Columbia's Q3 Sales Dip Year Over Year

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Columbia's Q3 Sales Dip Year Over Year

10/30/2016
Columbia Sportswear Company reported third-quarter net sales of $745.7 million for the quarter ended Sept. 30, 2016, a 3 percent decrease compared with net sales of $767.6 million for the same period of 2015.

Third-quarter 2016 net income totaled $83.6 million, or $1.18 per diluted share, compared to third-quarter 2015 net income of $91.1 million, or $1.28 per diluted share. The combined effects of a shift in timing of shipments of U.S. wholesale advance orders and bankruptcies of certain U.S. wholesale customers during 2016 had a negative effect on comparative third-quarter results.

Through the first nine months of 2016, net sales increased $32.8 million, or 2 percent (3 percent constant-currency), to a record $1,659.6 million, compared to $1,626.8 million in the comparable 2015 period. Year-to-date net income decreased 3 percent, to $107.2 million, or $1.52 per diluted share, compared with net income of $111.0 million, or $1.56 per diluted share, for the comparable 2015 period.

"During the third quarter, our go-to-market and operational teams around the world continued to execute well against a challenging consumer environment, setting the stage across the global retail landscape with innovative, trend-right Fall season products supported by compelling brand marketing campaigns," said CEO Tim Boyle. "The Columbia, prAna and SOREL brands drove mid-teen percentage growth in our North American direct-to-consumer channel, high-20-percent growth in Europe-direct markets and high-single-digit percentage growth in China, helping to partially offset the negative effects of bankruptcies and cautious inventory management by North American wholesale customers, as well as continued challenges in Russia and Korea."

Boyle concluded, "Our expanded direct-to-consumer businesses, enhanced supply chain, strong balance sheet and proven disciplined expense management enable us to drive profitability over the long run, while making strategic investments to drive demand for our brands and enhance our operations."

Third-quarter results
(All comparisons are between third quarter 2016 and third quarter 2015, unless otherwise noted.)

The combined effects of a shift in timing of shipments of U.S. wholesale advance orders from the third quarter into the fourth quarter of 2016 compared to the prior year, and the impact of U.S. wholesale customer bankruptcies during 2016 presented a difficult comparison to the third quarter of 2015, when a favorable shift in timing of shipments drove a 26 percent increase in U.S. net sales, a 14 percent increase in consolidated net sales and a 39 percent increase in consolidated net income, compared with the third quarter of 2014.

Third quarter consolidated net sales declined 3 percent driven by:

a 6 percent decline in U.S. net sales to $484.8 million, consisting of a low-double-digit percentage net sales decline in the company's wholesale channels, partially offset by a mid-teen percentage increase in direct-to-consumer channels; and
a 3 percent net sales decline in Canada, to $75.2 million.
These declines were partially offset by:

8 percent net sales growth in the Europe, Middle East and Africa (EMEA) region to $73.0 million, including high-20-percent growth in the company’s Europe-direct business, partially offset by a low-30-percent decline in net sales to EMEA distributors; and

3 percent net sales growth (1 percent constant-currency) in the Latin America, Asia Pacific (LAAP) region to $112.7 million, consisting of mid-teen percentage growth in Japan (low-single-digit decline constant-currency) and high-single-digit percentage growth in China (mid-teen constant currency), partially offset by a low-20-percent net sales decline in Korea and a high-single-digit percentage decline in net sales to LAAP distributors.

Global Columbia brand net sales decreased 4 percent to $587.3 million compared with the third quarter of 2015. Global SOREL brand net sales increased 2 percent (1 percent constant-currency) to $87.6 million. Global prAna brand net sales increased 11 percent to $38.1 million, and global Mountain Hardwear brand net sales declined 12 percent (13 percent constant-currency) to $30.5 million.

Global apparel, accessories & equipment net sales decreased 4 percent to $574.1 million and footwear net sales were essentially unchanged at $171.6 million.

Third quarter income from operations totaled $123.6 million, or 16.6 percent of net sales, compared to $132.3 million, or 17.2 percent of net sales, for the same period in 2015.

The effective income tax rate was 29.7 percent in the third quarter of 2016, compared to 28.9 percent for the same period in 2015.

Third quarter net income totaled $83.6 million, or $1.18 per share, compared with third quarter 2015 net income of $91.1 million, or $1.28 per share.

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