Columbia Sportswear's sales in Europe, the Middle East and Africa (EMEA) declined by 15 percent to $58.2 million in the three months to the end of last year. Sales contracted by 6 percent in constant currencies, due to a fall of more than 30 percent in sales to distributors. The group's turnover in European markets where it operates directly advanced at a mid-teen rate in constant currencies, but it was flattened by currency exchange rate changes.
The entire U.S. outdoor group's sales were up by 3 percent $699.4 million for the quarter, which was an increase of 7 percent in constant currencies and an impressive performance given the weather. It underlines the efforts undertaken by the group to make its business less seasonal.
The ample sales rise was driven by the U.S. market, where the group's turnover advanced by 10 percent to $446.2 million, with contributions from all brands. Canadian sales tumbled by 7 percent in reported terms and by 10 percent in constant currencies.
The group's sales slipped by 4 percent to $149.7 million in Latin America and Asia-Pacific, but they moved up by 2 percent in constant currencies. Sales to distributors throughout Latin America and Asia-Pacific soared by more than 40 percent. Columbia said the regional sales decline came from Asian markets, although Japan and China contributed sales increases in constant currencies.
All of the group's brands added sales for the quarter, with increases of 3 percent for Columbia, 21 percent for Sorel, 39 percent for Prana and 5 percent for Mountain Hardwear in constant currencies. The rise was driven by footwear, as sales improved by 10 percent to $183.8 million and by 16 percent in constant currencies, while sales of apparel, accessories and equipment crawled up by 1 percent to $515.6 million and by 4 percent in constant currencies.
The company achieved an operating profit of $82.3 million for the quarter, amounting to 11.8 percent of net sales, down by 0.3 percentage points for the quarter. Columbia Sportswear ended the quarter with net income of $63.4 million, up by 14 percent.
After the group's buoyant performance in previous quarters, Columbia Sportswear's resilience in the last quarter enabled it to raise its sales by 11 percent to $2,326 million for the full year, with a rise of 15 percent in constant currencies.
Excluding five months of incremental sales for Prana, the outdoor and fitness brand that the company acquired in May 2014, the group's sales expanded by about 8 percent in reported terms and 12 percent in constant currencies.
The Columbia brand led the way with a sales increase of 7 percent to $1,865 million, up by 10 percent in constant currencies for the year. Without exchange rate changes, Sorel's sales climbed by 34 percent and Mountain Hardwear managed an increase of 1 percent. Prana's turnover more than doubled to $125.3 million but that includes an extra five months, generating incremental sales of $56.0 million.
Tim Boyle, the company's chief executive, pointed out in a statement that Europe generated a sales increase of more than 20 percent for the Columbia brand in constant currencies, adding that it was reclaiming share in key European markets.
Yet still, the group's sales in EMEA shrank by 10 percent to $233.2 million and they were flat in constant currencies. The company raised its sales at a low single-digit rate in European markets where it operates directly, amounting to an increase in the low 20 percent range in constant currencies, then again its sales to distributors dropped in a mid-20 percent range.
The group's sales dipped by 5 percent to $469.2 million in Latin America and Asia-Pacific, although they would have increased by 2 percent in constant currencies. Sales to regional distributors advanced at a mid-20-percent rate but that could not compensate for a declining turnover in Korea and Japan, along with flat sales in China. Taking away the exchange rate changes, the group's sales increased in Japan and they were up by 2 percent in China. The company closed down 11 stores in Korea last year.
The performance was most convincing in the U.S. market, where the group's sales amplified by 21 percent to $1,455 million. Its organic expansion amounted to 17 percent in the U.S. market and Prana adding about $48.5 million in incremental sales. The group's sales were also up by 11 percent to $168.6 million in Canada, a jump of 30 percent in constant currencies.
Footwear performed strongly for the entire year, with a sales increase of 26 percent in constant currencies to $505.0 million, up by 19 percent in reported terms. Sales of apparel, accessories and equipment moved up by 9 percent to $1,821 million, and by 12 percent in constant currencies.
With five months of incremental income from the Prana brand, operating income for the year jumped by 26 percent to $249.7 million. It amounted to an operating margin of 10.7 percent, up by 1.2 percentage points. The group's net income inflated by 27 percent to $174.3 million.
Columbia Sportswear anticipates mid-single-digit sales expansion this year, with a negative impact of about 1 percentage point from changes in currency exchange rates. The rise should be driven by low double-digit growth in own retail sales and a low single-digit increase in wholesale turnover.
The gross margin is predicted to improve by 0.4 percentage points and operating income to reach between $257 million and $267 million, representing operating margin of up to 10.8 percent. The company's guidance calls for net income to reach between $179 million and $186 million.
The group repurchased $70.1 million of its common stock and paid $43.5 million in dividends last year. Inventories jumped by 23 percent to $473.6 million at the end of the year but the group said that cold weather at the start of this year helped to reduce them.
As part of its increased focus in European markets, Columbia has been adjusting its product range to make sure that about 20 percent of the offering is specific to European consumers. This change already began last year but the range has been more thoroughly adjusted this year.
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