A year after Fila Korea, along with holding company, GLBH Holdings, bought the firm from a private equity group, the athletic company is overhauling its U.S. business. Over the last year, Fila has closed 18 underperforming company-owned retail stores, refocused its merchandise, inked parternships with leading independent boutiques and built three new product lines.
“This brand has been a lot of different things at a lot of different times,” Jon Epstein, president of Sparks, M.D.-based Fila USA, told Footwear News recently at the Fila New York offices. “What we did was try to identify the consumers who really like Fila, build products for those consumers, then plug those products into where they shop.”
Those destinations vary widely — from Nordstrom, which stocks Fila’s wellness and eco-friendly apparel, to independent retailers and mall-based athletic chains that sell sneakers and performance product. Then, there’s also Kohl’s, which carries the Fila Sport line developed exclusively for the store.
Only one Fila retail store remains open in New York, and Epstein doesn’t plan to open new doors. “Our focus is wholesale and strong retail partnerships,” said Epstein. “We might revisit retail opportunities when we have wholesale stability, but it would be more from a trend or marketing standpoint.”
As for product, three new lines — Sport Couture, Street Culture and the Alpha tennis shoe — have seen a strong retail response, said VP of footwear Gary Wakley. The Sport and Street lines preserve Fila’s Italian heritage by incorporating slimmer lasts, bold metallics and details unique to each shoe, and also help separate the brand from competitors including Nike and Adidas. Print, online and television ads are rolling out to support the new merchandise.
“Where we’re really succeeding is where we can separate ourselves from the fray and do things differently to add new interest,” said Epstein.
To that point, Fila is launching exclusive product with top independent retailers including Los Angeles-based Sportie LA and Kitson, and Brooklyn Circus in New York.
“Fila has been a staple in Brooklyn, especially in the 1980s and ’90s,” said Ouigi Theodore, owner of Brooklyn Circus. “We were honored to be part of their comeback.” The retailer will bow exclusive men’s and women’s sneakers, as well as a backpack and jacket for the back-to-school season.
Isack Fadlon of Sportie LA said he is eager to stock the exclusive Melrose shoe, a women’s high-top in three different colors featuring 3M-brand reflective materials. “What’s promising is that [Fila is] in the beginning stages of this relaunch and this collaboration speaks to how they want to direct the product and the brand,” said Fadlon. “I don’t think anybody expects this type of collaboration from Fila, and they don’t expect it for women’s product.”
To fuel its women’s offering, earlier this year the company hired footwear designer Merrill Lyons.
“We did things in order of what was going to drive business as soon as possible, and now we’re focusing on women’s,” said Wakley.
Fila also is expanding into kids’ product and has partnered with BBC International for spring ’09.
“If we do our job and do it well, there’s no reason we can’t grow our market share,” said Epstein. “Retailers and consumers are always looking for innovation.”
As the changes unfurl, Epstein said a long-term goal is to reach a level of stable growth and take the company public in the next five to 10 years. “In 1996, the company was [trading at] $101 per share on the New York Stock Exchange and had a $1.5 billion market cap. The potential for this brand is really great,” he said.
To reach that goal, the firm in March started to improve its balance sheet by eliminating a sizeable debt incurred a year ago when Fila Korea and GLBH Holdings acquired the athletic brand from Cerberus Capital Management. To reduce debt, Fila had completed the sale of its European, Middle East, African and Indian subsidiaries to the European-based management team headed by CEO Stefano di Martino. Then it entered into a long-term license for the Fila brand in the EMEA region.
The transaction also morphed Fila’s business model from direct operations to brand licensing in major regions of the world, with the exception of Korea and the U.S., which are operated directly by Fila Korea and GLBH.
Those moves, Epstein said, “put entrepreneurs in the driver seat to partner with us to rebuild the regional businesses.”