Columbia Sportswear Company reported an 11.3% increase in sales for the first quarter of 2007 to $289.6 million from $260.2 million for the same period of 2006. Net income for the quarter was $26.1 million, jumping 33.8% from $19.5 million for the year-ago quarter. Earnings per share for the first quarter of 2007 were 71 cents (diluted) on 36.6 million weighted average shares, compared to earnings per share of 52 cents (diluted) for the first quarter of 2006 on 37.3 million weighted average shares.
Compared to the first quarter of 2006, Other International sales increased 30.9% to $54.2 million, U.S. sales increased 7.7% to $155.5 million, European sales increased 12.7% to $54.1 million, and Canadian sales decreased 2.3% to $25.8 million for the first quarter of 2007.
Excluding changes in currency exchange rates, consolidated net sales increased 9.6%, Other International sales increased 30.4%, U.S. sales increased 7.7%, European sales increased 2.7%, and Canadian sales remained essentially flat for the first quarter of 2007, compared to the same period of 2006.
For the first quarter of 2007, sportswear sales increased 15.0% to $163.1 million, outerwear sales increased 8.3% to $59.8 million, footwear sales increased 4.3% to $52.9 million and accessories and equipment sales increased 10.4% to $13.8 million, compared to the first quarter of 2006.
Tim Boyle, Columbia's president and chief executive officer, commented, “Our record first quarter results reflect the continued strong demand for our sportswear category. Sportswear sales increased in all direct and distributor markets globally, led by continued strong sportswear sales growth domestically. The strong net sales growth combined with expanding gross and operating margins drove exceptional growth in net earnings for the first quarter. We are pleased with the continued strength of our spring business.”
Backlog
The company reported that as of March 31, 2007, consolidated fall and spring order backlog increased 4.7% to $888.7 million compared to consolidated fall and spring order backlog of $848.9 million at March 31, 2006. Of this total, fall order backlog at March 31, 2007 was $742.1 million, a 3.0% increase over fall order backlog of $720.7 million at March 31, 2006. Excluding changes in currency exchange rates, consolidated fall and spring order backlog increased 3.2%, and fall order backlog increased 1.6%, compared to the prior year.
Boyle continued, “Fall orders increased 3.0 percent at March 31, 2007, primarily due to continued strength in U.S. sportswear orders and exceptional growth in International Distributor sportswear orders. Global sportswear orders increased double-digits and growth in the category continues to reduce our dependency on cold weather conditions for customer orders and retail sales of our products. Orders for cold weather footwear and outerwear were negatively affected by extended periods of above average temperatures and lack of precipitation in many markets last fall and winter, but most specifically in Western Europe, where orders in all product categories decreased substantially. Global footwear orders decreased slightly, primarily due to decreases in orders for cold weather footwear. Global outerwear orders were essentially flat; however, we are pleased to report that U.S. orders of Columbia brand outerwear increased double digits, despite the warm weather conditions in the U.S. last fall, reflecting our continuing efforts to re-merchandise our core Columbia outerwear line. U.S. Pacific Trail outerwear orders declined substantially due to pockets of poor sell-through of fall 2006 products, an unappealing fall 2007 outerwear product line, and challenges integrating sales operations.”
“Overall, weather had a negative impact on our total fall season orders, particularly in Western Europe and for cold weather footwear. We are very pleased, however, with the progress we have made to improve profitability. We anticipate that gross and operating margins will expand throughout 2007, despite the effect of warm weather on projected net sales and significant incremental increases in depreciation and amortization anticipated this year. Our designers and merchants continue to develop apparel and footwear products that are less weather sensitive and have longer retail sales windows. These efforts will help us maintain our retail market position year-round and reduce the weather dependency of our fall season products,” commented Boyle.
Dividend
The company announced that the board of directors has approved a dividend of 14 cents per share, payable on May 31, 2007 to shareholders of record on May 17, 2007.
Guidance
Mr. Boyle continued, “Considering the backlog we released today, we currently anticipate second quarter 2007 revenue growth of approximately 6 percent and diluted earnings per share of approximately $0.18. For the full year 2007, we anticipate net sales growth of approximately 5 percent, and diluted earnings per share of approximately $3.65. 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 per share amounts)
(Unaudited)
Three Months Ended March 31,
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2007 2006
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Net sales $ 289,640 $ 260,211
Cost of sales 162,942 148,574
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Gross profit 126,698 111,637
43.7% 42.9%
Selling, general, and administrative
expense 90,361 84,819
Net licensing income (996) (1,005)
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Income from operations 37,333 27,823
Interest (income) expense, net (2,192) (1,898)
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Income before income tax 39,525 29,721
Income tax expense 13,439 10,254
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Net income $ 26,086 $ 19,467
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Earnings per share:
Basic $ 0.72 $ 0.53
Diluted 0.71 0.52
Weighted average shares outstanding:
Basic 36,181 36,900
Diluted 36,555 37,339
