Announcing a 14 percent increase in its quarterly dividends, Columbia Sportswear's board of directors was said to be confident in better results going forward. In fact, while they were still largely negative, the results released for the third quarter ended on Sept. 30 were better than forecast, due especially to better than expected direct sales to consumers in North America.
As expected, a shift in deliveries to distributors allowed the company to record sales increases in Europe, the Middle East and Africa (EMEA), which amounted to 29 percent in dollars and 25 percent in local currencies, although footwear revenues went down. This led to an improvement in operating earnings in the EMEA region to $11.2 million for the period, up from $7.9 million a year ago.
In the third quarter, sales fell by 7 percent in the U.S., by 4 percent in Canada and by 15 percent in LAAP. In the U.S., operating income declined to $50.3 million from $62.5 million in the same period a year ago.
Globally, the group's footwear sales were off by 7 percent, while other product categories were virtually unchanged.
By brand, Columbia was down by 1 percent, Mountain Hardwear by 9 percent and Sorel by 23 percent.
The group's total revenues declined by 4 percent to $523.1 million for the quarter, with adverse currency exchange translations causing a negative effect of one percentage point. The gross margin dipped by 0.3 percentage points to 44.4 percent, due to currencies and a higher mix of sales to foreign distributors, which could not offset lower closeout sales and a higher proportion of own retail. With operating expenses rising to 31.2 percent of sales, net profit fell by 15 percent to $54.6 million for the period.
The management reported declines in wholesale orders in North America, Europe and the Latin America/Asia Pacific (LAAP) regions, but said that it was seeing signs of an inflection point in its retail sales in Europe, where it expects to grow again in 2014.
The management expects its total sales to decline by up to 1.5 pecent for the full financial year. It sees sales in the EMEA improving due to higher sales to distributors, partially offset by lower sales in the countries where it has its own subsidiaries, due to “continued product assortment and macro-economic challenges.” Foreign currency exchange rates are likely to depress the sales results by about two percentage points on a global basis.
The gross margin should expand by half a percentage point. The operating should settle at around 7.25 percent, or about 8.1 percent excluding extraordinary expenses>.