Decline in wholesale backlog business of Columbia

24 Apr '09

6 min read

Columbia Sportswear Company, a global leader in the active outdoor apparel and footwear industries, announced net sales of $272.0 million for the quarter ended March 31, 2009, a decrease of 9 percent compared to net sales of $297.4 million for the same period of 2008, with 5 percentage points of that decline resulting from changes in foreign currency exchange rates.

First quarter net income totaled $6.9 million, or $0.20 per diluted share, compared with net income of $19.9 million, or $0.56 per diluted share, for the same period of 2008.

The 9 percent decrease in first quarter 2009 net sales consisted of a 24 percent decline in the Europe, Middle-East & Africa region (EMEA) to $49.8 million, including an 8 percent negative effect from changes in foreign currency exchange rates compared with the first quarter of 2008; a 26 percent decline in Canada to $19.8 million, including an 18 percent negative effect from foreign currency exchange rates; and a 6 percent decline in the Latin America & Asia Pacific region (LAAP) to $46.1 million, including a 4 percent negative effect from foreign currency exchange rates. First quarter 2009 U.S. net sales of $156.3 million were essentially equal to net sales in the first quarter of 2008.

Compared with the first quarter of 2008, first quarter 2009 sportswear net sales decreased 14 percent to $138.2 million and footwear net sales decreased 22 percent to $40.0 million. These decreases were partially offset by a 10 percent increase in outerwear net sales to $76.8 million and a 10 percent increase in accessories and equipment net sales to $17.0 million.

Columbia brand net sales totaled $241.6 million in the first quarter of 2009, a decrease of 10 percent compared with the first quarter of 2008. Mountain Hardwear brand net sales increased 6 percent to $23.2 million. Net sales of Sorel, Montrail and Pacific Trail brand products were insignificant during the first quarter of both years.

The company ended the first quarter with $299.8 million in cash and short-term investments, compared with $278.1 million at March 31, 2008. Inventories declined 6 percent compared with March 31, 2008, to $223.7 million, and were 13 percent lower than at December 31, 2008.

Tim Boyle, Columbia's president and chief executive officer, commented, “We managed our business well during the first quarter, against a very challenging retail environment in the U.S., Europe and Canada, and the headwinds created by a stronger U.S. dollar. First quarter 2009 operating expenses were lower than the first quarter of 2008, reflecting reduced selling expenses resulting from lower sales volumes and the effect of the cost control initiatives that we began implementing during 2008, including our decision to slow the pace of our branded retail store expansion and adjust our marketing investments in response to reduced 2009 revenue expectations.”

Backlog
As of March 31, 2009, fall 2009wholesale backlog was $608.0 million, 15 percent lower than fall 2008 wholesale backlog of $714.4 million, including a 4 percent negative effect from changes in foreign currency exchange rates. The decline in wholesale backlog consisted of a mid-teens percentage decline in apparel orders and a low single-digit percentage decline in footwear orders. U.S. wholesale backlog was down low double-digits on a percentage basis. The EMEA region and Canada wholesale backlogs were each down in the mid-twenties on a percentage basis, including high single-digit and mid-teen negative effects from changes in foreign currency exchange rates, respectively. LAAP region wholesale backlog declined slightly and was not affected by changes in foreign currency exchange rates.

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