The pandemic took its toll on the Fila Group, which saw its net income decline by 51 percent to 45,520 million Korean won (€33.3-$37.3m) during the second quarter of 2020, as revenues declined by 34.8 percent to KRW 625,011 million (€457.1-$512.1m), but the Korean-based group managed to improve the gross margin by 0.1 percentage point to 52.3 percent. Excluding revenues from the recently acquired Acushnet, sales would have been down by 38.9 percent to KRW 257,361 million (€188.2-$219.4m).
Fila Korea has been the owner of the Italian heritage sports brand since 2007, and it has been licensing it out in several regions. During the quarter, Fila added two more licensees, bringing the total to 49, but licensing revenues were down 44 percent in the quarter to $9.9 million due to lower wholesale revenues. Typically, Fila Korea charges a licensing fee of between 6 and 7 percent on the licensees’ wholesale revenues.
In EMEA, where the group has one master licensee and 11 regional licensees, revenues from royalties declined by 44.7 percent to $5.2 million.
The revenues of the company’s North American subsidiary, Fila USA, fell by 60 percent to KRW 56,453 million (€41.3m-$48.1m), leading to a net loss of KRW $4,403 million (€3.2m-$3.8m), against net profit of KRW 9,564 million for the same quarter a year ago, due to a $2.4 million write-off from the bankruptcy of U.S. retailer, Gordmans.
In South Korea, Fila fared better due to the lower impact of the pandemic. Sales went down by 12 percent to KRW 142,108 million (€104.0m- $121.1m), while net earnings dipped by 5 percent to KRW 20,274 million (€14.8m-$17.3m). Fila operated 515 stores in the country at the end of the quarter, down from 529 at the end of last year.
On the other hand, the group managed to book a 16 percent increase to KRW 9,529 million (€7.0m-$8.1m) in the 3 percent design fees attached to its joint venture with Anta Sports Products in China. Anta has aleady reported a 9 percent sales increase for the Fila brand in China during the period.