Columbia Sportswear Company said preliminary financial results for the fourth quarter ended Dec. 31, 2012 are below the companys prior outlook provided on Oct. 25, 2012.
The company now expects to report fourth quarter net sales of approximately $499.0 – $503.0 million, a decline of approximately 5 percent compared with fourth quarter 2011 net sales of $526.1 million. Prior fourth quarter outlook anticipated net sales growth of up to 1.5 percent.
Net sales were hampered by a combination of mild winter weather in North America during most of the holiday shopping period, general consumer caution and reduced retail traffic in key markets, and a more promotional environment. These factors, among others, combined to produce lower-than-expected direct-to-consumer sales, as well as higher order cancellations and fewer reorders from wholesale customers, primarily in the U.S. In addition, approximately one-third of the fourth quarter net sales shortfall reflected a timing shift into the first quarter of 2013 of factory-direct shipments of international distributors Spring 2013 advance orders.
The company now expects fourth quarter gross margin to contract approximately 120 to 130 basis points, to 41.2 to 41.3 percent. Prior fourth quarter outlook anticipated gross margin contraction of 50 to 75 basis points from gross margin of 42.5 percent in last years fourth quarter. Lower-than-expected gross margin primarily reflects increased promotional activity and liquidation of excess inventory in response to the slower sales discussed above.
Consolidated inventories at Dec. 31, 2012 are expected to be essentially equal to those at Dec. 31, 2011.
The company now expects fourth quarter operating income of approximately $47.0 to $52.0 million, or approximately 9.4 percent to 10.3 percent operating margin, compared with fourth quarter 2011 operating income of $50.5 million, or 9.6 percent operating margin. Prior fourth quarter outlook anticipated operating margin of 10.6 percent to 11.1 percent.
The company now expects to report fourth quarter net income of between approximately $37.0 million to $40.0 million, including a lower than expected income tax rate. Prior outlook anticipated fourth quarter net income of approximately $44.0 million, compared with net income of $36.7 million for the fourth quarter of 2011.
No conference call will be held in conjunction with this preliminary report. The company plans to announce actual fourth quarter and full year 2012 results and update its preliminary 2013 outlook on February 7, 2013.
Columbia Sportswear plans to report actual fourth quarter and full year 2012 financial results on Thursday, Feb. 7, 2013 at approximately 4:00 p.m. ET.
In addition to the Columbia brand, Columbia Sportswear Company also owns outdoor brands Mountain Hardwear, Sorel, and Montrail.