The worldwide rights to Fila Sports’ brand name and its global operations will become the property of Gene Yoon, who ran for many years the highly successful Fila Korea subsidiary and then bought it in 2005 from Sport Brands International.
The price of the transaction has not been disclosed but reports indicate that Yoon is paying about $400 million for the business. This compares with $351 million paid in 2003 by SBI, an affiliate of the US investment house Cerberus Capital Management, to buy Fila from HdP, an Italian conglomerate which has since been dismantled to focus on media activities.
Yoon, who has had a strong relationship with Samsung, reportedly topped bids made by Iconix, the American brand licensing group that recently took over the Ocean Pacific brand from Warnaco, and by Itochu, Japanese licensee of Fila. An unidentified Chinese manufacturer was apparently also in the running.
Under the latest deal, Fila Korea will buy Fila Luxembourg, which holds the global rights to the brand and its trademarks. SBI will retain two other sport brands that it had recently acquired, Cloudveil Mountain Works and Motionwear, based in the USA. Earlier, Fila had sold Ciesse Piumini, an Italian brand that it had owned for a long time.
Fila was last reported to have eliminated many of its former losses, recording a positive income of $20 million before amortization and depreciation (EBITDA) in 2005 on consolidated revenues of about $450 million. That includes royalties on licenses which, combined with direct sales, push the global wholesale turnover under the brand to more than $900 million.
Fila Korea makes annual sales of about $200 million, while Itochu’s Fila license in Japan yields annual sales of around $150 million. The brand has remained fairly strong in Asia in recent years and has developed some momentum in Europe under the management of Stefano di Martino, whose responsibilities were recently extended to include marketing and product management on a global basis.
Following a major clean-up of the European distribution and logistics; Fila EMEA was expecting to close 2006 with sales of $153 million, up from an original target of $146 million, while EBITDA was forecast at $6 million, due to increase to $10 million in 2007.
Yoon has hinted that he will keep the group’s “talented” management. Fila’s U.S. business will likely remain the biggest challenge for the new owner. SBI has pared back volume in the market and tried to tighten the distribution to bring the brand back to its original premium position, but it has not been an easy task.
It is not clear at this point who will be managing the Fila brand in the USA, but it seems unlikely that its head office will return to Italy. The U.S.-based chief executive of SBI, Steve Wynn will be staying with the Cloudveil and Motionwear brands. Cloudveil has a strong following in the upper tier of the outdoor market. Motionwear is now in the dance/yoga market and could be expanded to encompass a more broadly based fitness business. It has developed a domestic supply chain that specializes in short runs and fast fashion turns.
Yoon, who bought Fila Korea in 2005, has been associated with the Fila brand for many years, building an interesting business model under which he sells to a large network of franchised entrepreneurs who carry only the Fila label in South Korea. Most have only a single store. He was part of the original management group that was backed by SBI to acquire the brand. Under that plan, Yoon was to handle Asia and to take responsibility for sourcing.
