Led by Hill basketball shoes, Fila lights up the scoreboard Profits up 127 percent for 4th quarter of '95


March 02, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Fila Holding S.p.A. continued its string of booming earnings during the last three months of 1995, with profits jumping 127 percent for the fourth quarter as sales of its second Grant Hill-endorsed basketball shoe topped those of the first edition.

The shares of the Italian sportswear company, which gets 60 percent of its sales from its Hunt Valley-based Fila USA unit, had fallen by as much as $7 to about $44 in recent months on Wall Street buzz that the second edition of the shoe was not doing as well as expected.

But the actual figures exploded that speculation yesterday. The stock had been recovering for more than a month, and yesterday rose 62.5 cents to close at $55.375. It traded at $15 as recently as 1994.

"The second Hill shoe did not sell as fast," said Howe Burch, advertising vice president for Fila USA. "In terms of the absolute numbers of pairs, we sold more."

Industry sources have said Fila sold more than 1.5 million pairs of the first Hill shoe, which it introduced last March. The company has claimed the launch was the most successful in its industry since Nike launched the first Air Jordan shoe in 1984.

The second Hill shoe helped spark an 88 percent fourth-quarter U.S. sales gain for Fila, a gain doubling those made during the second and third quarters. The company said U.S. apparel sales rose 109 percent and Fila made big inroads in the women's market, a segment in which it has traditionally been weak. Women's lines accounted for 20 percent of Fila's sales by the end of 1995, up from 14 percent a year earlier. The bottom line: Fila earned $11.6 million in the fourth quarter on $224.9 million in sales. For the year, the company turned $908 million in sales into $61.2 million of profits.

The year's profit worked out to $2.42 a share, meaning the fourth quarter was almost 50 percent better than analysts had expected. Fila's results have now been above Wall Street expectations every quarter for two years.

"Great, in one word," said Gruntal & Co. analyst Susan Silverstein. "It's clear in the numbers that the Hill II shoe was a major positive and not the other way around."

She said Fila's sales growth was faster than expected, and that the price spread between the cost of getting clothes and shoes made and their wholesale price was wider because Fila is improving in selecting and managing relationships with Asian vendors who do its manufacturing.

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