FILA: SUCCESS, AMERICAN-STYLE

Byline: Rosemary Feitelberg

NEW YORK--Fila's game plan isn't exactly a home-court operation.
As part of its aggressive global strategy, the Biella, Italy-based footwear and activewear maker plans to intensify its presence in the U.S. market.
Enrico Frachey, managing director and chief executive officer for Fila Holding SpA and president and chief executive officer of Fila USA, said in an interview Tuesday that the company plans to double its total volume--and its U.S. sales--in four years.
In the next 18 months, the company plans to:
Open a 16,000-square-foot flagship store here.
Hire a sales force exclusively to handle department store accounts.
Open more concept shops.
Increase its advertising budget by at least 25 percent. The 1995 U.S. budget is nearly $40 million.
Get endorsements from more female professional athletes.
For 1994, Fila's worldwide sales exceeded $607 million--a 29-percent increase over the previous year, with footwear amassing more than $395 million in sales and apparel totaling $211 million.
The U.S. has also seen substantial growth. U.S. sales climbed from $296.9 million in 1993 to $365.5 million in 1994. Last year's footwear volume came to $290.9 million and apparel sales reached $74.6 million--gains of 17 percent and 54 percent, respectively. This year the company aims to reach $500 million in the U.S., Frachey said.
Establishing stronger brand recognition in the U.S. is essential since foreign markets often look to the U.S. for guidance in the activewear and footwear market, said Frachey.
Fila, he said, wants to incorporate an American spirit into the design and color scheme of its products even though many of its designers are from other countries, such as Italy, France and the Orient, as well as from the United States. He noted that Japan, which he called a "very large" market, was one of the first countries to buy heavily into the U.S. activewear look. "In sport, the American customer is more sophisticated than the European customer. American women pay more attention to detail and they want more functional products," Frachey said. "I don't know if it is due to the recession in Europe, but the image of product is more casual without such high development."
Fila has been so successful in creating an American image that the company is often mistaken here and in other countries for a U.S. firm, Frachey said.
"From the beginning, Fila's plan has been very strategic," he said. "The emphasis we use is on fashion and creativity as well as on technical components."
By the fall of 1996, as reported, Fila plans to open a 16,000-square-foot store on Fifth Avenue in the 50s to showcase all of the company's merchandise. In March, the company opened a 10,000-square-foot store in San Francisco, and in August another will open at the Mall at Short Hills in Short Hills, N.J.
While Fila plans to open three concept shops for men's activewear and its new sportswear collection, Fila Sport, before the end of the year, there is no plan to open such shops for women. However, building the men's business leads to greater brand recognition, and that can boost women's sales, Frachey said.
At least 10 percent of Fila's men's products are sold to women, he estimated. Fila Sport is expected to be a big hit with female consumers, he added.
In the next 18 months, the company will hire a sales staff to develop the women's department store business, which Frachey says has been underserved. Until now, Fila has concentrated heavily on sporting goods stores, specialty stores and pro shops, he added.
Steady footwear sales improve brand image and often translate into stronger apparel sales, Frachey said. In the U.S., footwear accounts for almost four times as much volume as apparel.
For the first quarter of this year, Fila's U.S. apparel sales increased 43 percent to $26 million, aided by cross-merchandising with the brand's athletic footwear in specialty stores.
Sales of Fila footwear and apparel currently account for 6 percent of the U.S. athletic footwear and activewear market, and the company plans to increase that figure to 10 percent in the next three years, Frachey said.
"The popularity of our athletic footwear broadens the appeal of our apparel," he said.
Last month's acquisition of Dorotennis SA, a French fashion sportswear and fitness apparel business that generated $20 million in sales in 1994, will be instrumental in developing the women's business, Frachey said. In the next two years, Fila plans to expand Dorotennis's distribution beyond France to Germany, Italy and the UK, before introducing the line to the U.S. and Asian markets.
The company does not plan to make any other acquisitions until Dorotennis is up and running, Frachey said.
However, Fila would consider broadening its worldwide distribution through joint ventures such as the one it completed in February with Blacks Leisure Group PLC, which enables the firm to market Fila apparel and footwear in the UK.
Under the agreement, Fila holds 60 percent and Blacks 40 percent of a new company called Fila UK Ltd., which also markets products in Ireland, the Isle of Man, Gibraltar and the Channel Islands.
In May, Fila completed a joint venture with South Island Garments in Malaysia to expand distribution there. In the first 12 months of business, Fila's projected volume for Malaysia is $4.5 million.
In the U.S., women's apparel accounts for 20 percent of Fila's total apparel sales, with tennis and fitness being the strongest categories for women, Frachey said. By injecting more fashion into women's apparel without sacrificing function, the company expects to see double-digit percentage gains in the category for 1995, he said.
Fila's success with some former endorsers--tennis champions Bjorn Borg and Boris Becker and golf star Tom Watson, in particular--tended to put its women's business into the shadows, Frachey said.
"We don't have a strong culture in the ladies' business. We've always focused on the men's business," he said. "I've agreed to spend more time to understand the ladies' culture and to develop that business more."
Ironically, the success of a male athlete could be triggering all that.
Grant Hill of the Detroit Pistons, the National Basketball Association's co-Rookie of the Year, who currently represents Fila, has helped the company achieve even bigger gains than his athletic predecessors. Hill's association with Fila has pushed athletic footwear sales for men, women and children ahead by at least 15 percent in the past year with his signature sneaker, said Frachey.
Based on that, Fila is now looking for female athletes who would have a similar impact on the women's market.

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