Columbia Sportswear Beats Q4 Estimates…

Columbia reported record full year sales and slightly lower earnings than last year, but was able to beat previously issued guidance and analysts’ expectations. Net sales for the fourth quarter were $314.1 million, an increase of 4.1% over the $301.8 million of net sales in the same period last year. Growth in consolidated net sales was driven by strong growth in footwear and sportswear, better than expected domestic reorders, and accelerated fall close-outs of weather related outerwear products. Excluding changes in currency exchange rates, consolidated net sales increased 5% in the fourth quarter.

Sorel sales were $21.5 million for the fourth quarter, a 14.4% increase over the same period last year with growth driven by shipment of key classic footwear styles. Mountain Hardwear sales were $15.5 million for Q4, a 38.4% increase over last year. Full year sales were up 30% to $59.7 million with strong growth in the U.S. and international markets. U.S. sell-through rates have reportedly been strong this winter. Columbia stated that they feel the Mountain Hardwear brand is very strong in the specialty dealer base and is solidifying its premium market position in U.S. specialty and sporting goods channels.

Net licensing income increased 60% to $1.6 million in the fourth quarter, with strong contribution in licensing income from socks, leather outer wear, home furnishings, and bicycles.

Outerwear sales declined 4.7% to $147.4 million versus $154.7 million last year. Sales in Europe and Korea partially offset the expected weakness in North America. Sportswear sales increased 11.5% to $90 million versus $80.7 million. U.S. sportswear growth was “very strong” in the fourth quarter, driving overall sales growth for the product category globally. Footwear sales increased 19.9% to $63.3 million versus $52.8 million with shipments up in all markets globally, led by strong sales in North America driven by cold weather products. Accessories sales decreased to $12.2 million versus $12.6 million last year, while Equipment increased 20% to $1.2 million versus $1 million in 2004.

The company feels that they are well positioned in Europe and sales in the region were 16% of total sales, compared to 15.5% in 2004. EU sales increased 14.3% to $50.3 million versus $44 million last year. Canada’s, fourth quarter sales were $26.6 million versus $32.6 million, an 18.4% decrease. Other international sales were $51.8 million versus $44.1 million for 2004, an increased of 17.5%, or 19.7% excluding changes in currency exchange rates.

COLM’s consolidated gross margins for the fourth quarter contracted by 170 basis points to 42.8%, compared to 44.5% in 2004. This contraction was primarily the result of a sales mix shift from outerwear to sportswear and footwear products, as well as a product mix shift within the outerwear and sportswear categories. COLM's SG&A increased to 26% of sales for Q4 compared to 24.9% of sales for 2004. Net income for the quarter was $36.6 million, a 7.1% year-over-year decrease. However, diluted earnings per share were 97 cents, flat year-over-year, due to Columbia’s share repurchase program.

Columbia expects first quarter 2006 sales to increase roughly 1% based on current backlog numbers. First quarter gross margins are expected to expand approximately 20 basis points to between 43.7% and 43.9%. Excluding the expensing of stock options in the first quarter, Columbia expects estimated net income to decline approximately 15%. The guidance does not include projected financial results from the Montrail acquisition, which COLM expects to be neutral to earnings in Q1 and slightly dilutive to earnings in 2006.