Columbia Sportswear performed better than expected in the fourth quarter of 2020 and predicted that its results would return to 2019 levels in 2021. It exited the quarter with $791.9 million in cash and short-term investments, no bank borrowings and nearly $1 billion in total liquidity. It has refinanced its domestic credit agreement with a new agreement providing a $500 million five-year unsecured revolving credit facility.
The group’s revenues fell by 4 percent to $915.6 million in the latest quarter, although they benefited from later shipments of third-quarter wholesale orders.The group’s quarterly net income went down by 16 percent from the year-ago quarter to $95.8 million, a strong improvement from the third quarter. The bottom line included one-time charges of $18.1 million for retail impairments, as it permanently closed 13 stores in the U.S. and one in Europe, as well as a $17.5 million impairment on the prAna trademark.
E-commerce was once again a bright spot, with sales surging by 41 percent, boosted by the new e-commerce platform X1, implemented since the autumn in North America for the Columbia, Sorel and Mountain Hardwear brands, following a successful deployment across Europe in 2019. The newly refreshed sites have been aesthetically enhanced and were designed to offer an improved consumer experience.
However, sales in the company’s store fleet remained well below prior-year levels, sending direct-to-consumer sales down by 3 percent to $469.7 million due to store closures in Europe. Wholesale revenues declined by 5 percent to $446.0 million due to order cancellations.
The Columbia brand suffered a 7 percent decrease in revenues during the quarter. However, at Sorel, revenues were up by 5 percent, while at prAna and Mountain Hardwear, they gained 11 percent and 7 percent, respectively. Licensing income lost 10 percent.
In the three months to the end of December, sales in the apparel/accessories/equipment segment decreased by 6 percent from the year-ago quarter to $661.4 million, while footwear inched down by 2 percent to $254.3 million, both in constant currencies.
Also, in constant currencies, sales dropped by 18 percent to $85.6 million in EMEA due to a sharp drop in distributor orders, partially offset by high-single-digit growth from online sales. Revenues declined by 6 percent in the U.S. and by 8 percent In Latin America and Asia-Pacific. Canada surged by 36 percent, but this was mostly due to the later timing of third-quarter shipments.
Overall, the gross margin rose by 0.5 percentage points to 50.6 percent, thanks to a better channel mix with more profitable DTC e-commerce sales and lower promotions.
For the full year, sales were down by 18 percent to $2,501 million, the gross margin fell by 0.9 percentage points to 48.9 percent, and net income plunged to $108.0 million from $330.5 million in the previous year.
Looking at 2021, while continued uncertainty and business risks are surrounding the ongoing pandemic, the management said it is encouraged by e-commerce growth and the wholesale orders collected for the spring and autumn 2021 seasons, which it believes will fuel the group’s continued recovery in 2021. It is expecting a return to near-2019 levels in revenues and profits, forecasting sales of $2.95 to $3.00 billion and net income of $3.75 to $4.05 per share, thanks especially to more normal conditions at retail.