Iconix acquired Umbro from Nike in 2012. The British brand of teamsports apparel and footwear was sold for 225 million U.S. dollars. With the divestment of Umbro, the Swoosh company took over sponsoring the English national soccer team, which had been outfitted by Umbro for many years. Nike’s contract runs until July 2018.
Now, SDI has bought a 11.5 percent stake in Iconix, and it is likely that the English group has a big interest in Umbro. Until 2007, when Nike acquired the brand, SDI held a 30 percent stake in the historical label. The Telegraph reports that SDI bought its minority share through various stock purchases in November and December.
Beside that SDI has bought a 2.3 percent stake in Dick's sporting goods – a company which is one of the biggest in the United States of America. Over the last few months, Iconix has been facing various challenges including chief executive Neil Cole stepping down and delayed financial reporting.
Indirect investment in Umbro fits neatly with SportsDirect’s wholesale trading. Over the years, the division has collected a wide range of brands big in the U.K., including Karrimor, Dunlop, Slazenger, Lonsdale and Gelert.
SDI gives in on salaries
Most recently, the retail business of Sports Direct attracted public attention. Local media in the U.K. criticized the company for unacceptable working conditions and poor payments to staff below the National Minimum Wage.
As far as salaries are concerned, the group has now promised improvements. In a press release, SDI said it would pay its directly employed people above the national minimum from Jan. 1. This will mean additional expenses of around 10 million pounds (13.3 million euros).
Bad weather squeezes profits
Meanwhile, SDI has lowered its guidance for the current financial year regarding expected profits. For financial 2015-16, ending in April, the management had expected earnings before interests, taxes and write-offs (Ebitda) of 420 million pounds. It has now lowered the target to somewhere between 380 and 420 million pounds (505-558 million euros).
This is mainly due to unfavorable weather conditions, notably in Britain where Christmas sales apparently suffered substantially from unseasonal weather conditions.