Columbia Sportswear Company faces downward trend in IVQ and Full Year '08 Results

31 Jan '09

6 min read

Columbia Sportswear Company a global leader in the active outdoor apparel and footwear industries, announced net sales of $354.9 million for the quarter ended December 31, 2008, a decrease of 6 percent compared to net sales of $376.7 million for the same period of 2007, including a 3 percent negative effect from changes in foreign currency exchange rates compared with the fourth quarter of 2007.

Fourth quarter net income totaled $18.6 million, or $0.55 per diluted share and included a pre-tax, non-cash charge of approximately $24.7 million, or $0.46 per share after tax, for the write-down of acquired intangible assets related to the company's acquisitions of the Pacific Trail and Montrail brands in 2006. The impairment charge consisted primarily of goodwill and trademarks and resulted from the company's annual evaluation of intangible asset values.

The company recorded a tax benefit of $5.0 million in the fourth quarter of 2008, bringing the full year 2008 effective tax rate to 24.7 percent, compared with fourth quarter 2007 tax expense of $12.9 million and a full year 2007 effective tax rate of 30.6 percent. The reduced full-year 2008 tax rate resulted primarily from a higher proportion of income from foreign jurisdictions with lower tax rates, increased foreign tax credits and the favorable conclusion of a European tax examination.

Net income in the fourth quarter of 2007 was $45.7 million, or $1.26 per diluted share and also included a tax benefit of $0.14 per share related to the favorable conclusion of a European tax examination.

Tim Boyle, Columbia's president and chief executive officer, commented, “In 2008 we capitalized on our fortress balance sheet and operating cash flow of $145 million to make significant investments for future growth. We drove innovation across each of our product categories and elevated our brands through increased marketing and enhanced retail presentation in order to begin building stronger emotional connections with consumers. We also returned over $100 million to shareholders through share repurchases and dividends and ended the year with cash and short term investments totaling over $250 million and zero debt.”

“While we are pleased with our fourth quarter and full year results in the context of the weak economic environment, the accelerated deterioration of the global economy since September has prompted us to recalibrate the pace of our planned investments in retail stores and brand advertising in 2009. Although we continue to believe that these investments are strategic imperatives in the long run, we want to allow consumer markets to stabilize before moving forward as aggressively as we originally planned."

"As a result of our full year 2009 sales expectations, we have tabled plans to open branded retail stores in several key metro areas in the U.S. and made adjustments to our 2009 marketing and advertising budgets. We are also implementing additional steps to manage personnel and other overhead expenses across the entire organization. We plan to move forward with our previously announced plan to open a branded store on Chicago's Michigan Avenue in late 2009 and are also maintaining our plans to open additional outlet stores, primarily in the U.S. and Europe, to provide a more profitable channel for inventory liquidation.”

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