Outdoor and activewear specialist Columbia Sportswear kicked off 2019 with record sales and gross margin, and upped its full-year outlook.
In a Nutshell: Columbia Sportswear Company said it experienced a strong finish to the fall sales season in the January-through-March period, as well as “excellent early season sell-through of our Spring 2019 assortment.”
The company said it was above plan for the first quarter, which, it said, combined with favorable advance Fall 2019 orders, gave it confidence to increase its full year financial outlook. Columbia said it is “delivering this profitable growth while at the same time making substantial investments to build on our strengths as a brand-led, consumer-focused organization.”
The company raised its fiscal 2019 financial guidance that included net sales of $2.98 billion to $3.04 billion, up from $2.97 billion to $3.03 billion, representing net sales growth of 6.5 percent to 8.5 percent, compared to 6 percent to 8 percent.
Operating income is now expected to be $378 million to $391 million, compared to $369 million to $382 million previously forecast, representing operating margin of 12.7 percent to 12.9 percent, from the prior 12.4 percent to 12.6 percent.
Sales: Net sales for the first quarter ended March 31 increased 8 percent to a record $654.6 million, from $607.3 million for the comparable period in 2018. The Columbia brand generated double-digit growth in the U.S. across direct-to-consumer and wholesale distribution channels, and the Sorel brand—which Columbia acquired in 2000—grew 28 percent globally, the company reported.
Earnings: Net income for the quarter rose 64 percent to $74.2 million from $45.1 million a year earlier. First quarter net income includes the benefit of full ownership of the company’s China business, which became a wholly owned subsidiary in January.
Gross margin expanded 210 basis points to a record 51.4 percent of net sales, compared to first quarter 2018 gross margin of 49.3 percent of net sales. Operating income increased 48 percent to a record $88 million, and operating margin expanded 360 basis points to 13.4 percent of net sales, compared to first quarter 2018 operating income of $59.3 million, or 9.8 percent of net sales.
CEO’s Take: Tim Boyle, president and CEO, said: “It is encouraging to see the momentum we created in 2018 continue into this year, with record first quarter net sales, gross margin, operating income, net income and earnings per diluted share…We are also delivering on the financial value capture of Project CONNECT, which helped to fuel 210 basis points of gross margin expansion.”
“Our profitable growth trajectory and fortress balance sheet, with cash and short-term investments of over $700 million and no long-term debt, provide a foundation of strength and confidence from which we will continue investing in our strategic priorities to drive brand awareness and sales growth through…focused demand creation investments, enhance consumer experience and digital capabilities in all our channels and geographies, expand and improve global direct-to-consumer operations with supporting processes and systems, and invest in our people and optimize our organization across our portfolio of brands,” Boyle said.
“We are making these investments to enable sustainable long-term profitable growth, make us a more efficient company, and drive market share capture across our brand portfolio and geographic regions.”