Columbia Sportswear reported that a disappointing drop in net profit of 23.6 percent to $19,931,000 while its sales increased by 2.7 percent to $297.4 million during the first quarter ended March 31. Sales would have actually fallen by more than 2 percent if currency exchange rates had remained the same.
Group sales declined by 2.8 percent to $65.7 million in the Europe, Middle East and Africa (EMEA) region. The drop was 10 percentage points higher in terms of local currencies, and orders were off as well. The management indicated that the product line was not aligned with the customers’ perception of the Columbia brand, and the need to modify the line led to the reduced orders.
U.S. sales were flat at $155.8 million. Also, Canadian sales increased by 4 percent to $26.9 million and Latin America/Asia sales increased by 20 percent to $49.0 million.
In dollar terms, global sales of the Columbia brand rose by 1.9 percent to $267.2 million while sales of Mountain Hardwear rose by 23.2 percent to $21.8 million. Sorel’s sales climbed by 5.7 percent to $3.7 million, but sales of Montrail dipped by 20 percent to $3.9 million. Pacific Trail’s sales soared by 33 percent to $800,000. While sales of outerwear were up by 16 percent at $69.6 million, sales of sportswear slipped by 1 percent to $161.1 million and sales of footwear slipped by 3 percent to $51.3 million. Sales of accessories and hardware rose by 12 percent to $15.4 million.
The total order backlog was down by 4 percent at the end of the period. Columbia forecasts growth of 2 percent for this year, based mainly on foreign exchange gains and the expansion of its retail business. U.S. orders were down by high single digits as American retailers have been placing lower orders for the rest of the year. Orders from Canada were flat, while those for Latin America/Asia have risen by double digits.
Despite the cautious guidance, the group is still planning to spend $50 million on advertising and its retail store expansion; the budget is being split evenly between the two. The group plans to open 15 stores this year, focusing on larger and better locations.
Columbia acknowledged that there was some pressure building on input costs because of labor costs in Asia and currency appreciation. It said it was too early to see what impact it would have on pricing, given its ability to redesign product, but noted that the long spiral of price deflation in the industry was likely coming to an end.
The group has promoted Bryan Timm as chief operations officer. He replaces Patrick Anderson and will also remain interim chief financial officer. Tom Cusick, vice president for finance, has been promoted to chief accounting officer.
