To cut costs and improve profitability in response to widening losses, Fila USA said yesterday that it will outsource its distribution capabilities to Ryder Integrated Logistics Inc. in Miami.
The Sparks-based footwear and clothing company said it expects the restructuring, which will take effect in May, to save the company about $10 million over five years.
About 85 Fila employees and an additional 85 temporary employees work at the company's two distribution warehouses in Point Breeze and Brandon Woods. Another warehouse is under construction in Brandon Woods.
Ryder has agreed to consider all workers for employment with the company with a comparable compensation and benefits package, said Tom O'Riordan, Fila's executive vice president and chief operating officer.
Ryder's "intention is to hire as many as they can, but they have their own hiring requirements," he said.
Outsourcing its distribution will allow Fila to focus on its core business of athletic footwear and apparel design, marketing and sales, while providing a significant reduction in overhead costs, he said.
"A large number of our competitors have done this or are considering it," O'Riordan said. "It's difficult trying to run a distribution center in a business that's seasonal or cyclical.
"Ryder is very good at this," he said. "Their intention is to bring other people in the facility to optimize it for the entire year."
The distribution outsourcing marks the latest Fila move to improve its financial outlook.
Last week, the company sold its Sparks headquarters and 120 acres of surrounding land. In November, Fila eliminated 68 sales employees to cut costs and turned its sales effort over to independent contractors.
"There's still a lot for us to do, but we're making a lot of progress," O'Riordan said.
Italy-based Fila Holding SpA has been in a slump in the U.S. market.
The company reported a fourth-quarter loss of $2.18 per American depositary receipt, compared with a loss of $1.17 a year ago.
Its ADRs closed yesterday at $8.8125, down 6.025 cents, on the New York Stock Exchange.
Pub Date: 3/13/99