Columbia Sportswear is investing in its namesake and Sorel brands in 2020, with a focus on footwear, as it tries to navigate climate, regional and China-related issues.
Like many companies, Columbia has seen an impact from the coronavirus, as well as difficult market conditions in Asia and South America, and warmer-than-usual weather across the globe, which has its effect on outerwear sales.
To counter it all, the company will dive head first into innovation to build on 2019’s strong performance. For the year, Columbia surpassed the $3 billion sales mark for the first time, and net income increased 23 percent to $330.5 million.
“As we enter 2020, we believe the strength of our unique brand portfolio, diversified business model and ongoing strategic investments position us for long-term profitable growth and market share gains,” Tim Boyle, chairman, president and CEO of Columbia Sportswear said on a conference call with analysts. “We’re continuing to make investments in processes and systems across our supply chain to improve productivity, enhance service levels, and add capacity throughout our distribution and fulfillment networks. We’re investing in systems to unlock greater end-to-end inventory visibility and enable more dynamic and automated planning and fulfillment capabilities. We are also increasing network capacity and speed to drive faster store replenishment and fulfillment.
Sorel
Sorel is expected to remain Columbia’s fastest growing brand, as its successful evolution to a year-round function-first footwear brand continues. In 2019, net sales increased 14 percent in the fourth quarter and were up 22 percent for the full year, “driven by robust growth across our U.S. wholesale and e-com businesses,” Boyle said.
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The brand’s evolution falls in line with consumers demand for more wearable, style-focused products, and Columbia’s efforts in the last year continue to drive consumer awareness and omnichannel sales.
“In 2020, the Sorel brand is poised to capitalize on the…momentum and to leverage the investments we’re making in demand creation,” Boyle said. “We expect this strategy to drive mid-teens net sales growth for the brand in 2020.”
Columbia brand
Looking at the Columbia brand, which saw net sales increase 4 percent in the quarter and 10 percent for year led by U.S. wholesale business, the performance fishing gear (PFG) line experienced strong sell-through in 2019, and net sales including apparel and footwear surpassed $200 million.
Footwear, in particular, continues to be the area of focus for long-term opportunity.
“The investments we are making in footwear became evident to consumers with the shift product launch in August, which is the first of many new product families to be unveiled in the coming seasons,” Boyle said. “This new product, along with refreshed classic styles will be essential to building a much bigger footwear business with existing, as well as new wholesale accounts.”
In the fourth quarter, footwear outperformed the brand overall, he added, driven by top-selling styles including the Ice Maiden, Newton Ridge and Bugaboot.
In apparel, Men’s Health featured the Whirlibird Interchange Jacket in its “10 Best Ski Jackets for Men” article, and Forbes featured the Columbia Women’s Heavenly long hooded jacket in its top plus-size coats for the season. In footwear, Business Insider featured the Omni Heat equipped Bugaboot in its best winter boots price and Self awarded the Shift OutDry the best shoe for hiking.
For 2020, Boyle said the leading technology is “Black Dot,” which is a heat sink application for the exterior of the garment.
“As we go forward into 2021, we’ve got further enhancements of our Omni-Heat,” planned, Boyle said. “We’ve sold billions of dollars of products with Omni-Heat. In 2020, we expect to maintain demand creation as a percent of sales at 5.5 percent and while continuing to evolve our mix towards high-return opportunities including digital and in-store marketing.”
Omnichannel
The company is also investing in omnichannel capabilities and evolving direct-to-consumer (DTC) platforms to deliver a better consumer experience. In 2020, investments in brick-and-mortar stores, including ongoing store refreshments and optimizing the consumer first platform, are in place.
“In our e-commerce business, we intend to continue rolling out our new mobile platform Experience First or X1 across the remainder of North America,” Boyle said. “We’re also investing to strengthen our capabilities across the organization. Within merchandising and product teams, we’ve been investing in personnel to enhance our product engine across our brand portfolio. For the Columbia brand, this includes product initiatives for 2020 and beyond that span footwear, apparel, and accessories.”
Coronavirus impact
Discussing the coronavirus outbreak in China, Boyle said after taking appropriate measures to ensure the health and safety of our employees and partners in the region, “it’s having an immediate impact on our business in China, including the effects of store closures and lower store traffic at stores that remain open.”
“We’re also seeing an impact in regions and stores outside of China, due to lower tourism related to the outbreak,” he said. “This has resulted in a challenging start to the year, which will likely persist until normality returns to the region. At this point, it’s too early to forecast the regional and global financial impact on our business, including sourcing, production and supply chain implications.”