[Click eStock] "Fila Holdings at a Turning Point... Stock Momentum Unlikely to Be Strong"

[Asia Economy Reporter Myunghwan Lee] Hana Financial Investment announced on the 3rd that it maintains a buy rating and a target price of 45,000 KRW for Fila Holdings. The reason is that there will not be significant stock price momentum until brand sales growth occurs.

Fila Holdings' consolidated operating profit for the first quarter of this year was 168.8 billion KRW, down 8% compared to the same period last year. Fila's domestic business division sales decreased by 2% year-on-year; while design fees from China increased by 24%, pure domestic sales fell by 5%. Fila's U.S. segment sales dropped by 8%, showing a larger decline. Although the gross profit margin was similar to the same period last year, fixed costs such as logistics and labor costs increased, resulting in an operating loss.

The five-year strategy announced in March for Fila Holdings focuses on consistent brand value reestablishment, building a customer experience-centered business model, and sustainable growth. Fila, which has a high proportion of wholesale channels, is reducing wholesale sales and concentrating investments on offline retail and others. Fila aims to reduce the online sales ratio in Korea and the U.S. to over 20% each by 2026, and to reduce Korea's wholesale ratio to 20%. Currently, the wholesale sales ratio in Fila Korea is 35%, and in the U.S. it is 90%. In the U.S., the company plans to improve channel mix to raise the gross profit margin to over 30%.

Hana Financial Investment's analysis states that brand power must support this. Otherwise, the company would have to pay high sales commissions to enter distribution channels, leading to fierce competition in online channels.

Hana Financial Investment estimates that the company's consolidated operating profit for the second quarter of this year will be 157.7 billion KRW, down 9% year-on-year. In the short term, sales decline and cost burdens are inevitable due to investment expansion. However, Hana Financial Investment evaluates this positively as it is an investment to enhance brand value.

Researcher Hyunjung Seo of Hana Financial Investment said, "From a mid- to long-term perspective, buying at the bottom is valid," but also analyzed, "Stock price momentum will not be significant until brand sales growth and awareness recovery."

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