Columbia Sportswear Company (COLM, Financial) is a leading innovator in the global apparel, footwear, accessories and equipment markets.
Founded in 1938, Columbia brand apparel, footwear, accessories and equipment have earned a global reputation for innovation, quality and performance, keeping outdoor enthusiasts in more than 100 countries warm, dry, cool and protected year round.
It is an active lifestyle brand with a clear position in the market appealing to socially conscious consumers of both genders.
In addition to the flagship Columbia Sportswear brand, it also designs, develops, markets and distributes active outdoor and lifestyle apparel, footwear and related accessories and equipment under the Mountain Hardware, Sorel, prana, Montrail and Pacific Trail brands.
It was the first large U.S. outdoor brand to enter the Chinese market more than a decade ago. In 2014, it added the prana brand to its portfolio by shedding $189 million; since then, it has become a growing, profitable business. Prana added $54 million of its net sales subsequent to its addition.
The company is currently focusing on existing brands and organic growth. It recently reported a record first quarter with an increase in net income and net sales. It is constantly incorporating changes to its operating structure. Diverse brand portfolio was a growth driver during the quarter.
First-quarter results
It posted record first-quarter net sales of $525.1 million during the first quarter (a 10% increase from the net sales of $479.0 million in the prior-year quarter).
Operating income in the first quarter increased to a record $44.3 million, or 8.4% of net sales (44.1 million, or 9.2% of net sales in the prior-year quarter).
Net income during the quarter increased by 20% and was $31.8 million or 45 cents per diluted share, from the net income of $26.5 million, or 37 cents per diluted share in the prior-year quarter.
Cashflows during the quarter were $97.0 million.
It ended the quarter with $451.2 million of cash and short-term investments.
Inventories during the quarter were $412.2 million.
Effective income tax rate during the quarter was 22.5%.
Dividend
The company declared a regular quarterly dividend of 17 cents per share, payable on June 2 to shareholders of record on May 19.
Strong attributes of first quarter
- Increased earnings power of expanded brand portfolio.
- Seasonally diverse product offerings.
- Enhanced operational platforms.
- Robust momentum in North America.
- The company is very well positioned to deliver against strong fall advance order book.
- Diverse brand portfolio.
- Strong balance sheet.
Expectations for 2016
The company expects the following:
| Â | Range |
| Net sales growth | Mid-single-digit percentage 2016 net sales growth |
| Gross margins | To improve by up to 30 basis points |
| Operating income | To be between $254 million and $263 million |
| Net income | Between $184 million and $191 million |
Focus
- Innovation.
- Brand-enhancing distribution.
- Elevated in-store presentation.
- Increased demand creation investments.
Expansion in India
This U.S.-based apparel giant has opened around 25 stores in India. It partnered with Chogori India Retail Limited to enter the Indian market. Within a period of three years, it plans to roll out 120 points of sales, exclusive stores and shop-in-shop stores in India. Around 90% of the products are imported, and 10% are manufactured there. India is a growing economy and has plenty of room for these companies to grow. The company has plans to introduce high-performance outdoor gear in the country.
India ranks as the fifth-largest commercial market in the world. With a growing middle class population, India is becoming a fashion hub and a place for international investors to consider.
(Source: The Economic Times)
On a concluding note
This American outdoor retailer reported a strong first quarter and is poised for more stellar performances in the near future. It has more room to grow and is backed by strong sales. Mountain Hardware and Sorel were the chief performers in the recent quarter.
2014 was also a remarkable year for Columbia. Consolidated net sales surpassed $2.1 billion, or an increase of 25%, marking its fastest growth rate in the last decade and the largest single-year volume growth in the company’s history.
There is more upside to this company as the athletic apparel industry is booming. The company offers great product quality, innovation, style and value to its customers. It is focused on tapping the market opportunities, new technologies and capabilities for gaining further market share and deliver earnings growth.
It has significant room for continued expansion in North American markets and virtually untapped international opportunities to pursue together. In 2014, sales through ecommerce sites grew 40% and surpassed $100 million. The company’s stores and ecommerce sites have powerful marketing platforms through which each of its brands build strong emotional connections with consumers to drive additional growth through its wholesale channels.
Nowadays activewear is becoming a hot fashion statement. The wearables market is expected to be at $6 billion by the end of 2016. Under Armour (UA, Financial) is capitalizing on this growing trend by offering highly technical activewear products for men, women and youth. It is emerging as a big player in the sports apparel industry.
The athletic apparel industry has always been among the hot picks. Columbia has plenty of room to grow and is in a better position to offer increased shareholder returns. There is a lot of potential in this company.
Dislosure: I do not hold any position in the company.
