Fila Holdings’ constant-currency operating profit declined by 20.6 percent to KRW 92,563 million (€65.2m) for the period ended Sep. 30. Q3 net income slipped by 35.7 percent to KRW 57,743 million (€40.7m) with a KRW 98,906 million (€69.6m) profit at Acushnet, offsetting a quarterly net loss of KRW 6,343 million (€4.5m) at Fila.
Revenues fell by 5.7 percent to KRW 990,192 million (€697.1m) from KRW 1,079,544 million with a 6.4 percent increase at Acushnet to KRW 778,946 million (€548.4m) helping to offset a 34 percent decline at Fila to KRW 211,247 million (€148.7m) where the company continued to battle challenging market conditions in the US due to excessive inventories and an ongoing sales channel adjustment in Korea.
Promotional environment, tight orders from retailers affect Fila USA
Fila USA reported an operating loss of KRW 23,445 million (€16.5m) as total revenues slipped by 45.3 percent year-over-year to KRW 65,215 million (€45.9m). Besides a persistent promotional environment in the market, the group had to cope with conservative orders from retailers in the period. The net loss was KRW 26,934 million (€19.0m), but year-over-year inventories fell by 34 percent.
Higher average selling prices despite difficult results at Fila Korea
Fila Korea realized a 61.1 percent decline in Q3 operating income to KRW 7,869 million (€5.5m) on a 35 percent drop in year-over-year revenues to KRW 77,073 million (€54.3m). Excluding the design services unit (DSF), the operating loss was KRW 6,292 million (€4.4m). But gross margin improved by 630 basis points to 60.0 percent from 53.8 percent due to price increases and product mix improvements. The group continues to make channel adjustments focused on online wholesale. DSF sales fell 8.1 percent to KRW 14,161 million (€10.0m).
Lower global royalty sales everywhere but Asia
Total global royalty revenues fell by 12.1 percent year-over-year to KRW 18,529 million (€13.0m), with all regions, except Asia, posting double-digit declines. In the EMEA, inflationary pressures, consumer sentiment and excessive inventory contributed to a 21 percent sales drop to KRW 8,216 million (€5.8m). Elsewhere, North America sales fell 28 percent to KRW 1,272 million, and South America sales sunk 33.5 percent to KRW 2,183 million (€1.54m) due to factors that included severe inflation and currency depreciation. Royalty revenues in Asia increased by 25.5 percent to KRW 6,199 million (€4.4m) on store expansion and a rebound in key countries, including Thailand.
FY23 outlook remains unchanged
Annual consolidated revenues are projected to fall between 5 and 10 percent, with corresponding operating profit expected to sink by 30 to 40 percent. Fila USA’s annual revenues are expected to decline by 40 to 50 percent year-over-year and produce an annual operating loss of KRW 160 to 180 billion. The group’s FY26 targets include sales of KRW 4.4 trillion or more and a consolidated operating margin in the 15 to 16 percent range.
