Recreational Equipment, Inc. (REI, co-op) reported revenue for the full year 2023 decreased 2.4 percent year-over-year to $3.76 billion for the 12-month period ended December 31, 2023, compared to $3.85 billion for the full-year period ended December 30, 2022.

The co-op also released its 2023 Impact Study outlining several important measures for its members. The report said that REI invested nearly $270 million back into the co-op community in 2023.

Gross margin for full-year 2023 was 38.7 percent of net sales, a 140 basis point decline from the gross margin of 40.0 percent in full-year 2022. Operating expenses declined 5.1 percent year-over-year, or $89.3 million, to $1.67 billion in 2023. The resulting operating loss was $213.8 million in 2023, compared to $214.7 million in the prior year.

The co-op’s net loss for the year was $311.1 million in 2023, compared to a net loss of $164.7 million in 2022.

REI said three factors largely drove the loss:

  • Commitment to continue investing in hourly employee pay;
  • Commitment to providing a member reward; and
  • A $169 million non-cash valuation allowance against its deferred tax assets.

REI reported investing heavily in its workforce last year, broadening its efforts to “reimagine the employee experience and ensure its staff felt heard, supported, and set up for success,” and “remained committed to increasing hourly employee pay, regardless of company performance, and distributed $57 million in employee retirement and incentives.”

The $169 million non-cash valuation allowance is a reserve against REI’s future tax credits, required under current accounting guidance; however, the co-op continues to believe it will be able to use most of the tax credits when it returns to profitability. At such time, when the co-op returns to profitability, the co-op can use the deferred tax assets and reverse the related valuation allowance accordingly.

REI had cash and cash equivalents totaling $144.2 million at year-end, a sharp decline from $228.7 million at the end of 2022. Inventories were valued at $635.9 million at year-end, a drop of 15.5 percent, or $117.2 million, from inventories valued at $753.1 million at the end of 2022.

“As I reflect on the remarkable results shared in our Impact Report, I am filled with gratitude for the unwavering dedication of our employees and the support of our members, partners, and the entire co-op community,” said Eric Artz, president and CEO. “2023 was a year of both growth and challenges for REI. Despite these challenges, the co-op remained committed to increasing hourly pay for employees, making progress against our climate goals and supporting our nonprofit partners.”

To access REI’s 2023 Impact Report, go here.

To access REI’s 2023 Executive Compensation Discussion and Analysis, go here.

Image courtesy REI