While reporting stellar results for the first quarter (see the next article), Columbia Sportswear announced yesterday the takeover of Prana (the company spells its brand name as prAna), the American brand of lifestyle, yoga, rock-climbing and fitness clothing and accessories, for $190 million.
Tim Boyle, president and chief executive of the group, said the move “fits Columbia's strategic priorities to expand into categories that appeal to complementary consumer segments, reduce our dependence on cold-weather products, and leverage Columbia's global operational platforms to expand across key geographic markets.” He told financial analysts that the group, which ended the first quarter with a record $567.8 million in cash and short-term investments, is open for further opportunities for external growth.
The price being paid for Prana's acquisition, which is expected to close in the second quarter, is equal to about 13 times the company's projected earnings before amortization (Ebitda) for 2014. The company, which is currently controlled by an equity fund, Steelpoint Capital Partners, is in line to book this year an operating margin in the low double digits on sales of more than $100 million.
Between 2000 and last year, its sales grew at a compound rate of more than 30 percent, and Columbia sees major opportunities for further expansion, notably in international markets. Prana is sold by 1,400 specialty retailers around the world as well in five concept stores and on its U.S. website, which generated about 12 percent of its sales last year.
According to Columbia, only 5 percent of Prana's sales are currently outside the U.S. Company officials told us at the Outdoor Retailer Summer Market last August that Austria, New Zealand and various countries in Southeast Asia and along the Andes were among the company's strongest foreign markets. The brand had also a presence in Germany, the Czech Republic, the U.K. and Japan, and it recently appointed a distributor in the Philippines.
Boyle said that Prana would have significant opportunities for international development with the support of the group in Canada, South America and Asia, at least in an initial stage. He felt that Columbia could be of less help in Europe, “as we have our own challenges there.”
Boyle indicated that Columbia will will support Prana with its strength in sourcing. He added that it will add a footwear line “when appropriate.”
Columbia will operate Prana as an independent subsidiar.y It will remain stationed in Carlsbad, California and run by its current CEO, Scott Kerslake, who was appointed to the post by Steelpoint Capital in 2010.
Prana is said to be more fashion-oriented than Lululemon, which has its roots in yoga as well but not in climbing. Customers seem to appreciate the brand's vivid prints and the brand's promotion of healthy and active lifestyles, partly through community projects, and its commitment to social and environmental responsibility (more in The Outdoor Industry Compass).
