Umbro has cut the number of new England replica away shirts that it planned to make over the next year by two thirds to one million – the lowest production run since 2001.
The company, which holds a nine-year deal to supply kit to the England football team, said that it had taken the "brave" decision to help high street retailers coping with the fallout from England’s defeat to Croatia on Wednesday.
Steve Makin, Umbro’s chief executive, told The Times yesterday that the plan was being finalised with Sports Direct, run by Mike Ashley, the billionaire owner of Newcastle United Football Club and the Sports World chain.
Sports Direct is committed to buying two thirds of all England tops from Umbro. Its shares plunged 15 per cent on Thursday after a profit warning in the wake of England’s defeat at Wembley.
More than two million replica home jerseys are expected to be left on the shelves this year after the national team’s dismal run of form under Steve McClaren, the head coach who was dismissed on Thursday after only 18 months in the job. The new 2008 away kit goes on sale on February 9.
Mr Makin said: "We clearly want to make sure Sports Direct take the volumes of England shirts they are committed to, but we have to be pragmatic at the same time.
"We have to support them and other retailers and the biggest thing we can do is to reduce the number of away jerseys we put into the market for next year, to ensure the stock left over this year sells through. It’s a tough decision but, we think, a brave one."
Mr Makin said that Umbro would look to accelerate its overseas expansion into countries such as China after England’s failure to qualify for the Euro 2008 championship in Austria and Switzerland.
Umbro expects to generate 80 per cent of its turnover from international markets by 2010, up from the present 60 per cent, and is targeting new ventures in Italy and Brazil. It is also preparing a £4 million advertising campaign, headlined "Bring It On", which begins on January 1 and will be supported by the leading England players John Terry and Michael Owen. The vast majority of the marketing spend will go on digital media rather than television and newspapers.
Mr Makin’s comments came as Nike, the American sportswear giant, took a step closer to completing a £285 million takeover by posting its offer document to the British company’s shareholders. He said that he fully expected the deal to go through, despite speculation that Mr Ashley and JJB Sports, his rival high street retailer, could oppose the acquisition. Under the terms of the deal, Nike requires approval from investors holding 75 per cent of Umbro’s shares.
Sports Direct, home to the Sports World and Lillywhites chains, has taken a 29 per cent stake in Umbro, while JJB owns a 9 per cent share. Analysts believe that the two retailers have taken stakes to protect their negotiating positions with Nike and Umbro, two of their biggest suppliers.
Mr Makin said: "You would have to ask Mike [Ashley] about his intentions, but the level of investment that Nike plans to put into the brand has got to be good for everyone.
"The product development they can bring to bear and the investment means the product will be more fashionable and technically advanced. That will benefit all stakeholders."
Nike has already committed to keeping the Umbro "Double Diamond" logo on England shirts until at least the end of the current contract in 2014 if it succeeds in buying the business.
Mr Makin, who will stay at Umbro under the Nike takeover, said: "We are in this for the long-term. We have a great relationship with the FA. We are going to have a tough year but we will move on."
Despite the "disappointment" over England’s defeat, nothing about Umbro’s core strategy would change. Since becoming chief executive Mr Makin has sought to reduce the company’s reliance on the UK and expand overseas. He said that Umbro would look to more than double the number of stores it has in China to 3,000 over the next three years. By 2011, he expects China to surpass Britain as the company’s biggest market. The proportion of Umbro profits derived from overseas markets is expected to double to 60 per cent of the total by 2010.
Mr Makin said: "We have a very rich heritage globally. Pelé’s Brazil team that won the World Cup in 1970 wore Umbro. What happened with the England team was disappointing, but it doesn’t change our strategy at all. It just accelerates it."