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Umbro is targeting growth in new markets as it bids to overcome "challenging" trading conditions in its home market, it emerged today.

The Cheadle company, the name behind England's iconic "Three Lions" football kit, said it hoped the national side reach the finals of next year's European Championships in Austria and Switerland, or next year's profits may be hit.

Chief executive Peter McGuigan said Umbro was focused on growing its business in Russia, the Middle East, Africa and India and was hoping to have a joint venture signed in one of these new markets in the "next couple of months".

China and the US are already important and growing markets for the company, which posed a 15 per cent hike in profits during 2006 to £26.6m, on the back of high demand for the England replica shirt before and during the World Cup last summer.

Sales in China increased 48 per cent to £30.4m as Umbro has upped its stake in its Chinese licensee, Team and Sports, from 25 per cent to 40 per cent.

Total retail sales were up 16 per cent at £409.4m. Umbro said 2006 was highly competitive in the UK, with pressure on margins throughout most of the year.

Alongside China, Umbro said it also saw strong market potential in Eastern Europe, led by booming demand in Russia, which saw growth rocket 40 per cent last year.

Mr McGuigan said he was looking for "good growth" from the US this year after the company signed a 15-year distribution agreement with Dick's Sporting Goods, one of the country's largest sports retailers.

Everton

As well as England, Umbro provides kit to Premiership clubs Everton, Wigan Athletic and West Ham United, and hopes to reach deals with six Premiership teams.

Shares rose 3.5per cent to 144.25p, valuing the company around £207m.

Profits are expected to be lower this year, at around £26.1m, because there are no major soccer tournaments.

The figure is expected to jump to over £30m in 2008 - but much of that depends on England qualifying.

"It's an important part of revenue and profit generation, and if they didn't qualify it would have the same effect as a non- tournament year," finance director Steve Makin said.

Umbro increased its dividend by 16.9 per cent to 3.74p, which Mr McGuigan, a former professional footballer, said "reflects our confidence in the prospects of the business."

On a domestic basis, he said a new deal with Sports Direct, the country's largest sportswear retailer, would showcase Umbro's product ranges, particularly footwear, more effectively.

By Chris Barry

 

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