Columbia Sportswear announced record first quarter net sales of $168.9 million for the quarter ended March 31, 2003, an increase of 17.9 percent over net sales of $143.3 million for the same period of 2002.
The Company reported net income for the first quarter of $14.9 million, a 65.6 percent increase over net income of $9.0 million for the same period of 2002. Earnings per share for the first quarter of 2003 were $0.37 (diluted) on 40.4 million weighted average shares, compared to earnings per share of $0.22 (diluted) for the first quarter of 2002 on 40.0 million weighted average shares. The Company completed its acquisition of Mountain Hardwear, Inc. on March 31, 2003. First quarter results do not include income or expense of Mountain Hardwear operations.
Compared to the first quarter of 2002, U.S. sales increased by 9.8 percent to $99.6 million, Canadian sales increased by 39.2 percent to $18.1 million, European sales increased by 27.8 percent to $32.2 million and Other International sales increased 31.9 percent to reach $19.0 million for the first quarter of 2003.
When measured in constant dollar terms, Canadian sales grew by 32.1 percent, European sales increased by 3.4 percent, and Other International sales increased 23.2 percent for the first quarter of 2003. Consolidated net sales for the first quarter of 2003 increased 12.0 percent to $160.5 million in constant dollars, when compared to the first quarter of 2002.
When compared to the first quarter of 2002, outerwear sales decreased 1.9 percent to $36.0 million, while sportswear sales increased 20.9 percent to $97.8 million and footwear sales increased by 47.0 percent to $29.7 million. Accessories sales were flat year over year at $5.4 million.
Tim Boyle, Columbia’s president and chief executive officer, commented, “The strength of our brands and business globally contributed to exceptional first quarter results. Based on previously announced spring season bookings, worldwide sales continued to expand during the period, led by strong growth in our sportswear and footwear product lines. The acceleration of our spring business globally is in part the result of previously discussed management restructurings in sportswear and footwear, coupled with innovative product development. Our ability to efficiently source and distribute our products, combined with strong demand, contributed to expanding gross margins, operating leverage and record first quarter earnings.”
Net income expanded 65.6 percent to a first quarter record $14.9 million. Net income growth was primarily the result of (1) increased sales volumes in spring sportswear and footwear in all key geographic markets, (2) a 270 basis point improvement in gross margin to 45.4 percent compared to 42.7 percent for the first quarter of 2002, and (3) continued improvement in operating leverage which resulted in a decrease in sales, general and administrative (SG&A) expenses to 31.4 percent of sales compared to 32.3 percent of sales for the first quarter of 2002. The increase in gross margin was primarily the result of continued sourcing improvements for spring products and lower volume sales of fall closeout products at higher margins. The leverage gained through SG&A was primarily the result of continued cost control measures with focus on personnel, capital and other discretionary spending.
The Company reported that as of March 31, 2003, consolidated backlog increased 12.4 percent to $656.7 million, compared to consolidated backlog of $584.4 million at March 31, 2002. Of this total, fall product backlog at March 31, 2003 was $571.7 million, an increase of 10.4 percent when compared to fall product backlog of $517.8 million from the prior year. Due to the acquisition of Mountain Hardwear late in the quarter, Mountain Hardwear projected backlog is not included in the reported backlog; however, second quarter and full year financial guidance includes projected Mountain Hardwear results.
Boyle commented, “Fall backlog growth was stronger than previously anticipated, led by sportswear and footwear growth in all key geographic regions, and benefited by foreign currency strength in our direct markets. Geographically, strength in the backlog numbers for fall 2003 was led by international markets including Europe, Japan, and Canada. Achieving accelerating backlog growth rates in a difficult retail environment is very encouraging and underscores the value offered by Columbia’s brands.”
Boyle continued, “Based on the backlog we released today and including Mountain Hardwear projected results, we currently believe that our strategies will enable us to generate second quarter 2003 revenue growth of 18 to 20 percent and net income growth of up to 5 percent as compared to the second quarter 2002. For the full year 2003, we believe that consolidated year over year revenue growth of 12 to 14 percent is achievable. Mountain Hardwear is expected to contribute revenue of approximately $30 million for 2003. We also project consolidated net income growth of 8 to 10 percent when compared to the full year 2002. These projections are forward-looking in nature, and are based on backlog and forecasts, which may change, perhaps significantly.”
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
Three Months Ended
March 31,
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2003 2002
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Net sales $ 168,871 $ 143,299
Cost of sales 92,127 82,148
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Gross profit 76,744 61,151
45.4% 42.7%
Selling, general, and administrative 53,056 46,227
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Income from operations 23,688 14,924
Interest (income) expense, net (183) 109
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Income before income tax 23,871 14,815
Income tax provision 8,952 5,852
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Net income $ 14,919 $ 8,963
