After navigating supply-chain issues and product-delivery delays in 2022, Columbia Sportswear is intent on reducing its inventory level to be more in line with demand and generating 3 to 6 percent revenue growth this year in the range of $3.57 to $3.67 billion. The group is also eyeing an annual operating margin of 11.6 to 12.2 percent, up from 11.3 percent in FY22, and a 60-basis-point increase in gross margin to approximately 50 percent.
In Q4 (ended Dec. 31), net income declined 20 percent to $125,690,000 from $156,961,000, as operating income slipped 26.6 percent to $155.4 million. Final period revenues rose 3.6 percent to $1.170 billion from $1.130 billion, including a 460-basis-point impact from currency headwinds, as gross margin contracted by 180 basis points to 50.4 percent on higher promotional activity. Period-end inventories were up 59 percent to nearly $1.03 billion. By category, apparel sales increased 6 percent (11 percent in constant currency) to $901 million, and footwear sales fell 5 percent (flat C$) to $269 million because of lower Sorel sales prompted by early Q3 shipments.
| Columbia | |||
|---|---|---|---|
| Income ($ thousand) | |||
| 2022 | 2021 | Change | |
| Q4 | |||
| Net sales | 1,169,520 | 1,129,720 | 3.5% |
| Cost of sales | 579,544 | 539,544 | 7.4% |
| Gross profit | 589,976 | 590,176 | -1.8% |
| SG&A expenses | 405,093 | 384,047 | 53.6% |
| Net licensing income | 6,121 | 5,439 | 7347.9% |
| Operating income | 155,404 | 211,568 | -97.1% |
| Net interest income | 1,054 | 308 | 50355.8% |
| Other non-operating income | 3,253 | 24 | 4291.7% |
| Pre-tax | 159,711 | 211,900 | -98.5% |
| Tax | 34021 | 54,939 | -94.1% |
| Net income | 125,690 | 156,961 | -19.9% |
| Earnings per share (diluted) | 2.02 | 2.39 | -15.5% |
| FY | |||
| Net sales | 3,464,152 | 3,126,402 | 10.8% |
| Cost of sales | 1,753,074 | 1,513,947 | 15.8% |
| Gross profit | 1,711,078 | 1,612,455 | 8.7% |
| SG&A expenses | 1,304,394 | 1,180,323 | 45.0% |
| Net licensing income | 22,020 | 18,372 | 6999.9% |
| Operating income | 393,104 | 450,504 | -95.1% |
| Net interest income | 2,713 | 1,380 | 28385.8% |
| Other non-operating income | 1,593 | -373 | – |
| Pre-tax | 397,410 | 451,511 | -99.6% |
| Tax | 85,970 | 97,403 | -98.4% |
| Net income | 311,440 | 354,108 | -12.0% |
| Earnings per share (diluted) | 4.95 | 5.33 | -7.1% |
| Source: Columbia | |||
Brand sales showed 8 percent growth (13 percent C$) for Columbia at $961.3 million; a 13 percent decline for Sorel (-9 percent C$) to $142.6 million; a 6 percent decline at Prana to $32.3 million; and a 12 percent dip (-9 percent C$) for Mountain Hardwear at $33.4 million.
Geographically, U.S. sales rose 2 percent to $781 million, with wholesale down mid-single digits because of higher order cancellations and the shipping of a lower portion of fall orders during the period. DTC sales in the market rose by high single digits. EMEA sales increased 17 percent (32 percent C$) to $133 million, with Europe-direct up low double digits, while the percentage increase in the distributor business was in the high 30s. There was strong demand across all channels in the EMEA, which contributed €300 million and was profitable in FY22, expanding the company’s operating margin.
| Columbia | |||
|---|---|---|---|
| Net sales (reported) ($ million) | |||
| 2022 | 2021 | Change | |
| Q4 | |||
| By region | |||
| U.S. | 780.8 | 762.1 | 2.5% |
| Latin America & Asia-Pacific | 164.0 | 172.8 | -5.1% |
| EMEA | 132.8 | 113.6 | 16.9% |
| Canada | 92.0 | 81.2 | 13.3% |
| Total | 1,169.6 | 1,129.7 | 3.5% |
| By brand | |||
| Columbia | 961.3 | 894.2 | 7.5% |
| Sorel | 142.6 | 163.4 | -12.7% |
| prAna | 32.3 | 34.3 | -5.8% |
| Mountain Hardware | 33.4 | 37.8 | -11.6% |
| Total | 1,169.6 | 1,129.7 | 3.5% |
| By category | |||
| Apparel, accessories & equipment | 900.5 | 846.1 | 6.4% |
| Footwear | 269.1 | 283.6 | -5.1% |
| Total | 1,169.6 | 1,129.7 | 3.5% |
| By channel | |||
| Wholesale | 514.5 | 504.5 | 2.0% |
| DTC | 655.1 | 625.2 | 4.8% |
| Total | 1,169.6 | 1,129.7 | 3.5% |
| FY | |||
| By region | |||
| U.S. | 2,302.2 | 2,060.3 | 11.7% |
| Latin America & Asia-Pacific | 473.9 | 465.5 | 1.8% |
| EMEA | 438.6 | 382.1 | 14.8% |
| Canada | 249.5 | 218.5 | 14.2% |
| Total | 3,464.2 | 3,126.4 | 10.8% |
| By brand | |||
| Columbia | 2,864.3 | 2,557.4 | 12.0% |
| Sorel | 347.3 | 320.9 | 8.2% |
| prAna | 143.1 | 141.9 | 0.8% |
| Mountain Hardware | 109.5 | 106.2 | 3.1% |
| Total | 3,464.2 | 3,126.4 | 10.8% |
| By category | |||
| Apparel, accessories & equipment | 2,661.1 | 2,389.2 | 11.4% |
| Footwear | 803.1 | 737.2 | 8.9% |
| Total | 3,464.2 | 3,126.4 | 10.8% |
| By channel | |||
| Wholesale | 1,867.7 | 1,660.4 | 12.5% |
| DTC | 1,596.5 | 1,466.0 | 8.9% |
| Total | 3,464.2 | 3,126.4 | 10.8% |
| Source: Columbia | |||
Meanwhile, LAAP sales fell 5 percent (+11percent C$) to $164 million, with Japan down in the low teens. China fell mid-single digits (up mid-single C$) despite a strong DTC business. Korea was down low double digits (up low single C$) on growth in wholesale and DTC. Columbia senior executives, confirming there are no substantial order cancellations in China for the Spring ’23 season, said they are “bullish” about the market this FY.
For FY22, Columbia has reported a 12 percent decline in net income to $311.4 million from $354.1 million, a 220-basis-point contraction in gross margin to 49.4 percent, largely due to higher inbound freight costs. Annual revenues increased 10.8 percent to $3,464,152,000 from $3,126,402,000. Sales growth was negatively impacted by 340 basis points from currency headwinds and challenging market conditions in H2. Columbia sales rose 12 percent on a reported basis (13 percent C$) last year to $2.86 billion; Sorel sales jumped 8 percent (11 percent C$) to $347.3 million; Prana revenues were essentially flat at $143.1 million; and Mountain Hardwear sales were 3 percent higher at $109.5 million.
By channel, annual wholesale revenues increased 12 percent (16 percent C$) to $1.87 billion, and DTC climbed 9 percent (12 percent C$) to nearly $1.6 billion.
