Companies

Columbia Sportswear posts soft second quarter

Aug 2, 2024 United States

While focusing on strategies to reignite long-term profitable growth, the US-based company posted another quarterly decline in sales amid continued challenging conditions in its home market

“Second quarter results were generally in line with expectations. We are working to maximize sales in a challenging U.S. marketplace. Most international markets, including China and Europe, continue to see strong demand. We have made meaningful progress on our top priorities, including inventory reduction, rationalizing expenses through our Profit Improvement Program, and are developing actionable strategies to reinvigorate long-term profitable growth”, commented Chairman, President and Chief Executive Officer Tim Boyle.

Second Quarter Results

In the second quarter of fiscal 2024, Columbia Sportswear reported net sales of 570.2 million US dollars, a decrease of 8% (or 7% on a constant currency basis) on a comparable basis to the same period of last year. This decline was driven by lower wholesale net sales in the US “due to retailer cautiousness, a difficult competitive environment, and generally soft consumer demand”.

The parent company of the Columbia, Sorel, prAna and Mountain Hardwear brands recorded a 15% year-over-year decline in US net sales to 340.2 million US dollars in the second quarter. In Canada, the company's net sales also fell by 4% year-over-year to 26.6 million US dollars.

On the contrary, Columbia Sportswear’s second quarter net sales increased by 7% (or 13% on a constant currency basis) in Latin America and Asia Pacific to 99.5 million US dollars and by 3% (on a reported and constant currency basis) to 103.9 million US dollars in Europe, Middle East and Africa, as compared to the same period of fiscal 2023.

In the second quarter of this year, the company’s gross margin narrowed by 270 basis points year-over-year to 47.9%, thanks to “the impact of efforts to spur demand and reduce inventory in the US” and “changes in sales provisions, partially offset by lower inbound freight costs”.

In the three months to the end of June, Columbia Sportswear reported a loss from operations of 23.8 million US dollars, as compared to an operating income of 6.2 million US dollars in the same period last year.

The company also posted a quarterly net loss of 11.8 million US dollars, or a loss of 0.20 US dollars per diluted share, as compared to a net income of 8.4 million US dollars, or 0.14 US dollars per diluted share, in the second quarter of fiscal 2023.

First Half

In the first half of the year, Columbia Sportswear’s net sales declined by 7% (or 6% on a constant currency basis) to 1.34 billion US dollars, on a comparable basis to the same months of last year.

The company’s net income at the of June decreased by 44% to 30.6 million US dollars, or 0.51 US dollars per diluted share, as compared to a net income of 54.6 million US dollars, or 0.88 US dollars per diluted share, in the first half of 2023.

Columbia also reported that inventories in the year-to-date decreased by 29% to 823.6 million US dollars from 1.16 billion US dollars in the same period of the previous year.

Full Year Outlook

For the full year, the US-based company continues to expect a decline in net sales of between 4.0% and 2.0%, resulting in net sales of 3.35 billion to 3.42 billion US dollars (as compared to 3.49 billion US dollars in 2023) and diluted earnings per share of 3.65 to 4.05 US dollars.

Image Credits: retail-insider.com

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