In its first quarter of 2013, Columbia Sportswear managed to increase its total sales by 5 percent compared with the same period of last year, reaching $348.3 million. The impact of foreign currency changes was lower than 1 percent. Net income jumped by 159 percent to $10.1 million, including restructuring charges of about €2 million. The reorganization charges include the cost of improving product development in Europe under the region's new interim chief, Doug Morse. Apparently, the weather conditions were better than one year ago, notably in North America. The cold weather helped to reduce the company's inventories for the autumn season, primarily through Columbia's own factory outlets.
In geographical terms, the group's business was up everywhere except in Canada where it dropped by 6 percent to $23.8 million, including one percentage point from currency exchange effects. U.S. sales were up by 4 percent to $200.5 million compared with last year's first quarter, while Latin America and Asia-Pacific had a rise of 8 percent to $83.1 million. Benefitting from exchange rate effects, the Europe, Middle East and Africa (EMEA) region managed to boost sales by 7 percent to $40.9 million. Under Morse's direction, Columbia intends to implement improvements in sales growth and efficiency. To begin with, the Columbia brand recently shut down its single-brand store in Munich.
By brands, Sorel was the front-runner with a sales jump of 94 percent to $12.4 million. This compared, however, with a very poor period in the previous year. Mountain Hardwear was up by 5 percent to $32.1 million. The smallest increase came from the core Columbia brand with 3 percent higher sales of $301.1 million. In terms of product categories, shoes rose by 11 percent to $54.0 million, and apparel, accessories and equipment combined reached $294.3 million or 4 percent up from the first three months of 2012.
For the whole financial year, the company expects a slight decrease in sales compared with 2012. This estimate anticipates a sales increase in the lower single-digits on the basis in terms of dollars, offset by the impact of currency exchange variations. The management expects a stable gross margin overall, but indicated that from next year on, the company's joint venture in China will boost the gross profit by around $3.0 million. The operating margin should be around 6.6 percent for the full year. Ignoring a few items such as the venture in China and some restructuring charges, the operating margin would be 7.5 percent.
The second quarter, usually the weakest in terms of sales, is expected to be down by 4-6 percent compared with April-June 2012. Basically, lower excepted wholesale revenues, notably in North America, are unlikely to be offset by stronger direct-to-consumer sales in the U.S. and higher demand from European wholesale revenues, notably from Russia.
Tim Boyle, the group's chief executive, expects Sorel, Columbia's most weather-sensitive brand, to suffer a sales decline this year, but at a modest rate. He admitted that the company's offer still needs some improvement to resist periods with transitional weather conditions. In return, Columbia is optimistic about the launch of its Omni-Freeze Zero technology, which hit the market with the support of the largest marketing campaign in the company's history. The new offer was especially welcomed in the south of the U.S. Retailers around the globe were supplied with no less than two million demonstration sleeves to enable the sales staff to explain the way the new technology works.