Columbia Sportswear Co.’s president and chief executive officer Tim Boyle said the pace of fundamental recovery exceeded the company’s expectations for the first quarter.
First-quarter sales rose 10 percent to $625.6 million compared to the same selling period last year.
In reporting results for the quarter ended March 31, Boyle noted “a return to net sales growth and financial results that were stronger than expected.” That meant a 35 percent increase for its direct-to-consumer e-commerce business compared to the same selling period last year. That sector now accounts for 20 percent of the total sales mix.
Boyle highlighted “a strong finish in fall sales, excellent early sell-through for spring,” high consumer demand, lean inventories and a “favorable full-price selling environment.”
Based on the strong first-quarter performance, Columbia forecast 2021 net sales of $3.04 billion to $3.08 billion, representing growth of 21.5 to 23 percent compared to 2020. Operating income is seen coming in at $347 million to $369 million with an operating margin of 11.4 to 12 percent. Diluted earnings per share are seen in the range of $4.05 to $4.30.
Begun in Portland, Ore., in 1938, the company sells products from its brands in about 90 countries. In addition to the Columbia brand, Columbia Sportswear owns Mountain Hardwear, Sorel and Prana. Apparel, accessories and equipment climbed 4 percent to $469 million and footwear jumped 35 percent to $157 million. For the first quarter, inventory was reduced by 9 percent to $525.7 million, driven in part by fewer spring inventory purchases, a reduction of excess inventory and delayed receipts of inventory. “Aged inventories” represent “a manageable portion” of the company’s total inventory.
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In terms of brand performance, Columbia was up 12 percent to $527 million and Sorel increased 20 percent to $46 million. Prana, however, dropped 14 percent to $32 million and Mountain Hardwear declined 4 percent to $21 million. Overall, wholesale was up 3 percent to $336 million and direct-to-consumer climbed 20 percent to $290 million.
Regionally, net sales in Europe, the Middle East and Africa saw a 27 percent increase to $71 million, Latin America/Asia Pacific increased 9 percent to $112 million, the U.S. was up 9 percent to $409 million and Canada inched up 1 percent to $34 million.
In a call with analysts Thursday, Boyle noted that Columbia named a general manager for China. He also flagged investments planned for digital and supply chain improvements and the interest younger consumers have in outdoor activities.
Wrapping up his remarks, Boyle said, “I’m confident in our strategy and encouraged by the fundamental recovery underway. We’re committed to driving sustainable and long-term growth and investing in our strategic priorities to drive global brand awareness and sales growth…”
Port congestion and logistics constraints led “later timing” in spring inventory receipts and deliveries. With supply chain and logistics constraints still an issue, delays are expected for fall receipts and deliveries. These factors combined with health and safety measures implemented in its distribution center has resulted in higher freight, distribution and supply chain costs, the company said.
Looking ahead, the company’s capital allocation will involve investing in organic growth opportunities, return at least 40 percent of free cash flow to shareholders and “opportunistic M&A,” according to analysis from Jim Swanson, executive vice president and chief financial officer. Those strategic priorities will be contingent on market conditions.
Columbia said the majority of its own stores remained open in the first quarter with store traffic varying by region but “below pre-pandemic levels.”
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