An ongoing recalibration of its sales channels in Korea and further inventory adjustments in the US were the key contributors to Fila Holdings’ operating loss of KRW 41,392 million (€28.4m) for the period ended Dec. 31. The Q4 net loss was KRW 60,139 million (€41.3m) against a profit of KRW 136,164 million as total revenues slipped by 15 percent year-over-year to KRW 760,830 million (€522.8m). The quarterly gross margin improved by 490 basis points to 51.1 percent from 46.2 percent.
Fila USA inventory liquidation plan proceeds
The group reported a smaller, year-over-year quarterly loss in the US as inventory units fell 54 percent. Promotional activities throughout 2023, combined with conservative ordering from retailers, continued to impact brand results.
The final period operating loss was KRW 13,473 million (€9.3m), better than a KRW 37,284 million loss in Q4/22. Revenues slid by 39 percent to KRW 54,144 million (€37.2m) from KRW 88,195 million. The net loss was KRW 15,417 million (€10.6m) against a loss of KRW 58,317 million. Gross margin increased to 33.6 percent from 7.8 percent in the year-ago period, helped by lower freight costs. For the FY, Fila USA reported an operating loss of KRW 141,975 million (€97.6m) on a 38.0 percent drop in revenues to KRW 287,657 million (€197.7m) from KRW 463,743 million. The annual net loss was KRW 151,642 million (€104.2m) versus a net loss of KRW 80,175 million.
Higher investments, lower sales impact results at Fila Korea
Fila Korea suffered a 53 percent decline in Q4 operating income to KRW 6,912 million (€4.7m) as the unit raised its investments in advertising and promotions, including the signing of a new brand ambassador, Han So-Hee. The net loss was KRW 5,997 million (€4.1m) as gross margin increased by 100 basis points to 54.9 percent. Total revenues fell by 17 percent year-over-year to KRW 98,955 million (€68.0m) despite a 20 percent increase in design service fee (DSF) income to KRW 23,750 million (€16.3m). For the FY, operating profit tumbled by 46 percent to KRW 46,428 million (€31.8m) on a 26 percent drop in revenues to KRW 367,562 million (€252.6m).
FY26 operational targets
The group wants its Fila Korea revenues to grow to more than KRW 700 billion, resulting in a 13-14 percent operating profit margin and 62-64 percent gross margin with approximately 60 percent of sales generated by DTC. At Fila USA, the outlook calls for $650 million in annual revenues by 2026, with more than 80 percent of the total generated by wholesale. The US business also wants to achieve an 11-12 percent operating profit margin and 39-40 percent gross margin before FY26 as part of the group’s five-year “Winning Together” strategic plan announced in 2022.
