Sr. Director of Investor Relations
& Corporate Communications
COLUMBIA SPORTSWEAR COMPANY REPORTS SECOND QUARTER 2011 RESULTS; REAFFIRMS FULL YEAR NET SALES AND OPERATING INCOME OUTLOOK
- Second quarter 2011 consolidated net sales increased 21 percent to $268.0 million, compared to second quarter 2010 net sales of $221.8 million, including a 3 percentage point benefit from changes in foreign currency exchange rates.
- Second quarter 2011 net loss was $13.6 million, or $(0.40) per diluted share, compared to net loss of $10.6 million, or $(0.31) per diluted share, for the second quarter of 2010.
- The company reaffirmed its outlook for full year 2011 net sales to increase 14 to 16 percent and maintained its outlook for operating margin of approximately 7.5 to 7.7 percent.
- The board of directors declared a quarterly dividend of $0.22 per share.
- The company’s cash and short-term investments at June 30, 2011 totaled approximately $298.3 million with no long-term debt.
PORTLAND, Ore. – July 28, 2011 – Columbia Sportswear Company (NASDAQ: COLM), a leading innovator in active outdoor apparel, footwear, accessories and equipment, today announced net sales of $268.0 million for the quarter ended June 30, 2011, an increase of 21 percent compared to net sales of $221.8 million for the same period of 2010, with 3 percentage points of that increase resulting from changes in foreign currency exchange rates.
Second quarter net loss totaled $13.6 million, or $(0.40) per diluted share, compared with a net loss of $10.6 million, or $(0.31) per diluted share, for the same period of 2010.
Tim Boyle, Columbia’s president and chief executive officer, commented, “Each of our major brands generated growth in the second quarter, keeping us on pace toward our full year objectives of record sales and improved profitability. As we head into the second half of 2011, we are confident that our product innovations and compelling marketing messages will continue to elevate our brands and drive growth.”
Second Quarter 2011 Results
The second quarter is the company’s smallest revenue quarter, historically accounting for approximately only 15 percent of annual net sales. As a result, regional, category and brand net sales results often produce large percentage variances in relation to the prior year’s comparable period due to the small base of comparison and shifts in the timing of shipments. Second quarter net sales increased 21 percent, driven by 20 percent growth in Columbia brand net sales to $239.1 million, a 24 percent increase in Mountain Hardwear brand net sales to $22.7 million, and a 106 percent increase in Sorel brand net sales to $3.7 million. (See “Brand Net Sales” table below.)
Second quarter U.S. net sales grew 4 percent to $129.0 million, driven primarily by a 39 percent increase in direct-to-consumer sales, partially offset by an 8 percent decline in wholesale sales, reflecting a combination of a planned shift in the timing of shipments of Fall 2011 advance orders compared with Fall 2010, and unseasonable weather, which resulted in fewer reorders and greater cancellations of advance orders compared with the second quarter of 2010. Net sales in the Latin America/Asia Pacific (LAAP) region grew 48 percent to $76.6 million, including a 9 percentage point benefit from changes in foreign currency exchange rates, while net sales in the Europe/Middle East/Africa (EMEA) region increased 39 percent to $53.6 million, including a 5 percentage point benefit from changes in exchange rates. The increased net sales in both the LAAP and EMEA regions primarily reflected increased shipments to independent distributors, made possible by more timely production of Fall 2011 advance orders compared to last year. The LAAP region also benefited from a 42 percent net sales increase in Korea and a 36 percent net sales increase in Japan as it began to recover from the March 11, 2011 earthquake and tsunami. Canada net sales increased 14 percent to $8.8 million, including a 6 percentage point benefit from changes in exchange rates. (See “Geographical Net Sales” table below.)
Second quarter 2011 sportswear net sales increased 12 percent to $136.2 million, outerwear net sales increased 43 percent to $62.1 million, footwear net sales increased 29 percent to $50.0 million, and accessories and equipment net sales increased 11 percent to $19.7 million. (See “Categorical Net Sales” table below.)
