Recreational Equipment, Inc. (REI) reported sales of $1.3 billion for fiscal year 2007, growing 13.5% from 2006. In addition, REIs comp store sales showed continued strength in 2007 at 8.2%, marking three consecutive years of 8% or higher. For the year, REIs operating income increased from $105.5 million to $106.5 million, or .9%, and net income increased from $40.3 million to $41.4 million, or 2.7%. The companys direct sales channel, which includes online and catalog sales, gained 16.1%.
While anyone may shop at REI, only members share in the co-ops profits. Based on the co-ops 2007 sales, $62.8 million will be distributed to its active members through the annual patronage dividend. In late February, 3.4 million active REI members will receive their patronage refunds calculated at 10% of their eligible 2007 purchases.
Based on its operating profit results, the outdoor retailer will dedicate $3.7 million through its grants program in support of conservation and recreational access in the coming year. REI provides funding to local and national nonprofit organizations that help protect and restore the environment, and increase participation and access to outdoor activities.
“We are encouraged by our sustained growth and healthy profits during 2007, especially in a year when the countrys economy faced uncertain times,” said Brad Johnson, REIs chief financial officer. “As we celebrate our 70th year as an outdoor retailer, we are pleased to carry on our tradition of sharing our profits with members, communities and employees. We will also continue to reinvest in our business to ensure the long-term success of the co-op even 100 years from today.”
Supporting REIs sales growth is the addition of more than 625,000 members joining the cooperative, or a 13% increase from the previous year. Since 1938, more than 8.75 million individuals have become REI members.
The company opened seven new stores Marina, Calif., Fresno, Calif., Cranston, R.I., West Hartford, Conn., Schaumburg, Ill., Portland, Ore., and Issaquah, Wash. In addition, one store was relocated from Niles, Ill. to Northbrook, Ill.
A significant milestone for REI was the opening of its new prototype store in Boulder, Colo. that enables the company to test new retail concepts and the performance of green building features for future stores. The Boulder location complements the co-ops commitment to community involvement, environmental stewardship and providing a gateway to the outdoors. The company anticipates receiving the U.S. Green Building Councils Leadership in Energy and Environmental Design (LEED) Silver certification under its Retail Commercial Interiors pilot program.
Building upon its leadership in green building design, REI officially opened its new eastern regional distribution center in Bedford, Pa., a 525,000 square-foot building on 43 acres. Last month, the facility received LEED Silver certification for New Construction. The eastern region distribution center will help REI significantly reduce transit times of stock replenishment to stores and more quickly deliver orders to co-op members and customers. Forty-two of REIs 96 stores will be serviced by the distribution center, as well as approximately 50% of the co-ops direct-to-customer business. The project represents REIs largest capital spending in its history.
Last year, REIs commitment to active stewardship in communities where the company has a presence reached new heights. REI hosted 688 volunteer projects, a 30% increase, where employees joined more than 32,600 members, customers and other outdoor enthusiasts to care for shared natural spaces. Additionally, direct positive impacts from organizations funded via REIs grants programs include the maintenance of 14,680 acres of land and 9,730 miles of trail; the participation of 194,385 adults and 547,098 youth in outdoor recreation programs; and 2,149,870 million volunteer service hours by 260,666 individuals across the country. Results are calculated from completed projects and targeted outcomes proposed by grant applicants as some of 2007 grant recipients will utilize funding in 2008 seasonal initiatives.
REI Gear & Apparel the co-ops award-winning private label also introduced more than 40 clothing styles bearing its new eco-sensitive icon. The designation was developed to help customers make more informed decisions on products that have improved environmental performance compared to their conventional counterparts. The company plans to increase its eco-sensitive offerings in the coming seasons.
The past year also saw a 45% increase in trip bookings for REI Adventures, REIs adventure travel company, which offers more than 140 worldwide adventure travel and weekend getaway trips annually. Another significant milestone was the expansion of REI Outdoor School. With the introduction of the program in Los Angeles and San Diego, REI Outdoor School is now available at all REI retail locations in California as well as Baltimore, Boston, Philadelphia and Washington, D.C.
RECREATIONAL EQUIPMENT, INC.
|Condensed Consolidated Statements of Income|
|December 31, 2007, 2006 and 2005 (In Thousands)|
|Costs & Expenses|
|Cost of Sales||754,671||659,568||573,307|
Operating & Administrative Expenses
|Total Costs & Expenses||1,235,498||1,075,981||936,360|
|Other Income, Net||10,798||7,721||9,109|
Income Before Member Refunds & Taxes
|Member Refunds Declared||62,790||58,345||50,478|
|Less Unclaimed Refunds||(9,367||)||(8,936||)||(7,298||)|
|Net Member Refunds||53,423||49,409||43,180|
|Income Before Income Taxes||63,901||63,862||51,895|
|Provision for Income Taxes||22,474||23,589||19,169|