Effective May 1, 2008, Columbia Sportswear Company will shift all sales, marketing and service functions for its shrinking Montrail brand to its Mountain Hardwear unit.
The announcement follows a 22.7% decline in Montrail sales in the fourth quarter – the second worst performance of any Columbia brand after Pacific Trail, where sales plummeted 85%. Columbia bought Montrail in June 2006 for $15 million in cash and assumption of debts to bolster its footwear business, but the brand has been shrinking ever since. Montrail reported unaudited sales of $16.5 million at the end of 2005. While Columbia did not break out Montrail sales for the important first quarter of 2007, sales of the brand in the last three quarters of the year fell 8%, 28%, and 22.7%, respectively, to a total of $7.8 million.
By placing Montrail sales, marketing and service under Mountain Hardwear, Columbia is aligning the brand with a company that enjoys a solid reputation among specialty retailers.
“We believe that our reputation for retailer service and marketing will help make this an easy transition,” said Mike Wallenfels, president of Mountain Hardwear, which has thrived since being acquired by Columbia in 2003. In the fourth quarter, Mountain Hardwears sales rose 15.5% to $23.9 million.
Wallenfels said the steady decline in Montrail sales through the last three quarters of 2007 was caused by a mix of sales and product issues, the latter of which he attributed to decisions made by Montrail before it was acquired by Columbia.
“There have been issues with delivery and fit and quality, but for folks receiving and selling new product, Columbia has done a great job fixing those issues that they might have inherited,” he said.
Turnover in the sales force, meanwhile, undermined dealer service. “The biggest challenge they faced was the sales force changed two or three times in the last few years,” said Wallenfels.
For example, Montrail was first sold byt the Sorel sales team before being consolidated under a single Columbia footwear sales force.
Mountain Hardwear and Montrail match up well, Wallenfels said. Many outdoor specialty retailers already carry both brands and both companies use a grassroots marketing approach to marketing that emphasizes sponsoring athletes and local events and promotions.
“We will cross over as much with the athlete pool as possible,” said Wallenfels. “Someone running Montrail shoes we would like to see running in Mountain Hardwear apparel.”
The question remains whether its too late for Montrail to regain its position as category leader. Asolo, Go-Lite, Keen, Merrell, The North Face, La Sportiva, Salomon, Vasque and other brands have aggressively expanded their trail running offerings. Moreover, much of the sales growth is occurring in the specialty running market, where Mountain Hardwear has less experience.
“Montrail has been growing especially well in the specialty running market – local and chain,” said Wallenfels. “A lot of talk you hear about trail running growing is those stores.”
Montrail product sourcing functions will remain under Columbia Sportswear corporate management in Portland, OR and U.S. product distribution and shipping will continue to be processed through the companys Kentucky facility.
Mountain Hardwear and Columbia Sportswear will work together on product direction and development using the established Montrail footwear team in the Columbia Sportswear headquarters in Portland, OR. Mountain Hardwear and Montrail already share resources for international sales management in key markets such as Europe, South Korea, and Canada and it is expected this change will help consolidate and streamline their efforts. Service and sales operations will formally transition after May 1, 2008.
