With the completion of an initial public offering and the launch of a potential breakout item, Fila Body Toning System apparel, at Dick's Sporting Goods, Fila feels it’s back in growth mode in the U.S. Indeed, sales in the U.S. are expected to increase around 40% this year, thanks in part to an effort to remain in stock during the downturn, according to comments by Jon Epstein, president of Fila USA.
“When other competitors were pulling back inventories, we went the other way and brought millions of pairs of shoes at the best prices,” said Epstein in an interview with Sports Executive Weekly. “So when people were having a tough time delivering product from China after the Chinese New Year and the world of China changed from a sourcing standpoint, we were in stock. So we had quite a field day around back-to-school. The product sold though and now we're reaping the rewards of taking that risk with future orders up very significantly.”
But Epstein also said the brand in the U.S. is more slowly benefiting from a recommitment to quality through sizeable sourcing investments since being acquired by Fila Korea in 2007. The growth also reflects a refocus on core categories Fila is known for with consumers while licensing or exiting others. Fila's core product line now includes running, basketball, kids, and women's as well as the authentic, original Fila product, he explained.
On the distribution side, Epstein said that by the time the brand was acquired in 2007, Fila in the U.S. was known largely for only being sold at Foot Locker. Now, the distribution fairly parallels Nike and Adidas. “What we've found is Fila continues to have a very big mind share and that's helping us gain access to retailers but we're also trying to hold the brand to a very high standard,” said Epstein.
Also helping reestablish the name has been its successful collaboration with Kohl's that created the Fila Sport sub-brand as an exclusive for the department store. “That’s been wildly successful,” said Epstein. “It's become one the most important brands that that they have in the stores and it's helped us grow our footwear in a very tough economy.”
Toward that end, Fila Body Toning System (BTS) women's toning apparel was launched at Dick's Sporting Goods on Friday. Following in the footsteps of the toning footwear category, BTS apparel is designed to increase muscle exercise by as much as 50% versus traditional gear used for a workout. Becoming the first brand to utilize Invista's Lycra Sports fabric, the BTS collection also boasts 41% more support than traditional athletic leggings made from polyester or spandex.
The marketing program behind the launch sports taglines such as “Butt in Front” and integrates print, in-store support, social networking initiatives, online advertising, celebrity seeding and retail promotions.
Jennifer Estabrook, EVP business operations for Fila, told SEW the campaign particularly focused on seven “real women” – rather than models – who had tested the product for the last two months with their interviews and stories featured on a microsite. She said the buzz in the market has been “amazing.” The Facebook site for the product already counted 2,100 fans the day before the product was launched.
“We think the black athletic pant has become a staple for American women and the feedback on the product has been tremendous from our spokesmodels and everyone who has tried these pants,” said Estabrook. “People are asking for them.”
The launch will be limited to Dick's Sporting Goods, Fila.com and Paragon Sports in New York City but is expected to eventually reach other retailers.
“We wanted to make sure that we launched it in a narrow way,” said Epstein. “We potentially have a big opportunity but we wanted to make it really special for a few retailers with Dick's being the lead, and we hope it can leverage the brand presence in other categories.”
Epstein said reviving the footwear side will be the major focus in the U.S. “Obviously we really need to make an impact in footwear. It's a real important piece of this business and when you're relevant in footwear a lot of other things follow,” noted Epstein.
Some of the proceeds from the IPO of parent company Fila Korea Ltd. are being further invested into sourcing to further improve its footwear production capabilities. Investments after Fila Korea took the reins, including the establishment of its own design center and building a sourcing infrastructure, helped Fila get back into product this past back-to-school season. In China, Fila now has almost 100 people in its sourcing office.
“We now have the ability to build samples for customers within two weeks,” said Epstein. “This is what the market demands today, especially from a smaller company. We have to be very fast and very relevant.”
Proceeds will also go to further pay down debt from Fila Korea's $350 million buyout of Fila from Sports Brands International, a unit of Cerberus Partners LP, in 2007, as well as to invest in marketing, such as the Body Toning System launch. Through the sale of 3.25 million shares on South Korea's Kospi stock index, the offering raised 113.8 billion won ($99 million).
Epstein said Fila Korea has stated five areas of focus: expanding the U.S. business, maintaining its sizeable Korean business, expanding its footwear business worldwide with a focus on consistency, establishing the brand in emerging markets, and growth in China. Regarding China, Fila has a joint venture with Anta that will open 250 stores this year. The plan is to have 500 stores by 2011 with a goal of 900 by 2012. It has over 500 stores in Korea.
Fila Korea officials last year stated an ambitious goal of becoming the fourth largest sports fashion brand in five years by doubling sales worldwide to reach $3 billion over that time frame. Festivities worldwide are already being planned around Fila's 100th anniversary in 2011, but reviving the U.S. business remains a key priority.
“We plan on being a dominant force in this market,” said Epstein. “We think after a hundred years being on this planet that we have big mind share and a big opportunity.”