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Columbia Sportswear warns of a challenging year ahead

Feb 7, 2024 United States
Columbia Sportswear warns of a challenging year ahead
The US-based company posted a year-on-year drop in profits in 2023, as well as a weak fourth quarter. It also warns of a challenging 2024, as economic and geopolitical uncertainty remains high
“I’m proud of what our global workforce was able to achieve in 2023. We successfully executed our inventory reduction plan, which contributed to operating cash flow generation of over $600 million for the year. The Columbia brand generated healthy growth outside of the US., led by China and Europe-direct markets. In the US, we navigated a difficult US marketplace and a warm winter, both of which impacted our fourth quarter performance”, commented Chairman, President and Chief Executive Officer Tim Boyle.


Full Year Results

Columbia Sportswear’s 2023 net sales increased by 1% on a reported and constant currency basis, reaching 3.49 billion US dollars, as compared to the previous year.

The Columbia brand contributed 2.94 billion US dollars to the company’s total sales last year, up by 2% (or 3% on a constant currency basis) on a comparable basis to fiscal 2022. Sorel, prAna and Mountain Hardwear recorded annual declines in net sales of 3% (or 3% on a constant currency basis), 21% (or 21% on a constant currency basis) and 7% (or 6% on a constant currency basis), respectively.

Columbia Sportswear’s net income decreased by 19% last year to 251.4 million US dollars, or 4.09 US dollars per diluted share, as compared to the net income of 311.4 million US dollars, or 4.95 US dollars per diluted share, reported in fiscal 2022.


Fourth Quarter Highlights

In the fourth quarter of fiscal 2023, Columbia Sportswear’s net sales amounted to 1.06 billion euros, decreasing by 9% (or 10% on a constant currency basis), as compared to the same period of the previous fiscal year. This was due to an “earlier shipment of Fall 2023 wholesale orders” and “lower US direct-to-consumer (DTC) net sales”.

The company reported a net income decline of 26% in the fourth quarter of the last fiscal year to 93.5 million US dollars, or 1.55 US dollars per diluted share, on a comparable basis to a net income of 125.7 million US dollars, or 2.02 US dollars per diluted share, recorded in a similar period of fiscal 2022.

Outlook

“Looking ahead, we expect 2024 to be a challenging year. Retailers are placing orders cautiously, and economic and geopolitical uncertainty remains high”, warned Tim Boyle. “We are working diligently to maximize sales in this environment while optimizing our product, brand marketing and marketplace strategies to accelerate growth in 2025 and beyond. To mitigate erosion in profitability and to improve the efficiency of our operations, we are implementing a multi-year profit improvement program targeting 125 to 150 million US dollars in annual savings by 2026”, he added.

In this context, Columbia Sportswear expects net sales to decline between 4.0% and 2.0% in 2024, resulting in net sales of 3.35 billion US dollars to 3.42 billion US (2023: 3.49 billion US dollars).

Net income for the current year is anticipated to be between 207 million US dollars to 231 million US dollars, or diluted earnings per share of between 3.45 US dollars to 3.85 US dollars (2023: 241.4 million US dollars or diluted earnings per share of 4.09 US dollars).


Image Credits: theoutdoorscompany.co.uk

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