FILA DETAILS RESTRUCTURING, WILL CLOSE OUTLETS

Byline: Rosemary Feitelberg

NEW YORK — Fila Holding SpA, which expects to report about a $65 million loss when it releases fourth-quarter and yearend results Feb. 26, has mounted a major restructuring plan in which it will fold subsidiaries in unprofitable markets and close outlet stores.
Fila, based in Biella, Italy, has already resumed management of its distribution center in Baltimore. It has closed its subsidiary in Uruguay and is now doing the same in the Philippines, South Africa and East Africa.
In a statement released Friday, Michele Scannavini, chief executive officer, said: “We decided to take drastic measures in closing risky and unprofitable businesses in order to have Fila totally focused in 2001 on the strategic markets and on the startup of the new development projects.”
That involves taking a closer look at the structural organization of its subsidiary, Fila U.K., which saw an estimated $6 million loss last year. The company attributed the slip to ineffective stock management and information technology problems, which resulted in misevaluations of margins.
Last month the company closed seven outlet stores in the U.S. Fila now has 31 outlets and plans to shutter five to 12 more this year, according to Tom O’Riordan, executive vice president and chief operating officer of Fila USA. Additional outlet stores will be closed overseas this year.
Jon Epstein, president and ceo of Fila USA, noted there were 50 outlet stores when he joined the company two years ago and views the consolidation as a positive. Fila does not have the excess inventory needed for its domestic outlet operation and has had to produce goods solely for that channel of distribution.
Insisting that its American business is on the upswing, Epstein said Fila will spend $8 million on print advertising — the most it has spent in the last three years.
Last week, Fila announced a five-year retail plan to open 40 stores, including five flagships, in Europe.
As part of its plan to try to upgrade its distribution, Fila took over operations at its Brandon Woods facility in Maryland last month. Ryder Integrated Logistics, which signed a deal with Fila last year, will no longer do outsourcing for the company.
With three distribution centers in Baltimore, Ryder tried to find other companies to share the space with Fila but failed to do so, O’Riordan said. Fila has since consolidated its operations there into one facility.

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