Columbia Sportswear Co. reported sales in the fourth quarter slid 6% to $354.9 million from $376.7 million for the same period of 2007. Sales included a 3% negative effect from changes in foreign currency exchange rates compared with the fourth quarter of 2007. Net income dropped to $18.6 million, or 55 cents a share, from $45.7 million, or $1.26 a share, a year ago.
The latest quarter included a pre-tax, non-cash charge of $24.7 million, or 46 cents per share. after tax, for the write-down of acquired intangible assets related to the company's acquisitions of the Pacific Trail and Montrail brands in 2006. The impairment charge consisted primarily of goodwill and trademarks and resulted from the company's annual evaluation of intangible asset values.
The year-ago quarter included a tax benefit of 14 cents per share related to the favorable conclusion of a European tax examination.
Compared with the fourth quarter of 2007, fourth quarter 2008 outerwear net sales declined 6% to $171.7 million, sportswear net sales declined 8% to $106.8 million, footwear net sales declined 1% to $59.8 million, and accessories and equipment sales declined 6% to $16.6 million.
Compared with the fourth quarter of 2007, fourth quarter 2008 Columbia brand net sales decreased 7% to $305.6 million, partially offset by a 15% increase in Sorel brand net sales to $22.8 million and a 1% increase in Mountain Hardwear brand sales to $24.2 million. Combined, net sales of Montrail and Pacific Trail brand products did not comprise a significant percentage of sales in the fourth quarter of either year.
The company ended the quarter with $253.1 million in cash and short-term investments, compared with $273.5 million at Dec. 31, 2007. Accounts receivable at Dec. 31, 2008 were down slightly to $299.6 million, compared with $300.5 million at Dec. 31, 2007. Inventories at Dec. 31, 2008 decreased to $256.3 million, down $9.6 million, or 4% , compared with Dec. 31, 2007 and down $45.1 million, or 15% , compared with Sept. 30, 2008.
Fiscal 2008 Results
For 2008, net sales totaled $1.32 billion, a decrease of 3% from net sales of $1.36 billion for 2007, including a 1% benefit from changes in foreign currency exchange rates compared with 2007.
Net income for 2008 totaled $95.0 million, or $2.74 per diluted share, compared to net income of $144.5 million, or $3.96 per diluted share, for 2007.
2008 U.S. net sales decreased 5% , to $727.7 million, compared with 2007; EMEA net sales decreased 7% , to $267.2 million, including a 5% benefit from changes in foreign currency exchange rates, compared with 2007; LAAP net sales increased 13% , to $198.2 million, including a neutral currency effect; and Canada net sales decreased 1% , to $124.7 million, including a 2% currency benefit.
Compared with 2007, fiscal year 2008 sportswear net sales declined 4% to $540.9 million, outerwear net sales were down 1% to $491.7 million, footwear net sales decreased 4% to $217.2 million, and equipment and accessories net sales increased 4% to $68.0 million.
“While we are pleased with our fourth quarter and full year results in the context of the weak economic environment, the accelerated deterioration of the global economy since September has prompted us to recalibrate the pace of our planned investments in retail stores and brand advertising in 2009,” he continued. “We plan to move forward with our previously announced plan to open a branded store on Chicago's Michigan Avenue in late 2009 and are also maintaining our plans to open additional outlet stores, primarily in the U.S. and Europe, to provide a more profitable channel for inventory liquidation.”
The dynamic nature of the current economic environment limits the company's visibility and its ability to estimate future results. All projections related to anticipated future results are forward-looking in nature and are based on backlog and forecasts, which may change, perhaps significantly.
The 11% decline in Spring backlog that we announced in October 2008, combined with expectations of increased order cancellations and the negative effect of deteriorating consumer spending on sales at our retail stores, leads us to expect a 10% to 12% decline in consolidated net sales for the first quarter of 2009 compared with net sales of $297.4 million for the first quarter of 2008. This anticipated decline in net sales includes approximately 4% of negative foreign currency impact which may be further amplified if the U.S. dollar continues to strengthen compared to certain foreign currencies.
2009 first quarter gross margins are expected to decline by approximately 4% compared with first quarter 2008 due to a higher proportion of low-margin sales of excess Fall 2008 inventory created by the sudden deterioration in wholesale and retail activity over the past three months. First quarter 2009 operating expenses as a percent of net sales are expected to increase approximately 5% compared with first quarter 2008, primarily reflecting the incremental costs of our retail expansion plans, partially offset by a reduction in selling expenses as a result of the anticipated decrease in consolidated first quarter net sales. As a result, we expect first quarter 2009 diluted EPS to be in the range of 4 cents to 8 cents per diluted share, compared with 56 cents for the first quarter of last year.
Spring product sales have historically accounted for a minority of the company's full year net sales, therefore, the company does not traditionally comment on the factors that it believes will influence full year net sales and profitability levels until April when it announces first quarter financial results and Fall backlog.