After a small decline in turnover and net income for the third quarter, Columbia Sportswear has adjusted its sales guidance for the full year, estimating that sales should increase by about 4 percent, including less than one percentage point of negative impact from currency exchange rates.
The group's sales dipped by 3 percent to $745.7 million for the third quarter. The drop chiefly affected the apparel, accessories and equipment business, which was down by 4 percent to $574.1 million, while footwear sales were broadly flat at $171.6 million.
Tim Boyle, the group's chief executive, said in a statement that its teams continued to perform well, with the right products and a compelling marketing, but sales were impacted by a shift in shipments of U.S. wholesale pre-orders and the bankruptcy of several U.S. customers.
Furthermore, the three months compare with a buoyant third quarter in 2015, when sales were inflated by a favorable shift in the timing of shipments. That drove a 26 percent increase in U.S. sales, a 14 percent increase in consolidated net sales, and a 39 percent increase in net income.
The group's U.S. sales slipped by 6 percent to $484.8 million for the third quarter this year. Its own retail sales advanced at a mid-teen rate in the U.S., but this could not make up for a low-double-digit percentage sales decline in wholesale turnover.
Columbia Sportswear's turnover jumped by 8 percent to $73.0 million in Europe, the Middle East and Africa (EMEA). While sales increased at the upper end of the 20 percent range in European markets where the group runs its own business, sales to European distributors were off at a rate in the low thirties. The company pointed to ongoing issues in Russia.
The outdoor company's turnover in Latin America, Asia-Pacific (LAAP) moved up by 3 percent to $112.7 million for the quarter. Sales were up at a mid-teen rate in Japan (although that amounted to a low-single-digit decline in constant currencies) and at a high single-digit rate in China, but they declined at a rate in the low twenties in Korea. The group's sales to distributors in the LAAP region were off at a high-single-digit rate as well.
The Columbia brand's sales contracted by 4 percent to $587.3 million for the quarter, while Sorel raised its turnover by 2 percent to $87.6 million and the Prana brand's sales jumped by 11 percent to $38.1 million. However, the Mountain Hardwear brand's sales tumbled by 12 percent to $30.5 million.
Columbia Sportswear's gross margin was unchanged at 46.4 percent and its operating income margin amounted to 16.6 percent, down by 0.6 percentage points. The U.S. group ended the three months with income of $83.6 million, down by 8.2 percent.
For the first nine months of this year, the company's turnover advanced by 2 percent to $1,660.0 million, which was an increase of 3 percent in constant currencies. Then again, its operating profit shrank by 7 percent and its net income was off by 3 percent to $107.2 million for the nine months.
Issuing a slightly downgraded guidance, the group said that its gross margin for the full year should improve by up to 0.1 percentage points. Operating income should increase by up to 4 percent, to between $250 million and $259 million, meaning that the operating margin would reach up to 10.7 percent. The group's net income would then rise by up to 8 percent to reach between $180.0 million and $187.5 million.