Fila Holding chooses executive from Adidas to head U.S. unit Move comes in midst of restructuring

June 03, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

Fila Holding SpA, the Italian maker of athletic shoes and apparel, yesterday named a top executive from rival Adidas-Saloman AG to head its struggling Sparks-based U.S. hTC division.

Jon Epstein will leave his job as national sales manager at Adidas America in Portland, Ore., where he has worked for the past 20 years, to become president and chief executive of Fila USA.

In looking to No. 2 Adidas, Fila is tapping a company that is racking up higher sales and profits in a three-way fight with Nike Inc. and Reebok International for the fickle U.S. market.

Fila USA, meanwhile, is in the midst of a restructuring plan aimed at rebuilding U.S. sales and boosting profits. Although Fila Holding SpA's global sales grew from $280 million in 1991 to $1.5 billion in 1997, it reported an $8.7 million first-quarter loss -- compared with a $32.6 million profit in the year-ago quarter -- as its once-hot U.S. sales plunged 53 percent.

As a result, the company announced last month that it was cutting 265 jobs nationwide, including about a dozen jobs in Sparks and 55 at Baltimore area warehouses. Fila also said it would close its retail shops in New York, San Francisco, Chicago, Costa Mesa, Calif., and Short Hills, N.J.

"I don't know if [Epstein's arrival] is part of the restructuring plan. It is perhaps just a coincidence that it happened during the restructuring," Howe Burch, senior vice president of advertising and communications at Fila USA, said yesterday.

Burch said that the popularity of "brown" shoes and hiking boots had hurt the athletic shoe industry, as consumers opt for Doc Martens and Timberlands instead of sneakers.

"I certainly don't think it hurts that he's coming from Adidas, where they're doing extraordinarily well."

Indeed, as Fila watched its double-digit sales gains turn negative, Adidas enjoyed a turnaround. After posting losses in 1996, the company shed the red ink in the final quarter of last year and reported a 14 percent rise in first-quarter earnings, to $108 million.

Adidas stock has also rebounded, rising by about one-third so far this year. In contrast, Fila's American depositary receipts, which traded above $100 less than two years ago, closed yesterday at $18.3125.

"We are very excited to have Jon Epstein join Fila U.S.A.," Fila Holding SpA Chairman Enrico Frachey said in a statement yesterday. "His industry experience and knowledge combined with his enthusiasm and proven management skills make him an ideal choice to lead the company in the U.S."

Although he's based in Italy, Frachey held the title of president and CEO of Fila USA unti six weeks ago, when he was named chairman of the holding company.

Epstein, who was not available for comment yesterday, will be responsible for all administrative functions at Fila USA, along with sales and marketing of footwear, apparel and hard goods, such as in-line skates and soccer balls. He begins work in Sparks tomorrow.

Pub Date: 6/03/98

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