[Click eStock] "Fila Holdings, Brand Strategy Changes to Show Effects Starting This Fall"

[Asia Economy Reporter Kwon Jaehee] Daishin Securities maintained a 'Buy' rating on Fila Holdings on the 17th, setting a target price of 47,000 KRW.

Fila Holdings' sales and operating profit for the second quarter of this year are expected to be 1.0841 trillion KRW and 165.2 billion KRW, respectively. By market, domestic and China sales and operating profit growth rates are expected to decline by 5% and 29%, respectively, compared to the same period last year. This is because, although overall domestic consumption in the second quarter was favorable, sales decline was inevitable due to the reorganization of low-price channels domestically and internationally and the reduction of wholesale sales proportion. Commission income from China is expected to increase by 4% compared to the same period last year, but due to the lockdown in China from March to May, Fila China's retail sales reportedly contracted by about 20% during the same period. However, since Chinese commissions are received based on wholesale sales, the impact was less than the retail damage.

In the case of the United States, sales of the US subsidiary declined by 15% during the same period. Operating profit is expected to show a slight deficit, as in the first quarter, due to sales decline and hiring of new local staff for mid- to long-term strategy execution, while royalties are projected to grow by 5% compared to the same period last year.

Yoo Jeonghyun, a researcher at Daishin Securities, analyzed, "This year, due to the restructuring of domestic and overseas brands, the phenomenon of profit decline continues as the recovery speed of normal retail sales is slower than the rate of decrease in low-price wholesale sales." He added, "Once the hiring of a creative director to oversee brand planning and strategy is completed, the effects of the changed brand strategy are expected to gradually appear from the fall and winter seasons."

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