Stackhouse shoe sells well, says upbeat Fila Some good news after last big-name sneaker bombed at Christmas

February 26, 1997|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Fila USA's new Jerry Stackhouse sneaker apparently has gotten off to a strong start, which may help calm investors who had grown jittery over slow sales of the company's marquee Grant Hill-endorsed shoe at Christmas.

Fifteen to 20 percent of the Stackhouse shoes at midsized retailers Fila considers "trend-setting" were sold in the four days after its introduction Feb. 13, the company said.

By the end of the shoe's first week on the market, 40 percent to 100 percent of the shoes were sold, depending on the store chain, said Howe Burch, Fila's advertising vice president.

"If you said it was 50 percent [on average], I don't think you would be wrong," said Burch, who said such major national retailers as FootLocker and Foot Action had sales that were slightly weaker but still solid.

"It's about the same as the first [Stackhouse]," which came out last year, he added.

The new Stackhouse shoe's progress is being closely watched on Wall Street, which also is waiting for Fila's fourth-quarter earnings report tomorrow.

Fila, which has its U.S. headquarters in Sparks, has been one of the stock market's hottest non-technology issues since it went public in 1993 at $18 per American depositary share.

The shares reached $106.875 by September but fell to $59.125 by Feb. 19. Shares closed yesterday at $64.25, up 12.5 cents.

Fila's sales went from $350 million in 1992 to about $1.4 billion last year, depending on how fourth-quarter sales went. Key to the rise were the first two Hill shoes and the first Stackhouse.

But sentiment turned on Fila in the fall, especially after the third edition of its Hill shoe failed to live up to the sales records set by the first two, each of which sold more than 1.5 million pairs.

For the first time in recent memory, a marquee Fila shoe ended up on the discount rack. This gave ammunition to short sellers in the stock. And analysts believe it also contributed to Fila's decision to cut the $100 suggested top retail price for the new Stackhouse shoe to $85.

Lon Babby, Hill's lawyer, said the Hill III shoe sold well in January after it came out in different colors.

"The first shoe was so unbelievably successful it set an impossible standard," Babby said. "If you hit a grand slam the first time and then only hit a home run, people are disappointed."

Yesterday, analysts reacted to Fila's disclosure with cautious optimism. "I would call that meeting expectations, expectations that unfortunately had gotten too high," said Margaret Mager, a Goldman Sachs analyst.

"Thirty-five to 40 percent over 10 days is excellent," said Brett Barakett, a Salomon Bros. analyst who has been relatively bearish on Fila. But he continues to think Fila will stumble further in the fall.

Tom George, senior vice president at Advantage International, the sports marketing firm that handles Stackhouse, said Fila executives had not given any indication that they expected the shoe to encounter problems at retail.

"If that was the message they were sending, putting ads in the Sports Illustrated swimsuit issue and the Super Bowl is a funny way to do it," George said. "You don't cut costs by buying Super Bowl ads."

Fila also is showing no signs of letting up on the hiring spree that has brought its Sparks-based staff to 350 people. A company job "hot line" was advertising at least 24 open positions yesterday.

Pub Date: 2/26/97

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.