Korea-based Fila Holdings Corp. reported sales fell 8.3 percent in the third quarter as a 35.1 percent decline at the Fila brand business offset a gain of 3.3 percent at Acushnet (Titleist, Footjoy). Fila brand’s sales tumbled in the U.S. due to the impact of elevated inventories.
Overall sales reached ₩990,192 million (U.S.$761 mm) against ₩1,079,544 million a year ago, representing a decline of 8.3 percent on a reported basis and 5.7 percent on a currency-neutral basis.
Sales at the Fila brand business were ₩211,247 million against ₩325,708 million, a decrease of 35.1 percent on a reported basis and 33.9 percent on a currency-neutral basis. The company said Fila brand’s decline was due to “ongoing sales channel adjustment in Korea to align with the ‘5-year strategic plan’ and challenging market conditions in the U.S. due to excessive inventories.”
Acushnet’s sales reached ₩778,946 million in the quarter versus ₩753,836 million a year ago, up 3.3. percent on a reported basis and 6.4 percent on a currency-neutral basis. Fila Holding is the majority shareholder in Acushnet Holdings, a publicly-held company trading on the New York Stock Exchange.
Fila Holdings said Acushnet’s gains were “led by strong performance of Titleist golf balls and clubs with newly-launched products such as ProV1 and T-series.”
Operating profits for Fila Holdings were down 24.0 percent (20.6 percent currency-neutral) to ₩92,563 million from ₩121,803 million a year ago. The operating margin eroded 200 basis points to 9.3 percent from 11.3 percent.
The Fila brand segment showed an operating loss of ₩6,343 million against a loss of ₩6,802 million a year ago. Fila brand’s earnings were “impacted by the process of liquidating inventories in the U.S. and channel adjustment in Korea, which were in line with expectations.”
Acushnet’s operating earnings were down 0.2 percent (up 4.5 percent on a currency-neutral basis) to ₩98,906 million from ₩103,506 million. Fila Holdings noted that Acushnet’s increase on a constant-currencies basis benefited from improved gross profit due to the increase in revenues.
Net income in the quarter was down 4.3 percent to ₩57,743 million from ₩60,323 million a year ago.
Fila maintained its outlook for the year after reducing sales and earnings guidance earlier in the year.
Fila USA’s revenues are expected to decline in the year in the range of negative 50 percent to negative 40 percent. The Fila USA business is expected to show an operating loss of ₩180 billion to ₩160 billion.
Fila Korea, excluding a Design Services Fee (DSF), is expected to show a sales decline for the year in the range of negative 30 percent to negative 20 percent. Operating profits at Fila Korea, (excluding DSF), are expected to show a loss between ₩20 billion and ₩15 billion.
Acushnet’s sales for the year are expected the climb 4.6 percent at the midpoint with adjusted EBITDA projected to reach 9.3 percent at the midpoint.
Photo courtesy Fila