Fila Holdings group revenues inched 1.8 percent higher in constant currency to 1,073,563 million Korean won (€751.5m) and were 8.6 percent higher on a reported basis for the first quarter ended March 31. The revenue improvement was attributed to growth in Acushnet sales of 4.3 percent (12.9 percent on a reported basis) to KRW 730,305 million (€511.2m), especially in the EMEA region. Fila brand revenues slipped 3.1 percent to KRW 343,258 million (€240.3m) as the brand’s operating profit fell 14.8 percent to KRW 46,150 million (€32.3m). The group operating profit margin declined 2.9 percentage points to 15.7 percent, and the gross profit margin was 1.1 percent lower on a constant currency basis to 49.4 percent.
Total revenues generated by licenses rose 5.2 percent to KRW 17,360 million (€12.2m), with the EMEA royalties up 2.3 percent to KRW 8,240 million (€5.8m) and on an easy comparison due to year-ago delayed royalty income, South America rose 193 percent to KRW 1,897 million (€1.33m). The expiration of a royalty partnership with retailer Kohl’s sent the period’s North American royalties down 28.4 percent to KRW 1,352 million (€946,400), and Asia’s 5.3 percent royalty revenue decline to KRW 4,872 million (€3.4m) was a slower pandemic recovery in Japan and a relapse of Covid-19 in Southeast Asia markets.
Fila posted a 20.1 percent increase to KRW 15,878 million (€11.1m) from KRW 13,216 million from the three percent design fees it reaps from its joint venture with Anta Sports Products for the Fila brand in mainland China.
At Fila USA, revenues at the company’s North American subsidiary slipped 15.1 percent on a constant currency basis to KRW 135,347 million (€94.7m) due to a sales channel adjustment under a five-year equity improvement strategy that will aim to grow the brand’s annual sales by 31 percent in dollars, from $497 million in the financial year 2021. to $650 million or more by 2026. During that period, the brand will aim to grow its online/direct-to-consumer business to more than 20 percent of the total while reducing the sales contribution from wholesale to about 80 percent versus 95 percent last year. It also wants to improve its operating profit margin in the region to 11 to 12 percent versus only 3 percent in 2021.
In South Korea, where the group operates on a direct mode, Fila-only revenues declined 2.5 percent to KRW 132,789 million (€92.95m) under a similar sale channel adjustment strategy to that in the U.S. The operating profit slipped 1.4 percent to KRW 25,564 million (€17.9m) from KRW 25,929 million. The gross margin rate fell 1.7 percentage points to 60.2 percent on higher raw material costs and an unfavorable sales channel mix.
Fila Holdings has maintained its FY22 outlook, as first detailed in March, which calls for consolidated revenues and consolidated operating profit both in the -2 to +2 percentage range. Fila Korea, excluding the design business (DSF), has the worst outlook. It calls for a -35 to -40 percent decline in consolidated operating income and a -3 to -8 percent dip in consolidated revenues.
