The management of Columbia Sportswear is projecting an increase of 4.5 to 6.0 percent in its total sales this year, with an operating margin of 12.6 to 12.8 percent.
(SGI+*) In 2019, the company’s net sales rose by 9 percent to a record of $3,042.5 million, with growth of 10 percent in constant currencies, and its operating margin expanded by 0.5 percentage points to 13.0 percent. Thanks to a strong start to the year, the group’s net earnings jumped by 23 percent to $314.2 million.
The situation was different in the fourth quarter ended on Dec. 31, when sales increased by only 4 percent to $954.9 million. The gross margin dipped by 1.6 percentage points to 50.1 percent and the operating margin declined by 2.1 percentage points to 14.5 percent, leading to a gain of only 1 percent in net income to $114.0 million.
Columbia blamed a warm holiday season around the globe, which created challenging retail conditions, especially in outerwear, for the lackluster quarterly performance. In terms of constant currencies, sales rose by 8 percent in the U.S. and by 10 percent in the EMEA region, but they were off by 10 percent in Canada and by 4 percent in the Latin America/Asia-Pacific region.
Keeping its momentum, Sorel showed a gain of 14 percent in the quarter, while the Columbia brand and Mountain Hardwear posted increases of 4 percent and 5 percent, respectively. Prana was off by 10 percent. Across the group, sales of footwear went up by 13 percent, while apparel, accessories and equipment recorded an increase of 2 percent.
For the year, another big increase of 22 percent in constant currencies at Sorel helped the group surpass the $3 billion sales mark for the first time in its history. In terms of dollars, Sorel’s sales went up by 21 percent to $316.6 million, but the Columbia brand remained the biggest pillar, with its revenues rising by 9 percent to $2,513.0 million.
Prana and Mountain Hardwear continued to deliver disappointing sales figures. Prana declined by 4 percent to $151.6 million. Mountain Hardwear had nearly flat sales of $89.7 million, but its 4 percent increase in the last quarter was encouraging. In local currencies, Columbia grew by 10 percent and Prana declined by 3 percent.
Geographically, the group’s sales in the U.S. increased last year by 12 percent to $1,943.0 million. They grew by 5 percent to $380.8 million in the EMEA region, with a currency-neutral gain of 9 percent. Sales went up by 5 percent to $207.5 million in Canada, rising by 8 percent in terms of Canadian dollars. In Latin America and Asia-Pacific (LAAP), they were flat at $539.6 million but 2 percent higher in local currencies.
Going forward, the management foresees mid-single-digit growth in EMEA and high single-digit growth in the U.S. and Canada. Sales should remain flat in LAAP.
Footwear drove the group’s overall annual growth in terms of product categories, rising by 15 percent to $709.8 million, while sales of apparel, accessories and equipment went up by 7 percent to a much higher level of $2,361.1 million. Across the group, the wholesale segment was more dynamic than the retail segment, with an increase of 11 percent to $1,801.1 million contrasting with a gain of only 6 percent to $1,269.6 million.
The expansion and improvement of direct-to-consumer operations with supporting processes and systems is one of the priorities set for this year. The management wants to enhance the consumer experience and digital capabilities in all channels and geographies, and drive brand awareness and sales growth through increased and focused investments in demand creation.
Speaking about the coronavirus epidemic in China, the group’s management said it was being affected by store closings and lower tourism throughout the region. It indicated that its shipments of spring/summer merchandise should be normal, as less than 15 percent of its production is coming from China. Its inventories are 16 percent higher than a year ago. However, the management expressed worries about its autumn/winter collections, as producers in other countries are getting most of their raw materials for footwear and a significant amount of input for apparel from China.
(*) SGI+ means that this article is bigger than the one already published in SGI Europe. For those who have already read it in SGI Europe, the additional contents have been highlighted.