A strategic reorganization of Fila and its worldwide subsidiaries was announced Friday by Jon Epstein, CEO of Sport Brands International Ltd (SBI), the new owners of Fila. The reorganization is designed to achieve global efficiencies for the company and return the Fila brand to profitability under its new management team.
Since the acquisition of Fila on June 10, 2003, the company has implemented an in-depth assessment across all of its global operations to identify the best ways to maximize the value of the brand, while developing a long-term brand strategy, building a world-class management team, and addressing key customer relationships in major markets around the world.
An important part of the business strategy for Fila, is to further leverage the sport authenticity and Italian heritage of the brand. Fila will target a younger consumer through the development of products which are truly sport inspired and with superior lifestyle appeal.
Fila is committed long term to re-launch the brand and sustain a durable and profitable growth; a relevant example of recent investment is the multi-year agreement with the Italian Winter Sports Federation (FISI).
Moving forward Fila will create regional centers of excellence around the world in product design, development, sourcing and marketing. The Regional operating headquarters will be based in Sparks (MD, USA), Milan (Italy) and Seoul (Korea).
The new strategy includes the rationalization of key markets coverage around the world, the improvement of the supply chain to reduce the lead time to market and the streamlining of corporate structures.
Amongst the major actions, Fila announced that Footwear and Apparel design as well as marketing offices currently based in Sparks, Md. and New York City, will be expanded to accommodate the shift in global responsibilities to those locations. Product sourcing responsibilities will shift to the company's Asian headquarters in Seoul, Korea and will also be managed from Fila's existing offices in Hong Kong.
In order to enhance the capability to meet local market needs, Fila has recently announced a strategic partnership with Proline, a subsidiary of Mint Apparel, in the United Kingdom. Proline has assumed sales and operations responsibilities for the Fila brand in the UK and will assist in product design, development and sourcing.
As part of the strategic reorganization, the company plans to close its footwear research and development facility based in Peabody, Massachusetts by September 30 of this year and will shift those responsibilities to the existing office in Montebelluna, Italy. Fila's US retail division, which currently operates 14 outlet stores in the U.S.A., will be closed by the end of the year. Finally, the company will shift its footwear sourcing center that is currently based in Taiwan to China.
On a global basis, to meet its business objectives, the company plans to reduce its current workforce by 550 employees out of a total workforce of 1900. 350 of these reductions will be in Europe of which 250 will be in Italy. The results of the consolidation should be completed by the end of 2003.
The company will continue to explore alternative course of actions to improve its presence in the different markets and businesses and will further investigate the disposition of non strategic assets.
In making the announcement about the company's restructuring plans, Jon Epstein, CEO of SBI said, “Our goal is to be closer and more responsive to market needs and quicker to meet our customers' requirements. By doing so we will be able to build a stable, profitable and sustainable business. We regret that we have had to make some difficult decisions. By making these decisions we will be able to compete and prosper on a long-term basis”.
“The strategic reorganization is another critical step in making Fila an efficient and flexible organization in a highly competitive market and in building a solid foundation for the company's future growth,” continued Epstein. “We are extremely confident in our highly qualified and experienced management team and their strategic plan for Fila. Considering SBI's sound financial condition and capitalization, as well as the pace of our recent progress, the Company is in a strong financial position which will only be enhanced by our restructuring plans.”
