NEW YORK — As part of a major overhaul in strategy, Fila has ended sponsorship of tennis champ Jennifer Capriati as well as the U.S. Open tournament and will return to more sophisticated looks, said Steve Wynne, president and chief executive officer at Fila’s parent, Sport Brands International.
“The number one need we saw was to establish a clear global brand identity for Fila that can be adopted’’ in local markets, said Wynne, in his first major interview since joining the company last March. “For many years, Fila defined high-end Italian luxury sportswear. This is what drove Fila’s success, but in an effort to grow top-line sales, the company walked away from its core values.”
In the last nine months, Wynne has scrutinized the once-mighty sports brand and spoken with retailers to gauge Fila’s positioning and develop a new direction for the brand, which has global sales of about $1 billion, including licensing revenues.
Wynne, speaking at Fila’s headquarters at 8 West 40th Street here, outlined these key strategies:
Introduction of a new division called Filativa targeting 18- to 24-year-olds.
Fewer and more targeted sponsorships of sporting events and players.
Overhaul of Fila footwear and apparel to include more upscale looks and sophisticated designs.
A new marketing campaign designed to highlight the brand’s Italian heritage.
Relocation of the showroom and corporate headquarters to a larger space on Madison Avenue and the opening of a Fila retail store in the same building.
SBI also revealed this week that is has bought Cloudveil Mountain Works, an outdoor apparel and equipment company based in Jackson Hole, Wyo., but did not release terms. This will operated as a separate company within SBI and will maintain offices in Jackson Hole and Denver. In addition to Fila, SBI also owns Ciesse, a winter sports brand.
These developments follow a rocky period for Fila, which in recent years was mired in financial and organizational problems. At the end of 2002 Fila had a heavy debt load and posted a loss of $76 million on sales of $859.5 million.One of the most well-known brands in sports, Fila was founded in 1911 as a textiles company in Biella, Italy, before turning to knitwear production, and eventually sports apparel in 1973. In addition to its classic red, white and blue designs, the brand became known for its association with big-name players such as Björn Borg, Monica Seles and more recently, Kim Clijsters and Capriati. It also became a favorite of urban customers with its oversize velour tracksuits.
In the last few years, however, Fila lost market share and struggled to find a focus as brands such as Nike, Adidas and Puma zoomed ahead with innovative products and marketing strategies.
Fila’s former parent company, Italy’s Holding di Partecipazioni group, searched for a buyer for more than two years before the brand was purchased for $351 million in March 2003 by SBI, a team made up of Fila management that was backed by U.S. investment fund Cerberus. SBI quickly began shedding some its properties. It sold its Enyce brand to Liz Claiborne Inc. in late 2003 and also slashed its workforce, closed and consolidated offices and shuttered its U.S. retail operations.
Nonetheless, more bad news followed. Jon Epstein, who had been Fila’s U.S. president and chief executive officer, resigned from the company at the end of 2003, citing personal reasons. A few months later, Epstein pleaded guilty to conspiring to tamper with financial records involving Just for Feet, which went bankrupt in 1999.
Wynne, 52, a lawyer, was lauded as a good fit for Fila when he joined SBI in March 2004. Calm and soft spoken, he is credited with revamping Adidas America. During his leadership from 1996 to 1999, Adidas America’s sales went from $450 million to more than $1.65 billion.
“Fila hadn’t settled on a management model,” Wynne said last week. “It was difficult to create a global presence without that.”
Wynne, now based at the company’s headquarters here, brought with him another Adidas executive, Robert Erb, who joined SBI as chief marketing officer, also in March. The corporate structure has been streamlined and includes a core management team and six separate business units, each of which encompasses an entire category including footwear and apparel.The design staff was also consolidated so that there are two primary design offices, in Manhattan and in Montebelluna, Italy. The company still has U.S. offices in Sparks, Md., but New York serves as Fila’s worldwide headquarters. Wynne said Fila is in a solid financial position, and noted that the company is now profitable.
