Columbia Sportswear Company reported an operating loss of $2 million in the first quarter as sales fell 13 percent. The erosion primarily reflects the impact of lower consumer demand resulting from the ongoing COVID-19 pandemic.

Highlights of the quarter include:

  • Net sales decreased 13 percent to $568.2 million, compared to first quarter 2019.
  • Loss from operations of $(2.0) million, or (0.3) percent of net sales, compared to first quarter 2019 operating income of $88.0 million, or 13.4 percent of net sales. First-quarter 2020 loss from operations includes a $21.5 million year-over-year increase in bad debt expense and a $9.2 million year-over-year increase in inventory obsolescence provisions.
  • Break-even diluted earnings per share, compared to first quarter 2019 diluted earnings per share of $1.07.
  • Recent actions to mitigate the financial impact of the COVID-19 pandemic have been focused on financial liquidity enhancements, cost containment measures and capital preservation actions including suspending dividends and share repurchases.

Chairman, President and Chief Executive Officer Tim Boyle commented, “Our focus remains on the health and safety of our employees, their families, our customers and our communities. I’m proud of the strength and resilience of our global employees, whose dedication, focus and responsiveness are vital to successfully navigating this unprecedented global health and economic crisis. First-quarter results largely reflect the impact of the COVID-19 pandemic, which escalated throughout the quarter as the global effort to contain the pandemic unfolded. It is important to note that we entered into this crisis in a position of strength, with a fortress balance sheet and top quartile operating margin performance in our industry in 2019. As consumers look to make every dollar they spend count within this challenging economic environment, we believe the Columbia brand’s differentiated innovation and exceptional value are as important as ever.

“It is impossible to predict when this crisis will pass, but we have weathered many storms during Columbia’s long history, which spans more than 80 years, and I am confident that we will get through this one as well. We have quickly taken steps to enhance liquidity, preserve capital, contain costs and manage inventory to mitigate the financial impact of the pandemic, and we are keenly focused on emerging in a stronger competitive position.

“Our long-term commitment to driving sustainable and profitable growth has not changed and our strategic priorities remain to:

  • drive brand awareness and sales growth through increased, focused demand creation investments;
  • enhance consumer experience and digital capabilities in all our channels and geographies;
  • expand and improve global direct-to-consumer operations with supporting processes and systems;
  • and invest in our people and optimize our organization across our portfolio of brands.”

COVID-19 Update
In first-quarter 2020, lower consumer demand related to the COVID-19 pandemic began to impact financial performance in China in late January, Korea and Japan in early February and North America and Europe in March. Retail traffic trends declined across North America and Europe in early March, prior to store closures which began in mid-March. In light of the current and anticipated environment, the company has taken several actions to mitigate the financial impacts of the COVID-19 pandemic including financial liquidity enhancements, capital preservation actions including suspending dividends and share repurchases, cost containment measures and actions to manage inventory.

First Quarter 2020 Financial Results


  • Net sales decreased 13 percent to $568.2 million, from $654.6 million for the comparable period in 2019.
  • By region, U.S. sales declined 9 percent to $375.9 million. Internationally, LAAP sale were down 23 percent on a reported basis and 22 percent on a currency-neutral basis, to $102.6 million. EMEA sales were down 22 percent on both a reported and currency-neutral basis to $55.8 million. Canada was off 13 percent on both on a reported and currency-neutral basis to $33.9 million.
  • By brand, Columbia’s sales fell 15 percent on a reported basis and 14 percent on a currency-neutral basis to $471.7 million. Sorel’s sales were down 2 percent on both a reported and currency-neutral basis to $36.5 million. Prana declined 11 percent on both on a reported and currency-neutral basis to $38.7 million. Mountain Hardwear’s sales eased 2 percent on both on a reported and currency-neutral basis to $21.3 million.
    Gross margin contracted 360 basis points to 47.8 percent of net sales from 51.4 percent of net sales for the comparable period in 2019.
  • SG&A expenses increased 10 percent to $276.8 million, or 48.7 percent of net sales, from $251.8 million, or 38.5 percent of net sales, for the comparable period in 2019.
  • Loss from operations of $(2.0) million, or (0.3) percent of net sales, compared to operating income of $88.0 million, or 13.4 percent of net sales, for the comparable period in 2019. First-quarter 2020 loss from operations include a $21.5 million year-over-year increase in bad debt expense and a $9.2 million year-over-year increase in inventory obsolescence provisions.
  • Net income decreased 100 percent to $0.2 million, or $0.00 per diluted share, from $74.2 million, or $1.07 per diluted share, for the comparable period in 2019.

Balance Sheet as of March 31, 2020

  • Cash, cash equivalents and short-term investments totaled $706.9 million, compared to $703.1 million at March 31, 2019.
  • Short-term borrowings totaled $174.4 million. There were no short-term borrowings at March 31, 2019.
  • Inventories increased 11 percent to $577.1 million, compared to $520.6 million at March 31, 2019.
  • Share Repurchases for the Three Months Ended March 31, 2020
  • The company repurchased 1,557,184 shares of common stock for an aggregate of $132.9 million, or an average price per share of $85.34, under a previously established written plan.
  • At March 31, 2020, $82.2 million remained available under the current stock repurchase authorization. As part of a broader capital preservation effort during the ongoing COVID-19 pandemic, the company has suspended share repurchases.

Quarterly Cash Dividend
As part of a broader capital preservation effort during the ongoing COVID-19 pandemic, subsequent to payment of the dividend declared and paid earlier in the first quarter of 2020, the company’s Board of Directors suspended future quarterly cash dividends.

Photo courtesy Columbia Sportswear