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Fila Purchase Complete, Set to Hit Ground Running

Sport Brands International has wrapped up its $351 million purchase of Fila’s worldwide subsidiaries and has set up its management team.

NEW YORK — Now that Sport Brands International has wrapped up its $351 million purchase of Fila’s worldwide subsidiaries from Fila Holding SpA, the newly formed holding company has set up its management team.

Jon Epstein, former chief executive officer of Fila USA, has been named president and ceo of SBI and oversees the Fila, Ciesse Piumini and Enyce brands. The deal was finalized Tuesday night.

Reached Wednesday in Biella, Italy, Epstein said he was pleased the company was no longer on the block for the first time in two years.

“There’s a lot to be said for a company that is off the market, flushed with cash, debt free, has strong credit lines and has good brand recognition,” Epstein said. “We have tremendous flexibility to attract new employees and resources. People are anxious to do business with us again.”

Uncertain about the number of pink slips to be handed out to some of the brand’s “several thousand employees” or when that might happen, Epstein said he and his management team will be evaluating the organization for any redundancy.

Unlike Nike, for example, which has one European distribution center, Fila has several in different countries on the Continent. Fila employs about 450 people in the U.S., with the bulk of them working at its Sparks, Md., offices.

With more major retailers demanding customization, Fila has set up “centers of excellence” to focus on specific regions. SBI the Americas is based at the Maryland facility and is headed up by Tom O’Riordan, Fila’s former chief operating officer.

There are also plans to refurbish and expand Fila’s New York office. Robert Galvin has been named chief financial officer and president of European operations. The company’s European offices are in Biella, Italy.

Overseas, Gene Yoon oversees SBI Asia in Hong Kong as president and ceo. He was the founder and ceo of Fila Korea, which has 400 franchise stores there.

“We believe customization is an important part of retail and is getting bigger. All the stores want proprietary merchandise,” Epstein said. “We want to make product in places that will be most meaningful for us.”

Fila recently signed a sponsorship deal with the Federazione Italiana Sport Invernali, an Italian agency that represents 750 winter sport athletes. That alliance should prove to be valuable at the 2006 Winter Olympics in Turin, Italy. Therefore, it is in Fila’s best interest to keep production of its skiwear in Italy, Epstein said.

In addition to building the brand’s sales in winter sports, tennis, running, basketball, soccer and fitness, Fila will focus on motor sports through its licensing deals with well-known names like Ferrari. Giving Enyce, an urban sportswear label popular with city kids, “a greater global presence” is another initiative, Epstein said.

Like some of its competitors, Fila women’s apparel has become more style-driven in recent months. Management will continue to build on that by encouraging designers to develop items with denim inserts, appliques, embroidery and other novelty twists, Epstein said. Sell-throughs have been strong for such items, he said.

It hasn’t always been that way. When Epstein joined the company in 1998, Fila USA reported a $148 million loss. Last year, the company had an operating profit of $500,000.

“That was done with no investments and we were paying off huge interest rates,” he said.

Fila also signs a $12 million check for National Basketball Association player Grant Hill each year, even though he has been plagued by injury. Earlier this year, Olympic skier Alberto Tomba joined the ranks of tennis players Kim Clijsters and Jennifer Capriati, home-run king Barry Bonds and Formula 1 champion Michael Schumacher as one of Fila’s sponsored athletes.

For the first quarter ended March 31, Fila Holding reported a net loss of $7.4 million compared with a loss of $36.3 million in the year-ago period, based on currency conversions from the euro at the time.

Net revenues for the period plunged 20.5 percent to $227.6 million. Fila said the discontinuation of some subsidiaries and the depreciation of the dollar against the euro negatively subtracted about $20.3 million from the top line.