While Columbia Sportswear’s business, like most in the apparel industry, has been hit hard by the coronavirus pandemic, the company’s e-commerce sales have been a bright spot.
This is particularly true of the brand’s outdoor apparel and gear, and footwear, with consumers looking for fresh clothing and materials for hiking, climbing and walking as states slowly reopen and allow people to pursue activities that adhere to social to social distancing.
Tim Boyle, chairman, CEO and president of Columbia Sportswear, told analysts on a conference call discussing first-quarter results that e-commerce sales declined in March across North America as consumers focused on purchasing essential items.
“In April, we experienced a sharp recovery as consumers adapted to the new environment,” Boyle said. “Through the first several weeks of April, our U.S. e-commerce business was up over 60 percent year-over-year. We have also experienced healthy growth in our wholesale partners’ online businesses. Footwear is performing very well across both brands [Columbia and Sorel], with exceptional growth from Sorel. There have also been some surprise bestsellers, including the PFG Neck Gaiter, which is difficult to keep in stock as consumers look for face mask solutions.”
This came as net sales for the first quarter ended March 31 decreased 13 percent to $568.2 million. Net income decreased nearly 100 percent in the quarter to $200,000 from $74.2 million for the comparable period in 2019.
Boyle noted that the company’s e-commerce business represented 11 percent of global net sales in 2019. In the U.S., including its own e-commerce site and wholesale partners’ online business, “we estimate that the Columbia brands online penetration was over 20 percent in 2019. With the majority of stores closed, this is obviously a much higher number today, and we are leveraging every opportunity we have to connect with consumers online and deliver the innovative product they expect to their doorstep.”
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The pandemic is also impacting supply chain and logistics operations. Boyle said starting in February, factory closures in China began to impact raw materials and finished goods production, as well as logistics operations.
“As the outbreak expanded to a global pandemic, our factory partners in Bangladesh, India and Sri Lanka, among others, have experienced closures and just begun to reopen earlier this week,” he said on Thursday. “This remains a dynamic and rapidly evolving environment that will likely affect our ability to timely fulfill some Fall 2020 orders and could have longer-term implications for many production regions around the world.”
Boyle said the company has been working to strengthen the resiliency of its supply chain. It established a cross-functional crisis response team early in the outbreak to work through the evolving operational challenges that the pandemic represents.
“It’s also clear that this pandemic has increased consumer adoption of online shopping and the ongoing e-commerce market share shift has accelerated,” Boyle said. “We know that our e-commerce businesses are powerful brand marketing engines in the marketplaces where we connect directly with consumers. We continue to invest in our Experience First initiative or X1 and intend for the platform to go live for the Columbia, Sorel and Mountain Hardwear brands in North America prior to the peak holiday sales period.”
He said the single-biggest investment Columbia is making in 2020 is on improving and enhancing its digital capability, specifically as it relates to e-commerce.
“Our digital business is a global digital business and we’re shipping from distribution centers almost exclusively around the globe,” he said. “Certainly in the U.S. and in Canada, we’re shipping merchandise only from our distribution centers. But it’s important to remember that the company has a number of both pure play, digital wholesale customers, as well as the fact that many of our customers, our historical customers, have big digital businesses, and that would include Dick’s Sporting Goods, Kohl’s, REI, all of whom are having a significant business digitally on our products.”
For the foreseeable future, Columbia’s emphasis will be on digital, Boyle noted, whether it’s included in its own commerce or in the typical Facebook, Instagram and other platforms around the world.
“We may not be able to sustain 60 percent growth, but I think the world is much more accepting of digital commerce today than they were pre-pandemic, he said. “So our expectations are that consumers are going to be much more willing to shop remotely through digital means and that will continue to be a bigger part of our business. That’s why it really is getting the single most significant investment in capital in the company in 2020.”