England replica shirt maker Umbro was today in negotiations with its biggest customer over around 1.3 million unsold England shirts.
The sportswear firm said part-owner and largest supplier Sports Direct was unlikely to take the garments as part of a large supply contract for this year.
Sales of England shirts have slumped following the team's failure to reach next summer's Euro 2008 football championships. The shirts in question are currently at Umbro distribution facilities.
Umbro said today it was "highly unlikely" that Sports World owner Sports Direct would take the tops by its year end of December 31. The kitwear manufacturer warned the dispute will seriously impact 2007 sales, and that they were reviewing "all options available" to try and resolve the dispute.
Sports Direct owns a near-30% stake in Umbro, and takes the bulk of the replica England shirts produced. Rival sports retailer JJB Sports is also understood to have an outstanding order for England shirts from Umbro.
In a statement, Umbro said: "Umbro is reviewing all options available to it with regards to such contractual arrangements with its key customers.
"In relation to Sports Direct, Umbro continues to work closely with Sports Direct to find a mutually acceptable way forward regarding these matters. Umbro has already agreed certain changes to these commercial arrangements, involving increased support of the retail sell through of Umbro product. However, no final resolution has yet been achieved and these discussions are continuing."
Umbro posted a fall in pre-tax profits to £10.1 million during the six months to July 1, down from £17.7 million last year.