Fila's earnings jump 88.5% $1.61-a-share quarter tops estimates again

November 07, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Fila Holding SpA reported a quarterly earnings gain yesterday that topped Wall Street estimates for at least the 11th quarter in a row, but it will remain to be seen this morning whether the 88.5 percent gain in third quarter profits will calm the company's volatile stock.

The Italian sneaker company said it earned $42.8 million during the third quarter, or $1.61 per American depositary share. The number was far above the $22.7 million, or 91 cents per ADS, that Fila earned during the third quarter of 1995, and solidly above Wall Street estimates that saw Fila earning $1.45 per ADS.

For the nine months ending in September, Fila earned $96.9 million on sales of $1.1 billion, almost double the $49.5 million it earned on $683.7 million in sales during the corresponding months of 1995.

And the company's release held the promise of more good news to come for Fila, whose U.S. headquarters are in Hunt Valley: Orders for delivery in the first half of 1997 rose 41 percent, a solid figure, but one below the pace that Fila set in the second quarter.

"That's a darn good number worldwide," Merrill Lynch analyst Brenda Gall said.

"Apparel [sales growth] is the slowest" as footwear orders rose 46 percent. But the growth was weaker in the key U.S. market, where Fila gets about 60 percent of its sales. U.S. orders were up 29 percent.

Enrico Frachey, Fila managing director, said in a statement that gains in future orders, the indicator Wall Street watches most closely to chart the stock's short-term fates, are similar overall to the 42 percent gain Fila posted during 1995's third quarter.

Frachey said this year's figures may understate Fila's growth because the firm is still taking orders from retailers for its summer line. Last year, Fila had nearly completed the summer order process by November for its combined spring/summer 1996 line. But Fila has since divided the spring/summer season into two product lines because the company has been growing so strongly.

"We are extremely pleased with the expansion achieved," Frachey said.

Profits in the third quarter rose much more than the 51 percent gain in sales because the company has been shifting its sales toward a more profitable, more expensive mix of clothes, including more shoes that command higher prices because of celebrity endorsements.

Wall Street reaction was not clear yesterday, since the company announced its results after the stock market closed and is not scheduled to meet with analysts until today. Fila stock closed at $75.875, up $1.

The stock has been on a roller-coaster ride this year, with recent indications that one of Fila's biggest shareholders has been selling to take profits. The stock traded as low as $15 in 1994 and zoomed to $106.875 by summer, before falling into the mid-60s last week.

The pattern has become a common one for Fila. In the summer, the stock sagged $25 before the company reported second-quarter results, and gained back $14.25 in a day and a half after the announcement.

Pub Date: 11/07/96

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