Korean sportswear brand Fila thrives in China, boding well for 2025 profit

Fila Global Brand Ambassador Han So-hee, the heroine of the Netflix original series Gyeongseong Creature (Photo captured from Fila’s website)

South Korean sportswear brand Fila Holdings Corp. posted a loss in the fourth quarter of last year, hit by the downturn in the apparel industry and its withdrawal from the US market.

Buoyed by the resurgence of the retro fever in the apparel and footwear industries, however, Fila is widely expected to swing to profit this year, with its China business leading its way back to growth in particular.

According to Korean financial data provider FnGuide on Friday, Fila Holdings likely posted an operating loss of 5.2 billion won ($3.6 million) in the October-December quarter.

Some analysts even projected Fila’s quarterly losses to be more than 10 billion won as the apparel maker reflected all the costs related to the closure of its US business in its fourth-quarter results.

Its US performance was also hurt by the losses incurred by its US golf equipment subsidiary, Acushnet, in the off-season, analysts said.

Acushnet owns the trademarks for the Titleist and FootJoy golf brands.

Fila Holdings, formerly Fila Korea Ltd., is a Korea-based company engaged in the manufacture and distribution of sports casual clothing, footwear and accessories through wholly owned subsidiaries in countries such as the US and Malaysia, as well as through licensing deals with local companies in China.

Fila is a leading Korean sportswear maker

FILA ECHAPPE SNEAKERS

Fila solidified its position as a trend-setting brand during the boom of “ugly shoes,” or sneakers with a wide foot and a rough overall silhouette, that took off in 2018.

Thanks to the ugly shoe fad, Fila’s operating profit surged to more than 70 billion in the second quarter of 2019 from less than 30 billion in the first quarter of 2018.

Industry watchers said the retro trend has made a comeback, particularly in sneakers, boding well for Fila.

The Fila Echappe sneakers, released last year, gained popularity after being dubbed the “Han So-hee sneakers” – named after the actress and Fila model, leading to sellouts in recent months.

Her collaboration down jackets also saw a supply shortage.

Analysts expect Fila’s sales to continue to grow in the coming quarters as the overseas sales of its sneaker models go into full swing this year.

CHINA BUSINESS TAKES OFF

Fila performs strongly in China, where it works closely with Anta Group, the country’s leading fashion company.

Fila handed over its business rights in China to Anta, better known as Anta Sports Products Ltd., in 2009. In return, Fila receives a low single-digit percentage of Anta’s annual sales as a design fee every year.

In China, Fila products are part of Anta Group’s fashion lineup

In China, Fila products are part of Anta Group’s fashion lineup.

According to Hanwha Investment & Securities, Fila received 80 billion won in design fees from Anta last year. Such fees are expected to rise to 90 billion won this year.

Fila is also benefiting from the rise of the Chinese fashion fad, known as guochao, which has pushed out or significantly reduced the popularity and influence of Western and other well-known foreign brands in the world’s second most populous market.

Guochao, a combination of the Chinese word “guo,” meaning nation and “chao,” meaning fashion, has become an industry buzzword in recent years, as Chinese millennials born between 1980-95 and Generation Z born between 1995-2010 became the main followers of the trend.

According to FnGuide, the market consensus of Fila’s 2025 operating profit is 506.5 billion won, up 27.6% from last year’s estimated 397 billion won.

The 2025 forecast represents a 6.5% upward revision from the 475.5 billion won estimate three months ago.

By Yun-Sang Ko

kys@hankyung.com

In-Soo Nam edited this article.

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