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Columbia's President optimistic about upcoming fall
23 Jul '10
5 min read
The company ended the second quarter of 2010 with approximately $398 million in cash and short-term investments, compared with approximately $318 million at June 30, 2009. Inventories increased 6 percent to $310.5 million at June 30, 2010, compared to $293.4 million at June 30, 2009.
2010 Financial Outlook
The current economic environment, which involves high unemployment rates in many of our key markets and restricted credit markets for consumers and retailers, among other challenges, reduces the predictability of retailer and consumer demand. All projections related to anticipated future results are forward-looking in nature and are based on backlog and forecasts, which may change, perhaps significantly.
The company raised its outlook for full year 2010 net sales to increase 14 to 16 percent compared with 2009, based primarily on actual first half results, the previously announced 19 percent increase in Fall 2010 order backlog, and incremental direct-to-consumer sales.
2010 gross margins are expected to increase approximately 75 basis points compared to 2009 gross margins of 42.1 percent, due to a higher proportion of full price sales in our wholesale business, an increased proportion of direct-to-consumer sales, and more favorable foreign currency hedge rates, and increased costs to expedite production and delivery of Fall orders to customers.
Selling, general and administrative expenses are expected to increase approximately 75 basis points as a percentage of sales due to a combination of several factors, including the effect of the company's retail expansion, increased marketing investments to support the global launch of the company's Fall 2010 products, reinstatement of personnel and benefit programs that were curtailed or postponed in 2009, incremental costs related to IT infrastructure and business process initiatives in preparation for a new multi-year ERP implementation, and transitional costs associated with internalizing the sales organizations in North America and Europe.
As a result, full year 2010 operating margin is expected to approximate full year 2009 operating margin of approximately 7 percent. The company is currently planning a full-year income tax rate of approximately 28 percent.
The company expects a mid-teen percentage increase in third quarter 2010 sales compared with the third quarter of 2009, driven by the previously announced increase in advance seasonal orders, coupled with increased direct-to-consumer sales. Third quarter 2010 operating margin is expected to contract approximately 200 basis points compared with the third quarter of 2009.
This expected operating margin contraction consists of approximately 100 basis points of gross margin contraction and 100 basis points of SG&A expansion. The anticipated gross margin contraction is due primarily to incremental costs to expedite production and delivery of Fall 2010 orders. Third quarter SG&A expansion is consistent with the factors contributing to the increase in full year SG&A.
2010 Financial Outlook
The current economic environment, which involves high unemployment rates in many of our key markets and restricted credit markets for consumers and retailers, among other challenges, reduces the predictability of retailer and consumer demand. All projections related to anticipated future results are forward-looking in nature and are based on backlog and forecasts, which may change, perhaps significantly.
The company raised its outlook for full year 2010 net sales to increase 14 to 16 percent compared with 2009, based primarily on actual first half results, the previously announced 19 percent increase in Fall 2010 order backlog, and incremental direct-to-consumer sales.
2010 gross margins are expected to increase approximately 75 basis points compared to 2009 gross margins of 42.1 percent, due to a higher proportion of full price sales in our wholesale business, an increased proportion of direct-to-consumer sales, and more favorable foreign currency hedge rates, and increased costs to expedite production and delivery of Fall orders to customers.
Selling, general and administrative expenses are expected to increase approximately 75 basis points as a percentage of sales due to a combination of several factors, including the effect of the company's retail expansion, increased marketing investments to support the global launch of the company's Fall 2010 products, reinstatement of personnel and benefit programs that were curtailed or postponed in 2009, incremental costs related to IT infrastructure and business process initiatives in preparation for a new multi-year ERP implementation, and transitional costs associated with internalizing the sales organizations in North America and Europe.
As a result, full year 2010 operating margin is expected to approximate full year 2009 operating margin of approximately 7 percent. The company is currently planning a full-year income tax rate of approximately 28 percent.
The company expects a mid-teen percentage increase in third quarter 2010 sales compared with the third quarter of 2009, driven by the previously announced increase in advance seasonal orders, coupled with increased direct-to-consumer sales. Third quarter 2010 operating margin is expected to contract approximately 200 basis points compared with the third quarter of 2009.
This expected operating margin contraction consists of approximately 100 basis points of gross margin contraction and 100 basis points of SG&A expansion. The anticipated gross margin contraction is due primarily to incremental costs to expedite production and delivery of Fall 2010 orders. Third quarter SG&A expansion is consistent with the factors contributing to the increase in full year SG&A.
Columbia Sportswear Company
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