Sr. Director of Investor Relations
& Corporate Communications
COLUMBIA SPORTSWEAR COMPANY REPORTS RECORD THIRD QUARTER SALES AND RAISES FULL-YEAR 2011 OPERATING MARGIN OUTLOOK; REPORTS 7 PERCENT INCREASE IN SPRING BACKLOG
- Third quarter 2011 consolidated net sales increased 12 percent to a record $566.8 million, compared to third quarter 2010 net sales of $504.0 million.
- Third quarter 2011 operating income increased 26 percent to $86.6 million, or 15.3 percent of net sales, compared to third quarter 2010 operating margin of 13.6 percent.
- Third quarter 2011 net income increased 29 percent to $67.5 million, or $1.98 per diluted share, including a benefit of $0.04 per share from a lower income tax rate compared to third quarter 2010.
- The company raised its full year 2011 operating margin outlook to approximately 8.0 percent and its outlook for full year net sales to increase 15 to 16 percent.
- Global Spring wholesale backlog at September 30, 2011 totaled $420.7 million, an increase of approximately 7 percent compared with September 30, 2010.
- The board of directors declared a quarterly dividend of $0.22 per share.
PORTLAND, Ore. – October 25, 2011 – Columbia Sportswear Company (NASDAQ: COLM), a leading innovator in the global outdoor apparel, footwear, accessories and equipment industries, today announced record net sales of $566.8 million for the quarter ended September 30, 2011, a 12 percent increase compared with net sales of $504.0 million for the same period of 2010, including a benefit of 3 percentage points from changes in currency exchange rates.
Third quarter net income increased 29 percent to $67.5 million, or $1.98 per diluted share, including a benefit of $0.04 per share from a lower income tax rate, compared to net income of $52.2 million, or $1.53 per diluted share, for the same period of 2010.
Tim Boyle, Columbia’s president and chief executive officer, commented, “Our third quarter sales growth reflects the previously reported increase in our Fall season backlog, as well as strong performance in our global direct-to-consumer business. Improved operational execution resulted in a significant reduction in airfreight costs and produced meaningful operating margin leverage. Our increased profitability outlook for the full year reflects the strength of the third quarter and our expectations for continued growth through the remainder of the year.”
Review of Third Quarter Results
(All comparisons are between third quarter 2011 and third quarter 2010, unless otherwise noted.)
Third quarter 2011 net sales increased $62.8 million, or 12 percent, led by a 116 percent increase in sales of the Sorel brand to $72.0 million. Sales of the Columbia brand increased 4 percent to $447.8 million and Mountain Hardwear sales grew 17 percent to $44.7 million. (See “Brand Net Sales” table below.)
On a geographic basis, the increase in third quarter 2011 net sales was led by a 51 percent increase in the EMEA region to $100.3 million, including a 13 percentage point benefit from changes in currency rates. Sales in the LAAP region increased 23 percent, to $72.8 million, including a 9 percentage point benefit from changes in currency exchange rates. U.S. sales increased 2 percent to $333.6 million and sales in Canada increased 13 percent to $60.1 million, including a 9 percentage point benefit from changes in currency exchange rates. (See “Geographical Net Sales” table below.)
Third quarter 2011 footwear net sales increased 55 percent to $128.6 million. Sportswear net sales increased 7 percent to $179.8 million. Accessories and equipment net sales increased 23 percent to $35.9 million. Outerwear net sales were essentially unchanged at $222.5 million. (See “Categorical Net Sales” table below.)
The company ended the quarter with $90.4 million in cash and short-term investments, compared with $236.3 million at September 30, 2010.
Inventories totaled $432.1 million at September 30, 2011, an increase of $73.9 million, or 21 percent, from September 30, 2010. Higher average unit costs accounted for almost 80 percent of the dollar increase, with unit growth representing the remainder.
Increased Full Year 2011 Financial Outlook
Based on the stronger-than-expected third quarter results, the company raised its outlook for full year 2011 operating margin to increase approximately 100 basis points compared with 2010 operating margin of 7.0 percent, driven by:
- an expected net sales increase of 15 to 16 percent, which contemplates an 18 to 20 percent increase in the company’s fourth quarter sales,
- growth in the company’s global direct-to-consumer sales, which are expected to represent approximately 25 percent of full year 2011 sales,
- 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 25 to 35 basis point increase in selling, general and administrative (SG&A) expenses as a percentage of sales.
The company is currently planning for a full-year income tax rate of approximately 25 percent.
For the fourth quarter of 2011, the company expects an approximate 18 to 20 percent increase in net sales and operating margin expansion of approximately 130 to 150 basis points, consisting of an anticipated 85 basis point increase in gross margins, 15 to 35 basis points of SG&A expense leverage as a percentage of net sales, and increased licensing income, compared with fourth quarter 2010.
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.
Spring Wholesale Backlog
As of September 30, 2011, Spring wholesale backlog was $420.7 million, an increase of $26.5 million, or approximately 7 percent, compared with Spring wholesale backlog of $394.2 million at September 30, 2010, driven primarily by the Columbia brand. Changes in currency exchange rates provided a benefit of less than 1 percent to the year-over-year comparison.
Mr. Boyle commented, “Our Spring wholesale backlog represents less than one-fourth of annual sales. When combined with another strong product line-up for Fall 2012, our growing global direct-to-consumer business, and our commitment to manage our cost structure, we are well-positioned for another year of record sales and improved profitability in 2012.”
Consolidated wholesale backlog, which includes both global Fall and Spring orders at September 30, 2011, was $742.4 million, an 11 percent increase compared with consolidated wholesale backlog of $667.4 million at September 30, 2010. Changes in currency exchange rates did not have a material effect on the year-over-year comparison.
Wholesale backlog is not necessarily indicative of changes in total sales for subsequent periods due to the mix of advance and “at once” orders, exchange rate fluctuations and order cancellations, which may vary significantly from quarter to quarter, and because the company’s global direct-to-consumer operations are not included in wholesale backlog.
Share Repurchase Program
During the third quarter 2011, the company repurchased approximately 383,000 shares of common stock at an aggregate purchase price of $19.3 million. Approximately $59 million remains under the current repurchase authorization. The repurchase program does not obligate the company to acquire any specific number of shares or to acquire shares over any specified period of time.
The board of directors approved a fourth quarter dividend of $0.22 per share, payable on December 1, 2011 to shareholders of record on November 17, 2011.
CFO’s Third Quarter Financial Commentary Available Online
At approximately 8:15 a.m. EDT today, a commentary by Tom Cusick, senior vice president, chief financial officer and treasurer, reviewing the company’s third quarter 2011 financial results and 2011 financial 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 Tuesday, October 25, 2011 at 9:00 a.m. EDT to review its third 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 Relations section of the Company’s website at www.columbia.com, where it will remain available until February 1, 2012.
Fourth Quarter 2011 Reporting Schedule
Columbia Sportswear plans to report financial results for the fourth quarter and full year 2011 on Tuesday, January 31, 2012 at approximately 4:00 p.m. EDT. Following issuance of the earnings release, a commentary reviewing the company’s fourth quarter and 2011 financial results will be furnished to the SEC on Form 8-K and published on the company’s website at http://investor.columbia.com/results.cfm.A public webcast of Columbia’s earnings conference call will follow at 5:00 p.m. EDT at www.columbia.com.
About Columbia Sportswear
Columbia Sportswear Company is a leading innovator in the global outdoor apparel, footwear, accessories and equipment markets. 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®, and Montrail®. 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