With good earnings and even better press, Fila shares are flying higher than a Grant Hill slam dunk. But there's still a mystery: How did the stock fall so low before soaring so high?

Last Tuesday the

Wall Street Journal

ran a glowing feature on the shoe maker's top-selling Grant Hill kicks. On Wednesday night the company released stellar earnings. The stock had an slammin' week: up 4 + Monday, 3 3/8 on Tuesday, 1 on Wednesday, 7 1/8 on Thursday and 5 5/8 on Friday. Overall a 21 7/8 rise over the week, from 66 + to 88 5/8.

So what's the problem?

It's where the story began. That 66 + from last Friday's close is actually an ugly low. The stock, formally Fila Holding SpA, an American Depositary Receipt,

(FLH:NYSE)

was at $106 7/8 on September 13.

Though explanations for the dive are elusive, one appears likely--an exploding scandal involving several executives of Gemina SpA, an Italian company that once was a majority shareholder and now controls about 20% of Fila. According to news reports, Milan prosecutors in October arrested two former managers and issued three arrest warrants for current and former executives of Gemina for alleged falsification of balance sheets. At that time, Gemina said that four of the five executives had quit the company.

Fila maintains that its American sneaker unit operates independently of Gemina. And when first contacted, Fila's U.S. investor relations spokesman, Perry Hall, denied knowledge of anything that would affect the stock price. "We haven't received any news," said Hall. "We're not exactly sure what is happening, the company hasn't had any information."

In a subsequent conversation, however, Hall conceded that he knew about the Gemina situation, but added that it "supposedly has nothing to do with the operations of Fila. That is not a reflection on the accounting procedures of Fila. Whether that is a factor affecting the stock, well, I don't know."

The entire Gemina affair didn't make the cut in the

Journal's

story.

And what about the 7% rise in the stock in heavy volume, the day before that very positive story?

Not even an elusive explanation.

By Cory Johnson