Columbia Sportswear Company’s net sales rose 21 percent in its traditionally slow second quarter to $268.0 million despite an 8 percent decline in U.S. wholesale sales caused in part by weather related cancellation of advance spring orders.
The company attributed three percentage points of the sales increased to foreign currency exchange rates.
The net loss for the quarter totaled $13.6 million, or 40 cents per diluted share, compared with a net loss of $10.6 million, or 31 cents per diluted share, for the same period of 2010. The company reaffirmed its outlook for full year 2011 net sales to increase 14 to 16 percent and maintained its outlook for operating margin of approximately 7.5 to 7.7 percent.
Second quarter net sales growth was driven by 20 percent growth in Columbia brand net sales to $239.1 million, a 24 percent increase in Mountain Hardwear brand net sales to $22.7 million, and a 106 percent increase in Sorel brand net sales to $3.7 million.
Second quarter U.S. net sales grew 4 percent to $129.0 million, driven primarily by a 39 percent increase in direct-to-consumer sales, partially offset by an 8 percent decline in wholesale sales, reflecting a combination of a planned shift in the timing of shipments of Fall 2011 advance orders compared with Fall 2010, and unseasonable weather, which resulted in fewer reorders and greater cancellations of advance orders compared with the second quarter of 2010.
The company ended the second quarter of 2011 with approximately $298.3 million in cash and short-term investments, compared with approximately $398.3 million at June 30, 2010. Inventories totaled $422.0 million at June 30, 2011, an increase of 36 percent from June 30, 2010. The increase resulted from:
- earlier receipts of Fall 2011 production to fulfill advance orders for delivery in the second half of 2011;
- excess Fall 2010 inventory intentionally held for sale primarily through company-owned retail outlet stores in the second half of 2011;
- higher Spring 2011 inventory compared to Spring 2010, partially due to unseasonable weather which resulted in fewer reorders and greater cancellations of advance orders; and
- the effect of a weaker U.S. dollar on translation of non-U.S. inventory balances.
2011 Financial Outlook
The company reaffirmed its previous expectations for full year 2011 operating margin to increase approximately 50 to 70 basis points compared with 2010 operating margin of 7.0 percent, driven by:
- an expected net sales increase of 14 to 16 percent compared with 2010,
- an approximate 100 basis point increase in gross margins compared to 2010 gross margins of 42.4 percent, and
- increased licensing income, partially offset by
- an estimated 50 basis point increase in selling, general and administrative expenses (SG&A) as a percentage of sales.
The company expects a low double-digit percentage increase in third quarter 2011 net sales compared with third quarter 2010 and operating income of approximately $70 million to $74 million, with a 25 basis point increase in gross margins, and 100 basis points of SG&A expense expansion as a percentage of net sales, partially offset by an increase in licensing income.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Net sales | $ | 268,030 | $ | 221,831 | $ | 601,116 | $ | 522,237 | |||||||
Cost of sales | 155,617 | 124,909 | 339,167 | 298,011 | |||||||||||
Gross profit | 112,413 | 96,922 | 261,949 | 224,226 | |||||||||||
41.9 | % | 43.7 | % | 43.6 | % | 42.9 | % | ||||||||
Selling, general, and administrative expense | 134,512 | 113,458 | 268,659 | 228,997 | |||||||||||
Net licensing income | 3,459 | 1,819 | 5,990 | 2,544 | |||||||||||
Loss from operations | (18,640 | ) | (14,717 | ) | (720 | ) | (2,227 | ) | |||||||
Interest income, net | 461 | 392 | 784 | 926 | |||||||||||
Income (Loss) before income tax | (18,179 | ) | (14,325 | ) | 64 | (1,301 | ) | ||||||||
Income tax benefit (expense) | 4,621 | 3,721 | (852 | ) | (75 | ) | |||||||||
Net loss | $ | (13,558 | ) | $ | (10,604 | ) | $ | (788 | ) | $ | (1,376 | ) | |||
Loss per share: | |||||||||||||||
Basic | $ | (0.40 | ) | $ | (0.31 | ) | $ | (0.02 | ) | $ | (0.04 | ) | |||
Diluted | (0.40 | ) | (0.31 | ) | (0.02 | ) | (0.04 | ) |
COLUMBIA SPORTSWEAR COMPANY | |||||||||||||||||||
(In millions, except percentage changes) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||
Brand Net Sales: | |||||||||||||||||||
Columbia | $ | 239.1 | $ | 199.4 | 20 | % | $ | 527.2 | $ | 467.1 | 13 | % | |||||||
Mountain Hardwear | 22.7 | 18.3 | 24 | % | 54.4 | 43.9 | 24 | % | |||||||||||
Sorel | 3.7 | 1.8 | 106 | % | 14.0 | 5.8 | 141 | % | |||||||||||
Other | 2.5 | 2.3 | 9 | % | 5.5 | 5.4 | 2 | % | |||||||||||
Total | $ |