Other shoe drops at Fila Entire sales force being eliminated after profits vanish

November 18, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Fila USA's decline continued yesterday as the company announced that it will eliminate its 68-member sales force to trim costs.

The once high-flying Sparks-based footwear and clothing company will turn its U.S., Puerto Rico and military territories over to independent sales agencies. The restructuring will take effect Dec. 1, the company said.

The company's sales force -- which is based around the country -- was an obvious target, said Doug Herkner, the subsidiary's senior vice president for business development.

"With the business going backward a little bit, the cost of sales is a lot greater than we would like to see it," he said. "We're going to independents to control that."

Italy-based Fila Holding SpA has been in a slump in the U.S. market that has pushed it to a third-quarter loss.

Two weeks ago, the company reported a loss of $8.4 million, or 31 cents per American depositary receipt, a stunning reversal from the year-ago period when it had a profit of $17.2 million. Sales fell 15 percent.

Fila has suffered recently as it has seen itself outstripped in the United States by rivals Adidas-Salomon AG and Nike Inc.

Sales grew to $1.5 billion last year -- with 45 percent generated by the U.S. division -- as quarterly earnings consistently beat analysts' expectations.

Fila's American depositary shares rocketed, peaking at $105 in September 1996. But starting late last year, the trends reversed and the company's sales and earnings plunged.

Yesterday, Fila's stock price closed at $9.5625, up 31.25 cents.

Next month, the company is to name a new chief executive to help turn the Italian sportswear company around.

In the meantime, Fila USA is pursuing cost-saving measures, Herkner said. The dismissed sales representatives will be able to interview with the independent agencies, he said.

Pub Date: 11/18/98

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