Columbia Sportswear has embarked on a project to increase brand awareness and sales growth across its wholesale and retail business, with a focus on digital sales and infrastructure. This comes after an assessment of the outdoor group's operating model, which has already led to a substantial management reshuffle last month.
The project Connect, unveiled by Columbia last week, is reminiscent of the plans discussed by many other sports and outdoor companies in the last months. The extra investments in retailing may have been precipitated by retail failures in the U.S. market but they more broadly address ongoing concentration in the retail market and the rise of online retailing.
The plans were detailed as the Columbia group reported a sales increase of 3 percent to $398.9 million for the second quarter. The performance was strongest in Europe, the Middle East and Asia (EMEA), where the group's sales advanced by 16 percent in constant currencies.
Columbia Sportswear also expanded by 4 percent to $238.2 million in the U.S. market, although that came entirely from own retail sales, while the group's wholesale business was down at a high single-digit percentage rate. Sales in Canada advanced by 5 percent in constant currencies but they declined by 8 percent in Latin America and Asia Pacific (LAAP), due to lower sales in China and South Korea.
The Columbia brand's sales alone were up by 2 percent to $340.5 million, an increase of 3 percent in constant currencies. On the same basis, Sorel's turnover soared by 74 percent and Prana raised its sales by 9 percent, but Mountain Hardwear suffered another sales decline of 5 percent for the quarter.
The Columbia group's loss from operations reached $17.3 million for the quarter, including costs of about $4.0 million relating to the assessment of the operating model. This compares with a loss of $11.8 million for the same quarter last year. It ended the quarter with a net loss of $11.5 million, widening a loss of $8.2 million in the same three months in 2016.
The Columbia group is projecting a sales increase of 3 percent for the full year, including a currency hit of less than 1 percentage point, and most of the added sales should come from its own retail sales in the U.S. market. The group's operating income is projected to grow at the same rate, as an increase in gross margin should be offset by extra marketing spend. This would imply operating income in the range of $256 million to $265 million and net income from $193 million to $200 million.
Read the full story in the Outdoor Industry Compass.
