[Click eStock] "Fila Holdings, Core Business Unit Market Share Stagnates"... Target Price Down

[Asia Economy Reporter Ji Yeon-jin] Korea Investment & Securities announced on the 7th that it has lowered the target price for Fila Holdings from 70,000 KRW to 62,000 KRW, citing deteriorating profitability in its U.S. business and stagnant domestic market share, which led to a reduction in operating profit estimates.

Park Ha-kyung, a researcher at Korea Investment & Securities, stated, "Although the valuation burden is extremely low, the competitiveness as a global brand has been compromised," adding, "Since the stock price momentum is weak until brand power recovers in key markets, we need to wait for the results of brand rebuilding efforts such as strengthening new lineups to become visible."

Fila Holdings is expected to report third-quarter sales of 984 billion KRW, a 7% increase from the previous year, while operating profit is forecasted to decline by 17% to 130 billion KRW. Operating profit is expected to exceed consensus by 25%, but the profit contribution from Acushnet is estimated at 64%, indicating that the core business recovery remains slow.

Fila's operating profit is projected to be 47 billion KRW, down 20%, due to sluggish performance in the Korean and U.S. businesses. Acushnet's sales are expected to increase by 12% year-on-year to 642 billion KRW, but operating profit is forecasted to decrease by 15% to 83 billion KRW. Researcher Park explained, "Although a decline in profit is inevitable due to the high base effect from the previous year during the off-season, the company continues to experience growth in scale driven by an increase in golf population and the resumption of rounds," adding, "Compared to the normal market in the third quarter of 2019, operating profit has increased by 65%."

While Fila's China and royalty businesses are showing solid growth, the core domestic and U.S. businesses remain sluggish. Domestic COVID-19

19 impacts continue, and it is estimated that the market share among the key consumer group of people in their teens and twenties is stagnant. Within the leading online shopping mall Musinsa, the Fila brand ranks 97th. Although its sneaker ranking is 17th, it is considered to be lagging behind global brands and domestic outdoor brands.

This content was produced with the assistance of AI translation services.