In a Nutshell: Crediting a shift to become a more brand-led and consumer-focused organization, Columbia Sportswear Co., reported it had achieved record net income that topped $100 million in the third quarter.
The company said its strong balance sheet, with $451 million in cash and short-term investments, and no long-term debt, enables it to invest in growth initiatives. Columbia’s four strategic investment priorities are: to drive brand awareness and sales growth through focused demand creation, enhance consumer experience and digital capabilities in all channels and regions, expand and improve global direct-to-consumer (DTC) operations with supporting processes and systems, and invest in personnel and optimize the organization across brand portfolios.
Based on the strong results, the company now expects 2018 net sales growth of approximately 11 percent to 11.5 percent, compared to previous guidance of 9 percent to 10.5 percent from 2017 net sales of $2.47 billion. The company expects 2018 net income to range between $240 million and $244 million, compared to previous guidance of $223 million and $230 million, and 2018 operating income between $308 million and $312 million, compared to its previous forecast range of between $286 million and $295 million.
Sales: Net sales in the third quarter ending Sept. 30 increased 6 percent, to $795.8 million, compared with net sales of $747.4 million for the third quarter of 2017. U.S. net sales rose 9 percent, attributable to strong growth in direct-to-consumer (DTC). Columbia said its Latin America-Asia Pacific net sales fell 4 percent, driven by declines in its distributor business and China, partially offset by growth in Japan and South Korea.
Europe, Middle East and Africa net sales were up 15 percent, led by Europe-direct growth. Canada net sales were flat, with strong DTC net sales balanced out by flat wholesale revenue.
Among the company’s top lines, Columbia brand net sales increased 7 percent, to $640.9 million, while Sorel net sales rose 12 percent, to $91.2 million, and prAna brand net sales increased 8 percent, to $39.9 million.
By product group, apparel, accessories and equipment net sales were up 6 percent, to $617.6 million, and footwear net sales also gained 6 percent, to $178.2 million.
Earnings: Net income for the period rose 14 percent, to a record $100.2 million, from $87.7 million in the year-ago quarter. Third quarter operating income increased 5 percent, to $129.1 million, representing 16.2 percent of net sales.
CEO’s Take: Tim Boyle, president and CEO, said: “As we celebrate our company’s 80th anniversary, I’m delighted to mark this milestone with the strongest quarterly and year-to-date results in our company’s history. While this reflects broad momentum across our brand portfolio and regions, it is exciting to see the Columbia brand U.S. business leading the way. Our robust direct-to-consumer performance, across both our brick and mortar and e-commerce channels, is a testament to brand strength and demonstrates that consumers are responding positively to our innovative product line. In wholesale, the positive momentum we experienced with our Spring 2018 assortment has continued with excellent early season sell-through of our Fall 2018 product line.”