The Umbro Holdings IPO in London hit a bit of a snag this week after the company was forced to back off its initial expectations of a offer price in the £1.50 – £1.90 ($2.72-$3.45) range to a more realistic offering at £1.00 ($1.81). Investors and analysts were skeptical of the price that valued the company at £202 million ($366.6 mm), but appeared to welcome the new price pegging valuation at £144.5 million ($262.2 mm).

The IPO was originally expected to raise about £76.9 million ($139.6 mm), but that number was cut back to around £50 million ($90.7 mm).

Adding to the mix of doubts is the fact that Umbro posted flat revenues in 2003 at £123 million ($223.2 mm). Analysts also pointed to increased competition from Nike and Reebok in the Soccer arena as an issue.

Nike appears to be the main reason for investor’s hesitation. In a published report, one fund manager said Nike was much more diversified, while Umbro is over-reliant on getting premium prices out of soccer apparel and footwear. The manager said that if Nike decided to get more aggressive, Umbro would be “history.”

While investors cite competition as the reason behind the lower than expected share price, Doughty Hanson says it is due to tough stock market conditions. Local papers are reporting a positive environment for new issues at the London Stock Exchange, but this environment is somewhat unstable due to high oil prices and the on-going war effort.

The London market responded favorably to the discounted price on the first day of trading on Friday as Umbro shares climbed 9.5% above its issue price to £1.095 ($1.99), still more than 42% below the original float price of £1.90.