Led by its signature brand, Columbia Sportswear had a strong 2019, despite a tough fourth quarter for outerwear.
In a Nutshell: Columbia Sportswear Company had a record year in 2019, with sales surpassing the $3 billion mark for the first time in company history.
The company said it will prioritize driving brand awareness and sales growth in 2020 through increased demand creation investments, while enhancing consumer experience and digital capabilities in all channels and geographies. Columbia, which makes and markets active outdoor apparel, footwear, accessories and equipment, plans to expand and improve global direct-to-consumer (DTC) operations with supporting processes and systems.
For 2020, management now expects net sales of $3.18 billion to $3.23 billion, representing net sales growth of 4.5 percent to 6.0 percent. Operating income is forecast to reach $399 million to $412 million, representing operating margin of 12.6 to 12.8 percent.
The company said the outlook does not include the potential financial impact of the coronavirus outbreak, the effect of which is unable to be predicted with any degree of certainty at this time, the company said.
“With respect to the coronavirus outbreak, our first priority has been to take appropriate measures to ensure the health and safety of our employees and customers in this evolving environment,” the company said. “As a result, we have closed stores in China, implemented strategies designed to mitigate the impact on our employees in China and put in place company-wide travel limitations. The potential impacts of the outbreak are broad-reaching including impacts to our DTC and wholesale businesses. We are already experiencing lower store traffic at stores that remain open in China and stores outside of China that benefit from Chinese tourism. In addition, there are potential operational impacts across our supply chain.”
Sales: Net sales for the fourth quarter ended Dec. 31 increased 4 percent to a record $954.9 million compared to $917.6 million in the fourth quarter of 2018. Sales were evenly split between wholesale and direct to consumer.
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The Columbia brand saw net sales rise 3 percent in the quarter to $751.1 million. Sorel sales increased 13 percent to $143.5 million, prAna sales fell 10 percent to $33.1 million and Mountain Hardwear sales were up 4 percent to $27.2 million.
For the year, net sales increased 9 percent to $3.04 billion from $2.8 billion in 2018. Columbia brand sales grew 9 percent in 2019 to $2.49 billion. Sorel sales were up 6 percent to $314.2 million, prAna sales declined 4 percent to $151.5 million and Mountain Hardwear sales were flat at $89.1 million.
Earnings: Net income for the quarter increased 1 percent to $114 million from $113.3 million for the comparable period in 2018. Fourth quarter net income includes the benefit of full ownership of the company’s China business, which became a wholly-owned subsidiary effective January 2019.
Operating income decreased 9 percent to $138.6 million and operating margin declined 210 basis points to 14.5 percent of net sales, compared to fourth quarter 2018 operating income of $152.8 million, or 16.6 percent of net sales.
Operating income for 2019 rose 13 percent to a record $395 million and operating margin expanded 50 basis points to 13.0 percent of net sales, compared to 2018 operating income of $351.0 million, or 12.5 percent of net sales.
CEO’s Take: Tim Boyle, chairman, president and CEO, said: “In the fourth quarter, a challenging retail environment, particularly in outerwear, impacted sell-through performance and led to higher levels of promotional activity. In this environment, we delivered results generally in-line with our guidance, including continued exceptional growth for the Sorel brand.
“As we begin 2020, our unique brand portfolio, diversified business model and fortress balance sheet provide a foundation of strength and confidence from which we will continue investing in our strategic priorities,” Boyle continued. “We are making these investments to build on our strengths as a brand-led, consumer-focused organization and to enable sustainable long-term profitable growth.”