Columbia Sportswear Company pointed to a strong backlog picture in upgrading its outlook for the balance of this year and into fiscal year 2004. Backlog at the end of the third quarter increased 26.7%, or 20.2% in constant currency, for the spring period, aided a bit by $11.4 million in spring orders for the recently-acquired Mountain Hardwear business. Excluding the MH contribution, spring backlog would have still been up a healthy 21.8%.
While not sharing specific numbers, the company said that U.S. backlog “grew faster than the average”.
“We expect sales velocity to continue through the fourth quarter and into the first quarter of next year,” said Columbia CEO Tim Boyle in a press release.
The spring backlog — a portion of which COLM expects to pull forward into December — and a 19.1% increase in total consolidated backlog that includes Q4 orders was reason enough for the company to bump their previous 2003 earnings growth forecast of 8% to 10% to a revised range of 15% to 16% growth, or $2.94 to $2.97. Consensus estimates saw $2.87 a share.
Revenues for full-year 2003 are now expected to grow to between $938.7 million and $946.9 million, up 15% to 16% from 2002. The new forecast is a nice increase from the July forecast of 12% to 14% growth and dwarfs the February forecast of just 5% to 7% that sent shares sharply lower the beginning of the year.
Boyle said the strong third quarter results, which beat analysts earnings estimates by five cents, were driven by “solid sales growth” in the Sportswear category, along with a growing Footwear business and continued momentum in the International markets.
The positives carried over into the spring backlog in the U.S., as bookings for niche Sportswear brands PFG and GRG showed strength and sandals were said to be “healthy” in the Footwear category. In Europe, the U.K. and France led growth in bookings for spring in the region that saw Footwear lead backlog growth that was “up across all major European markets”.
The CEO said that in Europe, France is number one in volume, with Germany number two while the U.K. is “growing rapidly. He also sees “great strength” in Spain and the Scandinavian countries.
Boyle said the Europe business could be larger than the U.S. business “for many different reasons”.
COLM said the Footwear business has historically been a “cold weather business” for the company, but recent successes in sandals, light hikers, trail running and lifestyle casual footwear create the opportunity for Columbia to be a year-round footwear resource.
The Roc pant is becoming a staple at many retailers and is enabling the company to build a nice bottoms business for the back half of the year.
The higher mix of Sportswear and Footwear has impacted margins to the negative, with gross margin declining 60 basis points for the third quarter.
Mountain Hardwear sales were $13 million for the third quarter, driven by strength in Windstopper fleece, soft shells and insulated outerwear. Boyle said many of the high-end competitors to MH are now “concentrating on price-point styles” that are “less technical” in nature. MH Equipment sales were $1.4 million for the quarter.
MH will start to draft off of Columbias expertise with in-store concept shops to help build deeper penetration of the brand and develop stronger retail partnerships.
Sorel sales were $14 million in the quarter, up 22% from last years Q3. COLM sees a “significant opportunity” for this brand that was once a $90 million business and expects it to grow it “above the high teens level” for the foreseeable future.
On the distribution front, COLM did say they have had “some improvement” in the new TSA business, due primarily to increases at the older Sports Authority stores that did not have Columbia in the past.
For the first quarter of 2004, the company expects revenue growth in a range of 19% and 21%, with net income up in the range of 10% and 14%. For the first quarter of 2003, the company earned $14.9 million, or 37 cents a share, on revenue of $168.9 million.
>>> Acquisitions appear to be working here and do not seem to be forcing COLM to take their eye of the ball with the breadwinning brand…
