REI Hits $1 Billion in Sales for 2005; Comps Increase 9.6%…

Recreational Equipment, Inc. pointed to favorable weather throughout much of the country and a 10% increase in co-op active membership for an annual sales increase of 15% to $1.02 billion in 2005 from $887 million in the previous year. This is the first time in the co-op’s 67-year history that it has surpassed the $1 billion milestone. Six new retail stores in Bend, OR, Huntington Beach, Calif., Marlton, N.J., Pittsburgh, Penn., Plano, Tex. and Raleigh, N.C. also helped spur growth with stronger than expected initial sales. REI comp store sales increased 9.6% in 2005 on top of a 5.3% increase in 2004. Direct sales posted an overall gain of 20.7%, led by online growth from REI.com and REI-OUTLET.com.

In recognition of this milestone, REI announced a record member refund of more than $50 million and will dedicate $1 million to 100 community parks across the country, above and beyond its more than $3 million in grants previously earmarked this year for outdoor recreation and conservation causes.

Gross margin remained relatively stable year-on-year, with a 10 basis point increase to 43.9% of sales. Operating and administrative expenses declined slightly as a percentage of sales to 35.5% in 2005 compared to 35.7% in 2004.

For the year, REI’s operating income increased 19.4% to $86 million compared to $72 million last year. This represents an 8.4% operating margin in 2005 compared to 8.1% in 2004. Net income outpaced sales two-to-one and increased by 29.3% to $32.7 million compared to $25.3 million last year. The company also retired the last of its long-term debt and is completely debt free for the first time since 1985.

Looking forward, it is likely that REI will continue to expand its retail store count by roughly 10% per year with an emphasis on east coast expansion. The company’s new Eastern regional distribution center in Bedford, PA is expected to be operational in 2006.

About The Author

Teresa Hartford

Teresa Hartford Group Publisher & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

REI Hits $1 Billion in Sales for 2005; Comps Increase 9.6%

Recreational Equipment, Inc. announced a record member refund of more than $50 million on 2005 annual sales topping $1 billion, a first in the co-op’s 67-year history. In recognition of this milestone, REI will dedicate $1 million to 100 community parks across the country, above and beyond its more than $3 million in grants previously earmarked this year for outdoor recreation and conservation causes.

The donations have been driven by REI’s strong 2005 financial results. For the year, the company’s operating income increased from $72 million to $86 million, and net income increased by 29.3% – from $25.3 million to $32.7 million. In addition, REI’s sales increased by 15 percent, from 2004’s $887 million to more than $1 billion in 2005. REI comp store growth was also up sharply from 5.3% in 2004 to 9.6% in 2005 – approximately three times the national retail average; and direct sales posted an overall gain of 20.7%, led by online growth from REI.com and REI-OUTLET.com.

“REI had an amazing 2005, said Sally Jewell, who assumed the REI president and CEO post in March of last year. “As a co-op we share our success with our members, employees and the communities in which we do business. I can’t think of a better way to celebrate our success than by dedicating $1 million to support parks in every community with which REI has a presence across the country.”

“These community parks serve as natural playgrounds and tranquil escapes for our members, close to where they live, work and play. The importance of these parks is immeasurable in getting people outdoors – as recreation areas, as community gathering spaces and often, as our children’s first introduction to the natural world,” added Jewell. “Last year REI supported environmental stewardship projects with 572,000 volunteer hours of sweat equity. By extending an additional $1 million for parks around the country, we’ll continue to help ensure that community parks remain a vital and valued resource.”

Also supporting REI’s 2005 growth was a 10 percent increase in active membership and the strong performance of six new retail stores in Bend, OR, Huntington Beach, Calif., Marlton, N.J., Pittsburgh, Pa, Plano, Texas and Raleigh, N.C. Additionally, REI credits its success to a year of seasonally appropriate weather for outdoor recreation, a strong focus on customer service and a continued investment in product assortment and inventory.

“With an exceptional year and having liquidated our final piece of long-term debt, we have a strong balance sheet and find ourselves debt-free for the first time since 1985,” said REI Chief Financial Officer Brad Johnson. “Running a successful and sound business, not only enables us to share the majority of our profits with REI members, but also lays the groundwork for a strong future by allowing us to invest in our growth and operations.”

REI’s record sales capped a banner year highlighted by the announcement of plans for an eastern region distribution center in Bedford, Pa; the unprecedented extension of health benefits to all part-time employees; successful Bay Area pilot of the REI Outdoor School; a top 10 ranking on FORTUNE magazine’s “100 Best Companies to Work for in America” list; as well as an all-time high in volunteer participation levels for REI-supported environmental stewardship projects.

About The Author

Archives

Categories

Pin It on Pinterest

Share This