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Tiffany Montgomery
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Hurley revenues grow double digits in Q2

By Tiffany Montgomery
December 20, 2007 8:00 AM

Nike executives hosted a conference call Wednesday to discuss second quarter earnings. A few interesting nuggets emerged about Nike-owned Hurley International.
Revenues

Nike breaks out Converse, Nike Golf, Cole Haan, Hurley, Exeter Brands Group and Nike Bauer Hockey into a group it calls "other businesses."


Converse was the star of this group in the second quarter with revenue growth of over 40 percent while pre-tax income grew by a third.


Nike executives said revenues from Hurley grew double digits as did revenues from Nike Golf, Cole Haan and Nike Bauer Hockey.


Pre-tax income for the group rose 31 percent driven by revenue growth, expanding gross margins and SG & A leverage.


Portfolio review

Nike reviewed its "other businesses" portfolio earlier this year as it moved to focus on the businesses with the most potential. Hurley survived that review, while the Starter brand and Nike Bauer Hockey did not.


Here's what Nike CEO Mark Parker said when asked if any more divestitures were planned. This is from the Seeking Alpha transcript of the call.


"I would say right now specifically to your question that we don't see any other specific divestitures on the horizon with current Nike Inc. portfolio. We feel good about the performance of the other brands in the portfolio as evidenced by the Q2 performances led by Converse and as I said Cole Haan. But we also feel good about Hurley, Nike Golf, and then certainly the Jordan brand and then of course the Nike brand, all performing well, but this is really all driven by our fixation and trying to optimize the overall performances of the portfolio.


"I will say: to date, this year we are going to intensify our focus on being a better Nike Inc. and that is looking at better leveraging opportunities, investments and competencies across the portfolio. So it's not just about divesting and acquiring, it's about actually leveraging better what we have. And we have significant assets and competencies to leverage better, I think, over the overall portfolio. So, you'll see a lot more of that in the coming years for us."


Additional acquisitions

Parker said "there is opportunity I think beyond what exists today for Nike Inc. from the acquisition standpoint. I am not going to speculate today as what those are specifically. But we do see acquisition opportunities going forward. I don't think you are going to see anything in the near future in terms of other acquisitions though."


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