Fila to cut 265 jobs in U.S. Shoemaker to lay off about 55 employees at local warehouses

May 09, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Fila Holding SpA, the Italian maker of athletic shoes and athletic apparel with its U.S. headquarters in Sparks, said yesterday that it was cutting about 265 jobs nationwide to adjust a sharp downturn in sales.

The restructuring of Fila USA's operation has resulted in the loss of about a dozen jobs at its Sparks headquarters and will not affect the remaining 240 employees there. About 55 warehouse jobs in Point Breeze, Holabird and the Brandon Woods Business Park in Anne Arundel County will be eliminated, leaving 190 jobs.

Other jobs have been eliminated in the past few months as the company has struggled with the "white shoe vs. brown shoe" battle -- or the growing preference among urban consumers for outdoor-style shoes instead of athletic footwear.

Fila, which employed 915 nonretail workers in the United States at the end of last year, now employs 715 and will be down to 650 by the end of the year.

"It's been a difficult year, not only for this company but for the whole category," said Howe Burch, senior vice president of advertising and communications for Fila USA in Sparks. "It's forced us to take a hard look at the organization. That's what we have done and what we will continue to do until the end of 1998."

The cuts come in the wake of a first-quarter loss of $8.7 million -- compared with a $32.6 million profit in the year-ago quarter -- reported this week. Strong sales in Europe could not overcome poor performances in South Korea and the United States, Fila said.

The company, which blamed its South Korean results on the Asian currency crisis, plans to cut between 26 percent and 30 percent of its work force there. In the United States, where first-quarter sales fell 53 percent, the job losses will be accommodated mostly by releasing contract workers.

The restructuring is intended not only to make the company more competitive but to move more of the company's product development to facilities in Italy, Enrico Frachey, Fila's chief executive officer, told analysts.

The plan calls for cutting staff in Fila's New York office and at a footwear research and development facility in Peabody, Mass. The company will close an office in Boulder, Colo., that was dedicated to designing and developing outdoor-style footwear.

Biella, Italy-based Fila will shift virtually all of its U.S. design and development for footwear and apparel to Portland, Ore.,

boosting the work force there from about 60 to 100.

John Horan, editor of the newsletter Sporting Goods Intelligence in Glen Mills, Pa., said Fila is trying to focus on its main products -- athletic shoes and sports apparel.

"About two or three years ago, they went on a big diversification kick," he said. "They went into the running shoe business, got some Nike people and left them out there in Portland. And they set up outdoor people in Colorado. Now they've basically decided that the guys in Portland are the chief research and development guys and they want everything in one place."

In another move to reduce its costs, Fila plans to close its retail boutiques in New York, San Francisco, Chicago, Costa Mesa, Calif., and Short Hills, N.J. Fila said its 30 U.S. outlet stores will remain open.

VTC Horan said many athletic shoe companies are feeling heat from the popularity of "brown shoes" -- the outdoor footwear marketed by companies such as Timberland Co. of Stratham, N.H. The competition has been worse for Fila than many others, he said. "Fila had a high concentration of inner city customers and that is where a lot of the brown shoe thing has happened," he said.

Fila American depositary receipts, which traded above $100 less than two years ago, closed yesterday at $20.3125, up 68.75 cents.

Pub Date: 5/09/98

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