Third quarter net income totaled $64.4 million, or $1.88 per diluted share, compared with net income of $67.5 million, or $1.98 per diluted share, for the same period in 2011. A higher effective tax rate contributed $0.11 to the reduction in third quarter 2012 earnings per share compared with the third quarter of 2011.
Tim Boyle, Columbia’s president and chief executive officer, commented, “Our third quarter benefited from improved gross margins and disciplined expense management, resulting in higher operating margin and further demonstrating our ability to navigate effectively through a slow-growth environment. We are pleased to raise our 2012 operating margin outlook based on better-than-expected results through the first nine months of the year.”
Boyle concluded, “Looking ahead to 2013, we anticipate continued slow growth through at least the first half of the year, based in part on advance Spring 2013 wholesale orders, the fragile U.S. recovery, continued uncertainty in Europe, and signs of slowing in key Asian markets. However, we believe that our continued focus on innovation, performance and enhanced design is elevating our brand portfolio, which holds substantial long-term growth potential.”
Third Quarter Results
The $21.8 million net sales decline in the third quarter was concentrated primarily in the company’s Europe/Middle East/Africa (EMEA) region, where net sales declined $39.8 million, or 40 percent, to $60.5 million, including an 8 percentage point negative effect from changes in currency exchanges rates.
The decline reflected lower net sales in the company’s EMEA direct markets, against an increase of more than 70 percent in the comparable 2011 period. Last year’s warm winter and persistent unfavorable macro-economic conditions weighed on both the Sorel and Columbia brands, creating headwinds against our ongoing efforts to revitalize the Columbia brand in key European markets.
In addition, approximately 45 percent of the decline in EMEA net sales was attributable to previously-referenced timing differences in shipments of fall orders to EMEA distributors, which were heavily concentrated in the Columbia brand. Year-to-date Fall 2012 shipments to EMEA distributors are up 7 percent compared with Fall 2011 shipments in the comparable period.
Net sales in Canada decreased $8.1 million, or 13 percent, including a 3 percentage point negative effect from changes in currency exchange rates. These declines were partially offset by net sales increases in the U.S. of $14.2 million, or 4 percent, to $347.8 million, and in the Latin America/Asia Pacific (LAAP) region of $11.9 million, or 16 percent, to $84.7 million, including a 3 percentage point negative effect from changes in currency exchange rates.
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