Umbro sacks US workforce to stave off financial crisis

UMBRO, the US-owned British sportswear group, is relocating its head office to Manchester and sacking virtually its entire workforce in America in order to stave off a financial crisis which has threatened the group's future.

The decision to slash costs is a concerted effort to return the group to a stable financial footing. The move is likely to mean Umbro will be able to retain the contract to supply the England football kit.

Umbro has decided to shut down its sales operation in the US, having already announced the closure of its manufacturing facilities over there, which will result in the total loss of more than 500 jobs. It is close to securing a licensing partner in the US which will market all its products.

Umbro is also close to announcing a buyer for its sportswear factories in Merseyside and Stoke-on-Trent which will save more than 100 jobs in the UK. The manufacturing facilities were another casualty of Umbro's financial woes.

The Football Association had originally awarded Umbro a new pounds 50m contract to supply the England team's kit for the next four years, to run after its current contract comes up for renewal in July 1999. Growing concerns about the group's financial stability put that decision in doubt. Industry sources believe the deal is all but done.

Umbro, which is owned by Stone Manufacturing, a family-run American sportswear business, will now be run operationally from the UK, although it will retain a board in the US. The group paid the penalty for expanding too fast which knocked a hole its cash-flow. The American division made a sizeable loss last year, although its UK business remains profitable.

Umbro has secured the support of its bankers during its difficult trading period and denied rumours that it had been forced to pursue bankruptcy proceedings in the US

Manchester United, which also uses Umbro's kit, said yesterday that it was keen to retain the group's services. Martin Edwards, the club's chief executive said: "We are happy with Umbro. We have a contract with them for the next four years and do not see any problem with that."

Umbro is now looking to take advantage of the rapid growth in the European sports market. It also pledged pounds 500,000 yesterday to help England bid to host the World Cup in 2006. It has thrown its weight behind a multi- million campaign that is also being endorsed by British Airways, Littlewoods, Marks & Spencer and Nationwide.

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