REI will distribute $58 million to its active members through the annual patronage refund based on the co-op's 2006 sales of $1.18 billion. For the year, REI's operating income increased 22.8% from $86 million to $105.5 million, and net income increased from $32.7 million to $40.3 million, or 23%. REI's comp store sales remained high in 2006 at 9.5%, marking two consecutive years of 9.5% or higher. The company's direct sales channel, which includes online and catalog sales, gained 19%. These record financials mark the second consecutive year where sales rose more than 15%.
Based on 2006 results, the outdoor retailer will dedicate $3.6 million through its grants program in support of conservation and recreational access around the country in the coming year.
“The financial health of REI has never been stronger and we are pleased to share our success with our members, communities and employees,” said Brad Johnson, REI's chief financial officer. “We are also taking steps to reinvest in our infrastructure to improve our operations, introducing exciting new products in response to marketplace opportunities, and looking at additional ways to better serve our members and thank them for their involvement in the cooperative.”
Supporting REI's sales growth is the addition of more than 551,000 members joining the cooperative, or a 10% increase. The company also opened seven new stores — Santa Monica, Calif., Mountain View, Calif., Chula Vista, Calif., Maple Grove, Minn., Greensboro, N.C., Pineville, N.C., and Austin, Texas.
“Contributing to our success in 2006 were our merchandising, marketing and direct teams that worked collaboratively to bring high quality product to our members and customers,” said Brian Unmacht, senior vice president, Sales, Store Development and Logistics for REI. “The success of our new stores and comp stores was the direct result of our dedicated store staff who offer great customer service through expert advice to help people enjoy the outdoors.”
Being financially sound has enabled REI to invest in the company's future growth, increase its support for the communities where it does business, and take steps to reduce its environmental impact. Actions include breaking ground on a new east region distribution center in Bedford, Penn., and announcing plans to construct a prototype store in Boulder, Colo. that will embody the values that make REI unique high quality gear and apparel, community involvement, environmental stewardship and a commitment to serve as a gateway to the outdoors. Additionally, the company launched REI Outdoor School, classes and one-day guided outings that teach the basics of hiking, cycling, kayaking and more, in 23 stores in five cities.
In 2006, REI's involvement and positive impact in its local communities reached new heights. For example, 169,015 individuals volunteered in REI-supported environmental stewardship projects, equating to more than 900,000 hours of caring for outdoor recreation areas. The company also partnered with VolunteerMatch to help REI employees, members and customers connect to volunteer opportunities within their communities.
In the area of environmental stewardship, REI purchased renewable energy for 20 stores and its Pittsburgh store earned a Leadership in Energy and Environmental Design for Commercial Interiors (LEED-CI) Silver® rating from the United States Green Building Council. The company also announced that all REI Adventures trips beginning in 2007 would be carbon neutral at no additional cost to customers. REI Adventures was the first U.S.-based adventure travel company to offer carbon-neutral travel on this scale.