Gene Yoon, Chairman & CEO of FILA Global
Mumbai: Leading sportswear maker Fila, which Sunday extended its license agreement here with Cravatex for another 30 years, said it plans to more than double its exclusive stores to 100 in the next two years and focus more on apparel.
Fila has been present here for the past three years and operates under a license agreement.
The originally Italian and currently Korean brand Fila has 5 percent market share in the Rs 2,000-crore sportswear market and is eyeing to double its market share to 9-10 percent by 2015, the company said.
“We are growing at 25-30 percent annually, and we plan to add 60 more stores by 2014 to take the own-store tally to 100. And with this we will be focusing on more apparel sales here,” Fila global chairman and chief executive officer Gene Yoon told PTI here.
On extending the license agreement with the city-based Cravatex for such a long time, Yoon said, “I thought it is time to give more space to invest in the business more aggressively by giving a long-term license agreement to our franchise partner here. We have renewed it for 30 years so that they can comfortably invest more in the business”.
On store expansion, Cravatex chairman Rajesh Batra said the focus will be on the own-store format.
“So far we have been present largely in wholesale and shop-in-shop formats and retail stores, so the next step is open stores and push apparel sales through exclusive stores. Initially, we were focusing on footwear. Sunday we are 60-65 percent a footwear company. We want to make that equal as we go along,” Batra said.
Fila had clocked retail revenue of Rs 120 crore in 2011-12 in the country while its global sales stood at USD 1.2 billion (around Rs 6,500 crore at the current exchange rate), but Yoon said the market provides them a huge opportunity.
“There is big potential here. The two big potential countries in Asia are China and India,” Yoon said, adding the company has individual agreements with partners to spend 4-5 percent of their revenues on marketing activities.
Without naming Reebok India, he said the issues at that company offer him an opportunity to grow faster here.
“We have relatively small share of the market at this moment. We can only expect to grow and increase the business even though the market is declining for the big guys. There is a problem with a big global company here, which presents us opportunity over here,” Yoon said.
The Rs 2,000-crore branded sportswear segment is growing at 12-15 percent.
Asked if Fila plans to grow inorganically here, Yoon said a recent acquisition in the US does not permit it to acquire new firms at present.
“Not at this moment. According to the agreement for Acushnet, I am not supposed to buy any new company till I make a successful exit, which is in 2016, when the IPO for Acushnet comes in the Hong Kong market,” he said.
Fila Korea that owns the Fila brand name, and Mirae Private Equity, which bought the Fortune Brand Inc’s Acushnet that makes the Titleist golf balls, clubs and other equipment for USD 1.23 billion in May last year.
The Italian owner’s of Fila had sold the brand to hedge fund Cerberus Capital Management in 2003, except Fila Korea. Fila Korea later bought the parent brand in 2007.
Yoon added that newly-acquired company has shown good growth which makes it a profitable buy.
“When we acquired the company, the earning before tax was USD 105 million. This year it was USD 145 million. We are very happy with the acquisition of Acushnet. I have to double the earnings before tax before by 2015. Which means USD 215 million, but I am expecting we may even hit USD 265 million. So it is a good buy,” he said.
Fila India, which in July roped in cricketer Virender Sehwag as its first brand ambassador with a contract for three years, is keenly watching the football space due to the growing interest for the sport.
“Football is becoming very popular over here. We tied up with Mohun Bagan to sponsor their kits two weeks ago,” Yoon added.
PTI
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