Columbia Sportswear has lowered its sales outlook for the year but raised its profit forecast, despite weaker-than-expected third-quarter revenues due to supply-chain constraints. The group’s quarterly sales rose by 15 percent to $804.7 million, against forecasts of $862 million. Beating expectations, net income jumped by 60 percent to $100.6 million because of favorable gross margins, cost controls and health early-autumn, early-season sell-through.
The gross margin increased to 50.7 percent from 48.9 percent a year earlier, mainly driven by lower direct-to-consumer promotional levels and favorable wholesale product margins – partially offset by higher inbound freight costs and an unfavorable mix of sales channels. At 50.8 percent to 51.0 percent, the gross margin should be higher than projected for the full year.
The company said it expects annual sales to range from $3.04 to $3.08 billion compared with a previous estimate of $3.13 to $3.16 billion. Based on its order books, the company also believes that sales growth in the mid-teens or better is attainable in 2022. However, it anticipates that ongoing supply chain disruptions will continue to impact the timing of receipts and shipments of spring 2022 inventory and may result in higher than planned cancellations that would affect sales performance.
The owner of the Columbia, Sorel, prAna and Mountain Hardwear brands added that supply chain constraints will likely cause delayed receipt and delivery of products for its autumn 2021 and spring 2022 collections. Columbia anticipates pressure on gross margins next year, given higher product and freight costs and the likelihood of a more normalized promotional environment, but the operating margin should be similar to the 2021 level.
In the latest quarter, the launch of the Omni-Heat Infinity technology helped the Columbia brand to record a sales increase of 16 percent. Sorel slipped by 4 percent, despite a doubling in e-commerce. PrAna rose by 19 percent. Mountain Hardwear outperformed with a 48 percent jump in sales, helped by a rejuvenated product line that won over several new retail clients.
On a geographical basis, revenues went up by 15 percent in the U.S. In terms of local currencies, sales grew by 9 percent in the EMEA region, by 18 percent in Canada and by 10 percent in Latin America and Asia-Pacific, with China and Korea both up at mid-teen rates, but Japan declined by a low single-digit rate due to prologed Covid measures. In EMEA, the group recorded mid-single-digit gains in sales to distributors and low double-digit growth in direct-to-consumer sales.
