Global athletic footwear retailer, Nike Inc. ( NKE - Analyst Report ) has successfully sealed the previously agreed upon deal to sell its Cole Haan affiliate brand in Apax Partners. The company will receive $570 million for the sale of its Cole Haan brand to Apax Partners.

Apax Partners views Cole Haan as an iconic brand with a broad consumer appeal and projects immense growth opportunities for it. Apax has joined forces with Jack Boys in order to facilitate the growth of the Cole Haan brand in the U.S. and internationally.

In an effort to cut costs and sharpen focus on its NIKE, Jordan, Converse and Hurley brands, Nike, in May 2012, revealed its intention of divesting two of its brands – Cole Haan and Umbro. The company’s decision to sell these brands is guided by the fact that the performances at Cole Haan and Umbro brands failed to match up to that of its other brands. Additionally, Nike had been facing numerous challenges such as rising labor and material costs along with uncertainty in the European economies and decelerating future orders in China due to poor performances by these brands.

On Oct 24, 2012, Nike signed an agreement with Iconix Brand Group Inc. ( ICON - Analyst Report ) to sell its Umbro brand for $225 million. The deal was completed by year-end 2012.

About Apax Partners

Apax Partners, a leading global private equity investment group, has been in the business for more than 30 years, providing long-term equity financing to build and strengthen world-class companies. Funds under the advice of Apax Partners aggregate over US$35 billion around the world. Funds advised by Apax Partners are invested in companies across its global sectors of Tech & Telecom, Retail & Consumer, Media, Healthcare and Financial & Business Services.

Our Recommendation

We believe Nike’s decision to divest two of its underperforming brands will boost its bottom line. Meanwhile, in an attempt to expand its global reach and market share, Nike is capitalizing on growth opportunities in emerging markets, especially China. The company is focusing on other tools, such as a direct-to-consumer business model, to expand geographically. We believe Nike’s continued investment in China and focus on the direct-to-consumer business will not only help expand market share, but will facilitate the strengthening of its competitive position.

Nike currently has a Zacks Rank #2 (Buy). Other specialty retail stocks that are performing well include Francesca's Holdings Corporation ( FRAN - Snapshot Report ) , which has a Zacks Rank #1 (Strong Buy), and Adidas AG ( ADDYY ) , which has a Zacks Rank #2 (Buy).