Fila USA saw revenues jump 29.2 percent in 2014, to $279.2 million from $216.2 million in 2013, according to financial documents from its parent Fila Korea.
The region's operating margin eroded to 6.2 percent from 7.4 percent in 2013, but overall operating profits improved 6.9 percent to $17.1 million from $16 million.
In 2012, Fila USA's operating margin was 5.6 percent on sales of $158.8 million.
In the fourth quarter, Fila USA's sales climbed 27.9 percent to $66.4 million from $51.9 million in 2013. With its operating margin sliding to 1.1 percent from 2.9 percent in 2013, operating profits eased to $730,000 from $1.5 million.
Fila Korea's statement noted, “Fila USA has shown improvement in both sales and profit since its return to profitability in 2010. Despite the competitive market in the U.S. and the limited marketing investment, Fila USA continued
to grow both the revenue and operating profit.”
In an telephone interview with Sports Executive Weekly from China, Jon Epstein, president of Fila U.S.A., said the brand continues to reap the benefits of a turnaround plan enacted soon after Fila Korea acquired the Fila trademark and global assets in 2007. Similar gains were seen in 2012 and 2013 in the U.S. market.
The plan has included a focus on complementing the major brands such as Nike and Adidas with a strong price-value alternative. While often priced lower, much of Fila’s product touts performance technologies such as Invista’s Coolmax fabric, reflective materials, memory foam footbeds and engineered mesh uppers while still packing a healthy margin for retailers. Energized Rubber, a proprietary midsole cushioning technology launched last back-to-school, also saw a strong response in the marketplace in 2014.
Innovation is also being helped by its close partnerships with factories in China, including its own sourcing center there; as well as the brand’s own innovation lab in South Korea. Its investment in sourcing and production is also supporting greater segmentation, customization and flexibility for retail partners.
The growth in the U.S. has come as Fila has expanded into new categories and last year was led by men’s and women’s running in footwear, as well as training and running in apparel. In particularly, kid’s has become a “significant business” for the brand in the U.S. with much the line also increasingly embracing known performance technologies.
Epstein said the women’s business is doing particularly well and categories such as running, training and fitness overall are clearly benefiting from the trend in the U.S. toward healthy lifestyles. Kohl’s, which has an exclusive on the Fila Sport label, is particularly addressing the trend.
Epstein said the margin declines reflect investments in tooling, marketing and other areas to support growth.
“We want to expand the footprint and see if we can get the wheel spinning faster,” said Epstein. “So I’m less concerned about the small margin hit than I’m excited about the fact that that we grew 29.2 percent last year. If you keep expanding the footprint, you’re getting more shelf space and getting the consumer’s attention. It’s always better to have 10 shoes from Fila on the wall than one shoe from Fila. We want to broaden our assortments.”
Epstein also said Fila hasn’t raised prices because it wants to retain its compelling value story in the marketplace and also provide retailers with ample customization and flexibility.
Looking ahead, Fila is launching campaigns this year with major partners such as Kohl’s, Macy’s and JC Penney but also continues to support many regional players. Its Heritage, or vintage basketball business, for instance, is partnering with stars of the Afropunk movement on marketing campaigns along with several stores along the east coast. Overall, Epstein said the brand for 2016 would have 1,000 SKUs across its footwear lineup to provide a host of options for stores.
“We’re pretty excited for 2016,” said Epstein. “It’s going to be the strongest line we’ve ever had and should continue to support pretty strong growth.”
Companywide, Fila Korea's revenues on a consolidated basis improved in 2014 to 797.5 billion Korean Won ($722.2 mm) from 736.1 billion Korean won. Net income reached 93.5 billion Korean Won ($86 mm), slightly from 96.2 billion Korean Won.