On the product front, apparel accounts for about half the business, footwear the other half, and the company doesn’t plan any changes in that breakdown, Wynne said. In addition to tennis and racket sports, Fila makes products for running, yoga and outdoor activities, and also has a vintage collection and merchandise for children. Golf will be reintroduced for spring 2006.
Going forward, the apparel has been upgraded with more fitted silhouettes and lightweight performance fabrics with wicking properties, said Diane Shiviskis-McCaffrey, business director for the company’s personal performance division. Except for a few items in the vintage collection, gone are the color-blocked velour tracksuits and baggy clothes of the past. Many looks have special touches such as mesh pockets and buckles, and the color palette is more muted than in the past.
“The products are much more sophisticated than they had been,” said Shiviskis-McCaffrey, who has been with Fila for more than seven years. “There is more of a European flavor.”
While Fila has had many logo incarnations over the years, it will now use the boxed F for the luxury products, and a linear Fila incarnation for performance-oriented merchandise.
The number of styles has been cut down, and pricing on average is about 15 to 20 percent higher than it had been, reflecting the use of more high-end fabrics, she noted. The company’s products on average wholesale from about $22 to $75, said Kristin Kohler, a general manager for three of the business divisions.
The new Filativa business segment is geared toward college-age and slightly older customers. It will roll out initially in footwear this summer, and apparel will be introduced around holiday with a larger rollout planned for next spring. The company declined to give many details, but Kohler noted that the sports-inspired products will be distributed in independent specialty stores and footwear chains.And while many of its competitors are linking up with celebrities and big-name designers — Adidas has deals with Stella McCartney and Missy Elliott, while Puma is working with Christy Turlington and Neil Barrett — Fila won’t be heading in that direction, Wynne said.
Fila also isn’t rushing to plaster its names across a host of categories, Wynne said. It makes a selection of accessories including socks, bags and headbands, and plans for new licensees are on hold.
On the distribution front, the company is looking to expand its presence in sports specialty stores and chains, such as Finish Line, Wynne noted. Fila wants to find partners who can “tell the Fila story” and is looking for retailers who will carry a larger collection, not just items.
The brand is sold in a range of stores, including chains such as Nordstrom and Macy’s, as well as discounters such as Kohl’s Corp. and urban-oriented stores like Dr. Jay’s. Wynne declined to say whether Fila would stop selling in the discount channel, but said the company wants to “focus more on specialty chains in the athletic category.” Wynne also wants to improve service to stores. “We have not been particularly attentive to retailers from a service standpoint, and we have a commitment to change that,” he said.
Mark Mason, owner of Mason’s Tennis Mart, an upscale tennis store in Manhattan, has carried Fila for more than 20 years. “The brand has strong name recognition, but they have gotten away from their heritage,” he noted. “I would like to see the brand go back to the strong red, white and blue classic collections for men and women that have been so salable for so long.”
To market its new direction, a brand campaign will launch for fall that highlights the Italian heritage of the company. The ad copy is written in Italian, and the ads feature moody images such as a man running near a mountain in the rain, and a close-up shot of a tennis ball in motion after it hits the court. The media plan is still being completed, but global marketing director Mark Westerman said Fila is looking at publications such as the Robb Report and Kiplinger’s, which target high-end consumers. While it has stopped its long-time association with the U.S. Open, Fila is not ending all its sponsorships, and it will still work with players such as Clijsters.
“The contract with Capriati had come to and end and we decided not to renew it,” Westerman said. He declined to give more detail except to say that the company is reevaluating its sponsorship commitments.
Withdrawing sponsorship of the U.S. Open also marks a significant change in direction. Westerman said Fila wanted to speak to consumers all year long, and not just for that two-week period. According to published reports in tennis trade magazines, the Open’s parent company, the U.S. Tennis Association, is looking for a more lucrative clothing sponsor commitment. Meanwhile, the new Fila headquarters is to open in May on Madison Avenue and 43rd Street and will include a design center and retail store.
“This is just the beginning of our evolution,” Wynne said. “We have a lot of opportunities to continue growing Fila.”
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