[Click eStock] "Fila Holdings, Visible Earnings Turnaround Starting Next Year"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained its 'Buy' rating and target price of 60,000 KRW for Fila Holdings on the 22nd, expecting a visible earnings turnaround starting next year.

Last year's fourth-quarter results fell short of market expectations. Fila Holdings recorded sales of 796.5 billion KRW and operating profit of 68.1 billion KRW in Q4. Sales increased by 1% year-on-year, but operating profit decreased by 20%. Lee Ji-young, a researcher at NH Investment & Securities, analyzed, "The results fell short due to the resurgence of COVID-19, clearance of excess inventory, and one-time costs from the California warehouse shutdown," adding, "Non-operating expenses included 26 billion KRW out of the 60.2 billion KRW tax penalty from last year's tax audit."

Currently, all sectors are gradually recovering from the COVID-19 shock in the first quarter, but a sharp rebound in consumption has not yet appeared. Additionally, recent new brand launches such as Keds, development of performance products, and strengthening of the e-commerce organization may increase marketing and promotional expenses and labor costs. Therefore, a full-scale earnings recovery is expected to be possible only next year. The researcher stated, "This year, through major investments such as launching new brands like Keds, strengthening e-commerce, expanding performance lineups including tennis shoes, running shoes, and cycling shoes, and strategic branding, Fila Holdings will lay the foundation for mid- to long-term growth," adding, "Accordingly, a visible earnings turnaround is expected to appear starting next year."