REI 2010 Net Income Inches Up on Strong Sales Growth, Weaker Gross Margins

April 4, 2011
SGB Update

Recreational Equipment, Inc., or REI, announced sales rose 14.0% to $1.66 billion for the year ended Dec. 31, 2010, on 8.1% comps growth, a 22.9% increase in direct sales and the addition of four new stores. Gross margins slipped 80 basis points to 43.9% of net sales or $728.9 million during the year. Operating margins, however, edged up a basis point to 7.0% as operating income hit a record $115.4 million, up 14.8% over $100.6 million in 2009. Net income in 2010 was $30.2 million, up 1.4% from $29.8 million in the previous year.


The co-op closed out the year with $260.0 million in inventory and up 28.1% versus the previous year-end. REI raised its store count to 114 in 2010 and plans to open seven more in 2011 in Dublin and Santa Barbara, Calif.; Paramus, N.J.; Carle Place, Manhattan and Yonkers, N.Y. and Olympia, Wash.


“REI achieved remarkable results last year in an economy that remained uncertain, and I credit the dedication and commitment of our more than 9,500 employees who are focused on serving our members and customers. Our performance positions REI well for ongoing strategic growth and business investments,” said Ivar Chhina, REI’s chief financial officer and executive vice president. “As the nation’s largest consumer cooperative, we are extremely pleased to also share our success with our members, communities and employees.”


REI net income does not include the record $94.3 million in patronage refunds the co-op paid out to 4.4 million active members earlier this month. Nor does it include $35 million in rebates REI Visa card holders will receive from purchases made last year using their REI Visa cards. As a result, more than $129 million will be returned to REI members, an all-time high.


The co-op also disclosed that it invested $3.7 million in national and community-based nonprofit organizations dedicated to engaging volunteers in conserving local natural spaces. In addition, it awarded a grant of $2.5 million to the REI Foundation, an independent 501(c) 3 nonprofit organization established by the co-op in 1993 to support efforts that increase diversity and youth participation in the outdoors.
REI employees received a total of $58.6 million through the company’s annual incentive, retirement and profit sharing plans.

 

The rewards included the distribution of $32.7 million in performance incentives to employees and a $25.9 million contribution for retirement and profit sharing, up 20% from 2009. The co-op’s exceptional performance allowed the retirement and profit sharing plan to achieve its maximum contribution, which is 15% of eligible employee’s base salary.


REI also disclosed that it spent $47.3 million on advertising, including catalog distribution, in 2010, up 12% from 2009. Customer related obligations, which reflect unredeemed gift card balances and merchandise credits, rose 19% to $100.4 million. Contributions to employee retirement and profit sharing plans rose 20.4% to $25.4 million.

REI 2010 Net Income Inches Up on Strong Sales Growth, Weaker Gross Margins

March 29, 2011
SGB Update

Recreational Equipment, Inc., or REI, announced sales rose 14.0% to $1.66 billion for the year ended Dec. 31, 2010, on 8.1% comps growth, a 22.9% increase in direct sales and the addition of four new stores.

 

Gross margins slipped 80 basis points to 43.9% of net sales or $728.9 million during the year. Operating margins, however, edged up a basis point to 7.0% as operating income hit a record $115.4 million, up 14.8% over $100.6 million in 2009. Net income in 2010 was $30.2 million, up 1.4% from $29.8 million in the previous year.


The co-op closed out the year with $260.0 million in inventory and up 28.1% versus the previous year-end. REI raised its store count to 114 in 2010 and plans to open seven more in 2011 in Dublin and Santa Barbara, Calif.; Paramus, N.J.; Carle Place, Manhattan and Yonkers, N.Y. and Olympia, Wash.


“REI achieved remarkable results last year in an economy that remained uncertain, and I credit the dedication and commitment of our more than 9,500 employees who are focused on serving our members and customers. Our performance positions REI well for ongoing strategic growth and business investments,” said Ivar Chhina, REI’s chief financial officer and executive vice president. “As the nation’s largest consumer cooperative, we are extremely pleased to also share our success with our members, communities and employees.”


REI net income does not include the record $94.3 million in patronage refunds the co-op paid out to 4.4 million active members earlier this month. Nor does it include $35 million in rebates REI Visa card holders will receive from purchases made last year using their REI Visa cards. As a result, more than $129 million will be returned to REI members, an all-time high.


The co-op also disclosed that it invested $3.7 million in national and community-based nonprofit organizations dedicated to engaging volunteers in conserving local natural spaces. In addition, it awarded a grant of $2.5 million to the REI Foundation, an independent 501(c) 3 nonprofit organization established by the co-op in 1993 to support efforts that increase diversity and youth participation in the outdoors.
REI employees received a total of $58.6 million through the company’s annual incentive, retirement and profit sharing plans. The rewards included the distribution of $32.7 million in performance incentives to employees and a $25.9 million contribution for retirement and profit sharing, up 20% from 2009. The co-op’s exceptional performance allowed the retirement and profit sharing plan to achieve its maximum contribution, which is 15% of eligible employee’s base salary.


REI also disclosed that it spent $47.3 million on advertising, including catalog distribution, in 2010, up 12% from 2009. Customer related obligations, which reflect unredeemed gift card balances and merchandise credits, rose 19% to $100.4 million. Contributions to employee retirement and profit sharing plans rose 20.4% to $25.4 million.

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