Columbia reports a 21% gain in operating income FY24

Columbia Sportswear aims to revitalize its financial fortunes through continued development of its ”Accelerate” growth strategy, a refreshed marketing direction, stronger consumer segmentation and new products. In FY24, the group suffered both an operating profit and revenue decline, despite sales growth in both the EMEA and China, which is projected to continue this FY. 

“To amplify our refreshed marketing (in FY25), we are increasing our targeted demand creation spend to 6.5 percent of sales compared to 5.9 percent of sales in 2024,” Tim Boyle, Chairman, President and CEO, told analysts. “To activate brand and product strategies, we will be elevating storytelling and consumer experience across the marketplace. We’re investing alongside our strategic retail partners to enhance in-store presentations.”

While Columbia Sportswear enters FY25 with healthier inventory levels and the likelihood of lower clearance activity in the months ahead, it also must manage ongoing cost pressures and higher demand creation costs to maintain a stable year-over-year operating margin and an 80-basis-point increase in gross margin to 51.0 percent. With this in mind, the company is promising a wider review of its cost structure after netting $90 million in cost savings last year. 

Sales growth of 1% to 3%

The company’s current FY25 outlook calls for total sales growth of 1 to 3 percent to a range of $3.4 to $3.47 billion, which includes low-single-digit increases in EMEA and the US for the apparel and footwear segments and the Columbia brand. Annual operating cash flow is projected to be at least $250 million. 

In Q4, the group reported a 21 percent gain in operating income to $137.3 million from $113.1 million for the period ended Dec. 31. Net income was 9.9 percent higher at $102.6 million as gross margin grew by 50 basis points to 51.1 percent. Final period revenues rose by 3.5 percent to nearly $1.10 billion despite lower sales in the home US market and in footwear. Wholesale revenues were 6 percent higher at $459.9 million and were up 1 percent in DTC to $636.7 million. By brand in constant currency, Columbia sales increased by 6 percent to $945.4 million; Sorel fell by 16 percent to $97.7 million; Prana dropped 2 percent to $22.4 million, and Mountain Hardwear sales spiked up 5 percent to $31.0 million.

The EMEA region had 21 percent constant currency sales growth to $161.6 million in the final period, fueled by high-teens expansion in direct and a 30+ percent increase in distributor sales. Meanwhile, China net sales grew by mid-teens in Q4 and over 20 percent in FY24. Columbia intends to capitalize on the market’s growing interest in the outdoors through more localized product collections and a “robust digital strategy.”

Annual revenues tumbled

For FY24, Columbia reported a 12.7 percent drop in annual operating income to $270.7 million from $310.3 million as annual revenues tumbled 3.4 percent to $3.37 billion from $3.49 billion. Gross margin widened by 60 basis points to 50.2 percent. But net income contracted 11.2 percent to $223.3 million from $251.4 million. Year-over-year inventory was down by 7.5 percent at $690.5 million. 

A further breakdown of annual results shows 8 percent constant currency growth in the EMEA region to $511.8 million; an 8 percent contraction in the US to $2.07 billion and 11 percent expansion in LAAP to $560.7 million. By product category, annual sales of apparel/accessories/equipment were essentially flat at $2.69 billion; footwear was down by 16 percent to $681.4 million. By channel, wholesale declined by 7 percent to $1.73 billion, while DTC expanded by 2 percent for the year to $1.63 billion. Columbia brand sales were flat for the FY at $2.92 billion. Sorel annual revenues sank by 29 percent to $238.3 million and were down 8 percent at Prana at $104.1 million. Mountain Hardwear annual revenues climbed up 7 percent to $108.6 million.