Umbro Hit By Poor Shirt Sales - 08/09/2007

Sportswear brand Umbro has cut sharply its 2008 profit target on fears that retailers such as Mike Ashley's Sports Direct will order fewer England football shirts. Sports Direct has a commitment to buy 65 per cent of all the replica England shirts that Umbro expects to sell every year, although analysts think that Mr Ashley could attempt to alter the terms of the deal as the team's poor performance has led to flagging sales. Umbro chief executive Steve Makin said that he expected Ashley to honour his agreement. But he admitted that future sales would be hurt as retailers order smaller numbers of next year's replica shirts to shift a backlog of stock. Turnover for the six months to 1 July has already fallen from £108.7m to £55.8m, although a decline was expected following last year's World Cup as Umbro's sales depend heavily on whether an international football tournament is taking place. The company also warned that the fillip from next year's Euro 2008 competition would be below expectations. Jonathan Pritchard, an analyst at Oriel Securities commented, 'Already Umbro is warning that it does not think that replica kit sales will match its initial targets for 2008 and this is before England have even qualified. If the unthinkable happens and England fail to get through then both Umbro and Sport Direct's share prices will go into freefall.'