Jordan, Converse, and Hurley.

        "The company got a better return on investment with the sale of Cole Haan, a brand that generated $535 million in sales in the fiscal year ended May 31. Nike bought Cole Haan in 1988 for $80 million, plus the assumption of $15 million in debt. The sale price of Umbro, meanwhile, came at a discount to its $565 million acquisition price in 2008."

     Despite the popularity of these brands they represent such a small portion of Nike's total sales. In the most recent fiscal year of 2011, Nike generated 24.13 billion dollars of total sales. Umbro and Cole Hann only accounted for a 797 million dollars of that.

      Therefore, the moves being made are not as drastic as they first appear, in fact, they are smart if anything. Narrowing their portfolio gives them the ability to focus more time, money, and attention to their new products such as the Nike FuelBand, and it also allows them to work more in depth with their best marketing and designing brand in Jordan.

      Like most of the analysts, I think that selling off Cole Hann and Umbro will be beneficial for the company in the grand scheme of their goals. In my opinion, I do not see how Cole Hann fits in with the rest of their investments. I understand that they have a diverse collection of brands and products, but I think that too much diversity deflects their image. 

      With that being said, I think that Nike's image is the most important thing to the brand, hence, they should focus on athletic wear that follows their mission, brand, and logo. I like and strong agree with their moves. I am especially excited to learn more about their new products and how they develop the fitness and sporting industry. The ability to pioneer new technology that allows athletes to compete harder, train smarter, and get stronger will forever alter the exercise world.

Topics: Brand, Product Mix, Return on Investment

WSJ ARTICLE