With a warm winter and a difficult US marketplace to contend with in its seasonally strong final quarter of the year, Columbia Sportswear reported a 27 percent drop in operating income to $113.1 million from $155.4 million and a 9 percent decline in total revenues to $1.06 billion from $1.17 billion for the period ended Dec. 31. Net income was down 26 percent to $93.3 million from $125.7 million but gross margin improved by 20 basis points to 50.6 percent on lower freight costs and favorable channel mix.
Anticipating a challenging year ahead due to high economic and geopolitical uncertainty coupled with cautious retailers, Columbia has initiated a multi-year profit improvement plan aimed at generating $125 to $150 million in annualized savings by 2026. This year, the cost reductions are forecast in the $75 to $95 million range and include a 3 to 5 percent reduction in the US corporate headcount and other actions aimed at improving the company’s overall operating efficiency. The current FY24 outlook calls for a 2.0 to 4.0 percent decline in total revenues to a range of $3.35 to 3.42 billion and an 8.1 to 17.7 percent drop in annual net profitability to a range of $207 to 231 million. The anticipated operating margin range is 7.6 to 8.4 percent.
On the growth side of Columbia’s go-forward strategy, the group has numerous initiatives underway. Actions include attracting new, younger consumers to the namesake Columbia brand, streamlining color and style counts among product collections, increasing the marketing focus on brand storytelling and less on promotions and establishing stronger strategies for other brands in its portfolio. These include elevated brand presentations for Mountain Hardwear in both e-commerce and strategic wholesale accounts and a refined product offering and marketing strategy for its Sorel business.
A deeper dive into the group’s Q4 results shows reported sales declines in all geographies except for Latin America/Asia Pacific. While sales in the LAAP rose by 7 percent to $164.0 million, they fell in the US by 12 percent to $780.8 million, by 2 percent in the EMEA to $132.8 million and by 29 percent in Canada to $92.0 million.
In the product area, footwear sales stepped 12 percent lower to $269.1 million and were down by 9 percent in apparel/accessories/equipment to $900.5 million. Columbia brand sales slid by 7 percent to $961.3 million and were down by double digits in all brands – Sorel: -18 percent to $142.6 million; -29 percent to $32.3 million for Prana; and Mountain Hardwear down 11 percent to $33.4 million.
For the full FY23, the group generated positive sales growth in the EMEA (+7 percent to $438.6 million) and LAAP (+10 percent to $473.9 million). Annual Columbia brand sales inched 2 percent higher on a reported basis to $2.86 billion. Both apparel/accessories/equipment and footwear sales each rose 1 percent for the year to $2.66 billion and $803.1 million, respectively. Wholesale revenues were flat on a reported basis at $1.87 billion but grew by 1 percent in the DTC channel at nearly $1.6 billion.
