Columbia 3rd quarter sales edge forward, updates outlook
Columbia Sportswear Company continued to reap the benefits of strong sales in Europe in its third quarter, partially offset by a decline in net sales in the U.S. Still, the company’s net income increased 5 percent to $87.7 million, or $1.25 per diluted share, up from $83.58 million.
The American outdoor apparel and equipment group, reported net sales of $747.4 million for the third quarter ended September 30, 2017, up less than 1 percent compared with net sales of $745.7 million for the same period last year.
The owner of brands such as Columbia, Sorel, Prana and Mountain Hardwear, reported a 20 percent net sales growth in the EMEA region, to $87.5 million, including a net sales increase of more than 20 percent in the company's European wholesale and direct-to-consumer businesses.
Net sales equally increased in Canada by 8 percent, as well as by 9 percent in the LAAP region, but results were partially offset by a 6 percent decline in the U.S. to $456.0 million. The decline was due to a fall in wholesale net sales, and a low-double-digit percentage growth in direct-to-consumer net sales.
"We're pleased to report better than expected third quarter results, including continued strong sales growth in our European wholesale and U.S. direct-to-consumer businesses, as well as growth in each of our international regions,” said resident and Chief Executive Officer Tim Boyle, in a news statement. “While our U.S. business adapts to ongoing structural changes, our improved profitability outside the U.S. illustrates the strength of our global business model.”
Looking at sales results by brand, Columbia was the only brand that reported net sales in the green. Columbia sales increased 2 percent to $598.3 million, while Sorel decreased 7 percent to $81.7 million, Prana fell 3 percent to $36.8 million and Mountain Hardwear sales dropped 4 percent to $29.4 million.
Earlier this year, Columbia did a realignment of its senior leadership team including chief executive officer Tim Boyle who added the role of president to his duties. Tom Cusick was also promoted to Executive Vice President and Chief Operating Officer along with 5 other executive changes and appointments.
The corporate realignment is a part of an on-going organizational assessment launched by the company in the first quarter of 2017. The strategy baptized “Project Connect” is intended to drive brand awareness and sales growth in its wholesale and direct-to-consumer channels including digital capabilities and improving global direct-to-consumer channels.
As a result, the company has updated its 2017 guidance.
"We are also pleased to reiterate our full year 2017 financial outlook, which now incorporates the anticipated costs of Project Connect. In addition, based upon advance orders for Spring 2018 we are optimistic that we will continue to generate global growth, including a return to growth in our U.S. wholesale business in the first half of 2018.
"Our powerful balance sheet, with $430 million in cash and no long-term debt, provides the flexibility to adapt our business as our major markets evolve. It is from this position of strength and confidence that we are moving steadily forward on Project Connect, identifying strategic organizational and operational initiatives to accelerate execution of our strategic plan and to increase demand creation to drive further profitable growth in 2018 and beyond."
For the 2017 fiscal year, the company now expects operating income between approximately $243 million and $252 million. Previously, the company projected net income to between approximately $193 million and $200 million. Meanwhile, 2017 net sales are expected to grow approximately 3 percent compared with 2016, with net sales of $2.38 billion.
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