Fila’s performance was dented in the third quarter as margins shrank. Overall sales and profits remain on an upward trajectory but the Fila brand is operating against the backdrop of an intensely promotional market, especially in the US.Fila USA’s sales dropped 20 per cent while Fila Korea sales rose four per cent.

The sports and leisurewear operator benefited during the quarter from its well diversified business portfolio with resilient royalty income, but promotional sales and challenging circumstances in the US were an issue. US headwinds were strong due to weaker pricing power caused by excess inventory in the market and bigger discounts from competitors.

The company has updated its outlook with sales expected to rise between five per cent and ten per cent against a previous forecast between a fall of two per cent and a rise of two per cent. Expectations are unchanged for the Fila brand but Global Royalty revenue should be higher and Acushnet should continue to outperform.Yet the forecast for consolidated operating profit has been downgraded to a range of down five per cent to ten per cent from expectations that it could fall two per cent or perhaps even rise by up to two per cent.

The operating profit outlook will reflect one-off restructuring costs and that margin pressure due to promotional activities in the US.