The revenues of Columbia Sportswear fell by 9 percent for the first quarter ended March 31, dropping to $272.0 million, including a 5 percent negative currency impact. Net income fell by 65 percent to $6.9 million.

Results were particularly bad in Europe, where revenues dropped by 24 percent in U.S. dollars to $49.8 million. The region of Europe, Middle East and Africa (EMEA) continued to struggle with a unfavorable currency effect at 8 percent and not so strong backlogs from the retailers. In fact, backlogs both in EMEA and in Canada were down in the mid-twenties.

In Canada, sales were down by 26 percent to $19.8 million. The turnover in Canada, a traditionally strong market for Columbia, was affected by a negative foreign currency effect at 18 percent. Sales in Asia and Latin America (LAAP) were down by 6 percent to $46.1 million, while in the U.S. turnover was flat at $156.3 million. The results in the LAAP region included a currency effect of 4 percent.

It is an irony of fate that the smallest decrease in sales happened in the generally very difficult U.S. market where the decline was less than 1 percent. This is partially due to a strong increase in Columbia’s own retail operations: They nearly doubled thanks to 20 new corporate doors in the first quarter of 2009. The wholesale business declined, however, by a high single-digit rate, mainly in the categories sportswear and shoes. The company reported on a sort of weakness in its business with U.S. department stores. This distribution channel stands for an impressive 30 percent of Columbia’s sales in its home market.

By brand, Columbia’s sales fell by 10 percent to $241.6 million. Mountain Hardwear, the high-end brand, continues to be the darling in the group’s portfolio; its turnover rose by 6 percent to $23.2 million. Sales of Sorel, Montrail and Pacific Trail (a price-oriented label which is not marketed in Europe) were $3.0 million or less, and combined, the three brands were down by 14 percent to $7.2 million. The category breakdown showed gains of 10 percent each for outerwear, to $76.8 million, and for accessories/equipment, to $17.0 million. However, sportswear sales fell by 14 percent to $138.2 million and footwear sales were down by 22 percent to $40.0 million.

Orders were off by 15 percent to $608.0 million, including a 4 percent hit from currency, with apparel orders down in the mid-teens and footwear down in low single-digits. Europe and Canada both had drops in the mid-20s, while U.S orders were down by low double digits. Columbia remained cautious on the outlook, noting that it was continuing to invest in direct-to-consumer stores and said that full-year sales should end up with declines in the mid-teens at wholesale and in the low double-digits overall. The group also intends to launch internet sale platforms for both the Columbia and Sorel brands in the second quarter of 2009.

The operating margin for the year is expected to drop by 3 to 3.5 percentage points due to deleverage of fixed costs. This indicates an operating margin of 5.5-6.0 percent versus last year’s 9.0 percent, which included an impairment charge of $24.7 million. The second quarter is expected to see a significantly larger loss than last year in a seasonally slow period, in part because of a shift in the timing of shipments to overseas distributors.

The company expects a slightly lower gross margin for the year as a result of promotional activity and higher purchase costs. These input costs are expected to moderate because of the slowdown, and Columbia said it was studying whether to use any price declines in Asia to grow its margins or be more competitive in pricing.The company said it was planning for business conditions to remain about at their current depressed state right now, and it was taking a cautious approach in terms of speculative inventory for second half of the year. It also noted that spring cancellations have been up somewhat from normal levels. On the plus side, it said retail inventories are extremely clean right now. Meanwhile, Columbia is putting some focus on the Polish market. It has just opened a new showroom in Warsaw. The Polish market is covered by Columbia’s 100 percent own subsidiary, which was founded in late 2008. The company is directed by Rafal Tyszkiewicz who used to run the local operations of VF Corporation with its brands The North Face, Vans, Eastpak, Jansport and others.

Columbia entered the Polish market in the mid-nineties of the last century and worked in the market through various distributors including Domino, Optimum Distribution and Ilion, a wholesale subsidiary of the Sportmaster group that represents Columbia on the Russian market. After five years of being run by Optimum, the distribution was taken over by Ilion, and that period was the weakest chapter of Columbia’s history in Poland - mainly due to differences between the Polish and the Russian markets.

The Polish market is now being supplied out of Columbia’s European distribution center in France. Tyszkiewicz, the brand’s new Polish country manager, was in charge of Columbia when its distribution was in the hands of Optimum.