The company ended the second quarter of 2011 with approximately $298.3 million in cash and short-term investments, compared with approximately $398.3 million at June 30, 2010.
Inventories totaled $422.0 million at June 30, 2011, an increase of 36 percent from June 30, 2010. The increase resulted from:
- earlier receipts of Fall 2011 production to fulfill advance orders for delivery in the second half of 2011;
- excess Fall 2010 inventory intentionally held for sale primarily through company-owned retail outlet stores in the second half of 2011;
- higher Spring 2011 inventory compared to Spring 2010, partially due to unseasonable weather which resulted in fewer reorders and greater cancellations of advance orders; and
- the effect of a weaker U.S. dollar on translation of non-U.S. inventory balances.
2011 Financial Outlook
The company reaffirmed its previous expectations for full year 2011 operating margin to increase approximately 50 to 70 basis points compared with 2010 operating margin of 7.0 percent, driven by:
- an expected net sales increase of 14 to 16 percent compared with 2010,
- an approximate 100 basis point increase in gross margins compared to 2010 gross margins of 42.4 percent, and
- increased licensing income, partially offset by
- an estimated 50 basis point increase in selling, general and administrative expenses (SG&A) as a percentage of sales.
The company is currently planning for a full-year income tax rate of approximately 27 percent.
The company expects a low double-digit percentage increase in third quarter 2011 net sales compared with third quarter 2010 and operating income of approximately $70 million to $74 million, with a 25 basis point increase in gross margins, and 100 basis points of SG&A expense expansion as a percentage of net sales, partially offset by an increase in licensing income.
All projections related to anticipated future results are forward-looking in nature and are based on a variety of factors and assumptions, which may change, perhaps significantly.
The board of directors approved a dividend of $0.22 per share, payable on September 1, 2011 to shareholders of record on August 18, 2011.
CFO’s Second Quarter Financial Commentary Available Online
At approximately 4:15 p.m. EDT today, a commentary by Tom Cusick, senior vice president, chief financial officer and treasurer, reviewing the company’s second quarter 2011 results and fiscal 2011 outlook will be furnished to the SEC on Form 8-K and published on the company’s website at http://investor.columbia.com/results.cfm. Analysts and investors are encouraged to review this commentary prior to participating in the conference call.
The company will host a conference call on Thursday, July 28, 2011 at 5:00 p.m. ET to review its second quarter results and 2011 financial outlook. To participate, please dial (877)407-9205 in the United States, (201)689-8054 outside the U.S. The call will also be webcast live on the investor information section of the company’s website at www.columbia.com, where it will remain available until July 25, 2012.
Columbia Sportswear plans to report financial results for the third quarter of 2011 on Tuesday, October 25, 2011 at approximately 8:00 a.m. EDT. Following the earnings report, at approximately 8:15 a.m. EDT, the company plans to publish a commentary by Tom Cusick, senior vice president, chief financial officer and treasurer, to the company’s website at http://investor.columbia.com/results.cfm. A public webcast of Columbia’s earnings conference call will follow at 9:00 a.m. EDT at www.columbia.com.
About Columbia Sportswear
Columbia Sportswear Company is a global leader in the design, sourcing, marketing and distribution of active outdoor apparel, footwear, accessories and equipment. Founded in 1938 in Portland, Oregon, Columbia products are sold in more than 100 countries and have earned an international reputation for innovation, quality and performance. Columbia products feature innovative technologies and designs that protect outdoor enthusiasts from the elements, increase comfort, and make outdoor activities more enjoyable. In addition to the Columbia® brand, Columbia Sportswear Company also owns outdoor brands Mountain Hardwear®, Sorel®, Montrail®, and Pacific Trail®. To learn more, please visit the company's websites at www.columbia.com, www.mountainhardwear.com, www.sorel.com, and www.montrail.com.
- Financial tables follow -
Tables available in PDF Format