After a brilliant financial year in 2019, Columbia Sportswear did not have a great start to 2020 due to the Covid-19 pandemic. Its net profits stood at just $0.2 million, down from $74.2 million for the year-ago quarter, while sales dropped by 13 percent to $568.2 million because of the coronavirus pandemic. Sales in the apparel/accessories/equipment segment decreased by 14 percent to $452.2 million, while footwear lost 9 percent to $116.0 million.
Covid-19 caused the group’s wholesale revenues to tumble by 10 percent to $325.9 million and direct-to-consumer (DTC) sales to drop by 17 percent to $242.3 million. The store fleet included 122 outlets and 20 brand stores at the end of the quarter, against 113 outlets and 21 brand stores last year. Overall, the gross margin fell by 3.6 percentage points to 47.8 percent, primarily reflecting inventory obsolescence provisions related to Covid-19 and lower DTC product margins due to higher promotional activity.
Sales in EMEA dropped by 20 percent in constant currencies.In the U.S., sales decreased by 9 percent, In constant currencies, revenues fell by 13 percent in Canada. In Latin America and Asia-Pacific, they tumbled by 22 percent. China, the first market to have experienced pandemic-related weakness, was down by more than 40 percent.
The Columbia brand was hit the hardest, suffering a 15 percent decrease in sales during the quarter, owing to lower demand resulting from the pandemic as well as unfavorable weather conditions. At Sorel, sales were down by just 2 percent, with the decline primarily resulting from lower sales of winter utility styles in Europe. In the U.S., the brand experienced robust e-commerce growth. Prana declined by 11 percent, as lower wholesale revenues more than offset e-commerce growth. At Mountain Hardwear, revenues dipped by 2 percent as a healthy start to the year gave way to lower demand due to the pandemic.
Columbia suspended its formal guidance, but said that it expects sales in the seasonally small second quarter to be significantly weaker, resulting in an operating loss. It is planning more clearances, and it has curtailed sourcing for the autumn/winter collections.
