In the final three months of 2012, Columbia Sportswear managed to lift its net income by 8 percent to $39.5 million, while consolidated net sales fell by 5 percent to $501.1 million. For the full year, the group's sales dipped by 1 percent to $1.67 billion and net profit fell by 3 percent to $99.9 million compared with 2011. Except for the Latin America/Asia-Pacific region (LAAP), where sales soared by 11 percent to $377.6 million, all other regions posted declines in sales, notably Europe, the Middle East and Africa, where the company's turnover plummeted by 16 percent to $230.6 million. Four percentage points of this decline came from changes in currency exchange rates. In the fourth quarter, EMEA sales were down by 20 percent to $62.0 million.
For the U.S., the group reports flat sales, just slightly down from $948.0 million to $946.7 million for the full year, but in the last three months sales were down by 7 percent to $273.8 million. In Canada, a traditionally strong market for Columbia, sales were up by 5 percent to $33.3 million for the same period, but down by 11 percent to $114.7 million for the full year. In spite of the double-digit growth in the LAAP region for the full year, Columbia slowed down to $132.0 million, corresponding to an increase of 6 percent.
Globally, all of the group's brands saw their sales drop for the last three months of 2012. The Sorel brand of footwear suffered most, as its sales shrank by 12 percent to $56.5 million. For the 12 months, Sorel fell by 16 percent to $127.0 million. The Columbia main brand posted flat sales for the full year reaching $1,391.1 million, whereas it dipped by 4 percent to $400.5 million in the fourth quarter. Both for the three and the 12 months, Mountain Hardwear lost 1 percent in sales, reaching $42.7 million and $141.5 million, respectively.
According to the management, the group's results at the end of each year depend heavily on the weather and consumer spending before and during the holiday season. The reluctant start of the winter season, notably in North America, was not helpful in this context, since the market reacted with promotional sales.
In an outlook statement, Columbia Sportswear expects the turnover to be at the same level in the current year as it was in 2012 with a profit margin between 7.5 and 8 percent. Increasing sales are expected again for the LAAP region as well as in European countries where Columbia works with distributors, but not through own operations, which may partly offset the gains. To improve the situation, the company plans to open key technologies such as Omni-Heat to more attractive price points, but without changing its distribution policy. Instead, new products are planned utilizing those technologies, but with fewer features and less costly applications and materials.
For the upcoming spring season, the Columbia brand is set to push its latest innovation, the Omni-Freeze Zero technology, with the biggest spring campaign that has ever been launched in the company's history. Notably in the U.S., the introduction will be supported by Omni-Freeze stations and the points of sale; road show trucks will visit events in 57 cities across the country.
Questioned in a conference call whether new product initiatives will hit the stores to improve margins on differentiating highlights, the company's chief executive and president, Tim Boyle, said that, yes, there were new products in the pipeline, but Columbia has learned that it was too quick in launching one “Omni” product shortly after the other, whereas the consumers need some more time to to absorb the innovations. Therefore, it was decided to step back a little to launch new lines of differentiating products successfully.