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Fila Tries to Get in Gear

NEW YORK — With Fila on the selling block and the company under fire to up its earnings, Fila USA president and chief executive officer Jon Epstein has been evaluating his four-year tenure and spearheading the brand’s revival.<br><br>"What...

NEW YORK — With Fila on the selling block and the company under fire to up its earnings, Fila USA president and chief executive officer Jon Epstein has been evaluating his four-year tenure and spearheading the brand’s revival.

“What a mess we had. Where the company got lost was trying to compete with the Nike, Reebok and Adidas in the commodity business,” Epstein said in an interview at Fila’s showroom overlooking Bryant Park in Manhattan. “You can’t sell that and survive.”

That’s a sober tone from the ceo who marked his arrival a few years back with a Lizzie Grubman-produced “Fila Renaissance” fashion show for 1,000 people, including Sean “Puffy” Combs, Russell Simmons and Ingrid Casares. That was when red clam diggers and catsuits ruled the runway.

Now the brand sees its future in velour warmups, zip-front hoodies and terry capri pants, and has restructured to emphasize its tennis and Italian heritages. That has meant Fila has had to say arrivederci to the rickety tubular knitting machines used in its Biella, Italy, factory to make its activewear and has streamlined its design team to rely more on outside design consultants.

As reported, Fila’s parent company, Holding di Partecipazioni, has been in extensive talks to sell the embattled brand. Epstein said he has sat in on a handful of meetings, but declined to name the interested parties. As reported, HdP said it was in exclusive talks with the U.S. fund Continental but has said it is talking to others. The asking price is more than $500 million, due primarily to its more than $300 million in worldwide debt, Epstein said.

“HdP is anxious to find a new partner or owner, but they’re not going to just take a deal that is unfair to its shareholders. They are committed to the ongoing growth of the Fila brand,” Epstein said. “We want to get a respectable price or investment that will add some value to this brand for the future. We’re not just going to let it go to anybody. They will get the value of a great global sports brand.”

Women’s accounts for about 40 percent of the brand’s $148 million in apparel sales. For this year, women’s is expected to climb by a “high-single-digit percentage,” Epstein said. Total U.S. sales account for about $280 million of the brand’s $956 million in worldwide sales. Global apparel sales are $505 million.

For his part, Epstein has been trying to bolster the brand by eliminating superfluous categories like sports equipment, golf and outdoor divisions as well as updating the brand’s apparel and marketing. Now that old-school looks are in vogue, Fila is playing up Seventies’ inspired apparel and a new print and outdoor advertising themed “Taking You Back.”

In Style, Hamptons, The Source and Vibe magazines are the target of the brand’s $4 million campaign, which features colorful sketches more reminiscent of a sitcom than tennis.

Last year’s surprise hit “The Royal Tenenbaums,” a flick that featured Fila prominently, helped make buyers look at the brand differently and attract new accounts like Barneys New York, even though product placement was not involved, Epstein said. Rappers like Naz and Ja Rule have taken it upon themselves to wear the brand during public appearances, and Cameron Diaz will reportedly wear Fila in “Charlie’s Angels 2,” he said.

“Even though globally the brand hasn’t had the greatest response, the U.S. business has a strong cash flow and a good balance of new trends,” Epstein said.

The aim is for more consumers to recognize the label’s heritage and then Fila will be in a better position to evolve into other “cutting-edge products,” he said. “Being everything to everyone is definitely the kiss of death.”

Fila just signed a licensing deal with Ducati to produce an apparel collection for the high-end motorcycle market. Fila has excelled in the motor sports arena by sponsoring Formula One racer Michael Schumacker. A year-old deal with Ferrari helped raise the brand’s prestige and secured entrance into the $150 footwear market.

Fila’s sponsorship of the U.S. Open, which gets under way Monday in New York’s Flushing Meadows, is expected to enhance its image. Fila-sponsored Jennifer Capriati, a forerunner in the women’s field, appears in U.S. Open ads for the event.

Last year, the company sold $1.4 million worth of merchandise at its on-site store compared with $250,000 in 1998. This year, the company plans to “load the wagon” with more street-smart looks to entice shoppers beyond typical tennis fans, Epstein said.

“We don’t make any money at the Open, but we can show the world what we do,” he said.