Overall results at the Korean group were impacted by an 18 million Korean won (€12.1m) restructuring charge in US business largely related to severance costs. Operating profit was KRW93,371 million (€62.7m) against KRW92,563 million for the three months ended Sep. 30. Ebit declined by 11.0 percent to KRW77,981 million (€52.3m), and net income was down 7.6 percent to KRW53,360 million (€35.8m). Gross margin improved by 450 basis points to 54.0 percent from 49.5 percent, and total sales were up 6.0 percent year-over-year at KRW1,049,458 million (€704.5m) versus KRW990,192 million.
With the results, the company largely maintained the FY24 outlook it disclosed in mid-August. Consolidated annual revenues are expected to range between up 5 percent and down 5 percent, and the adjusted consolidated operating profit range is still forecast at up 30 to 40 percent. However, Fila USA’s annual operating loss is now pegged at KRW50-70 billion versus KRW50-60 billion previously.
Q3 segment results
Domestic sales at Fila Korea rose for the first time in two years, fueled by demand for the Echappe Choco footwear style. Revenues grew 5.1 percent to KRW81,023 million (€54.4m) from KRW77,073 million. Design service fee income rose 6 percent to KRW15,046 million (€10.1m). Operating profit was 33 percent higher at KRW10,432 million (€7.0m), and gross margin improved by 120 basis points to 61.2 percent.
At Fila USA, the unit reported a quarterly operating loss of KRW25,471 million (€17.1m) due to the restructuring expenses and the strong US dollar. The adjusted operating loss was KRW7,480 million (€5.0m) versus a year-ago operating loss of KRW23,445 million. A competitive market environment and promotional activities in the sports fashion market contributed to a 19 percent decline in quarterly sales to KRW52,983 million (€35.6m).
Meanwhile, Fila’s global royalty business suffered an 8.5 percent constant-currency sales decline in Q3 to KRW17,569 million (€11.8m). Royalty revenues expanded by 8.6 percent in the EMEA to KRW8,924 million (€5.99m) and by 3.9 percent in South America to KRW2,268 million (€1.52m), but they fell by 23 percent in Asia to KRW4,753 million (€3.2m) and declined by 26 percent in North America to KRW941,000.
