South Korean-owned sportswear brand Fila said on Tuesday it scaled back the loss-making US business to improve earnings through a restructuring in North America.
Fila Holdings Corp. said it closed on Monday some operations of Fila USA Inc., which generated sales of $220.6 million last year, or about 6.5% of the group’s total revenue, in a filing to the South Korean financial regulator.
The move aims to improve the US unit’s financial structure, which has been pressured by the intensifying competition in North America, the holding company said.
“We plan to reshuffle sales channels after reducing the US business for now and seek to re-enter the market,” said a Fila Holdings official in Seoul. “The North American business restructuring is expected to improve the group’s overall financial structure.”
Fila USA was estimated to have logged operating losses of 142 billion won ($102.4 million) last year and 66 billion won in 2022, respectively, according to SK Securities Co., a South Korean brokerage house.
FILA USA WEIGHS ON GROUP EARNINGS
The deficits hurt Fila Holdings’ earnings. Its operating profit fell 30.2% to 303.5 billion won on a consolidated basis in 2023 from the previous year when the profit slid 11.7%.
Fila Holdings Chairman Yoon Yoon Soo acquired the brand established in Italy when he led its South Korean operations in 2003.
The group sells its products including sports casual clothing, footwear and accessories through wholly-owned subsidiaries in some countries such as the US and Malaysia, as well as through licensing deals with local companies in other markets.
Fila Holdings’ subsidiaries include Acushnet Holdings Corp, which owns the trademarks for the Titleist and FootJoy golf brands. Acushnet generated sales of 3.1 trillion won last year, making up 77% of the group’s total revenue.
By Hyung-Joo Oh
ohj@hankyung.com
Jongwoo Cheon edited this article.
