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Columbia Sportswear Q3 net sales down 3 percent

By Prachi Singh

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Management

Columbia Sportswear Company has reported third quarter net sales of 745.7 million dollars, a 3 percent decrease compared with net sales of 767.6 million dollars for the third quarter of 2015. Net income totalled 83.6 million dollars or 1.18 dollars per diluted share against 91.1 million dollars or 1.28 dollars per diluted share. The company said, combined effects of a shift in timing of shipments of US wholesale advance orders and bankruptcies of certain US wholesale customers during 2016 had a negative effect on comparative third quarter results.

Commenting on the results, Chief Executive Officer Tim Boyle said, "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."

Third quarter sales marred by decline in US wholesale

Third quarter consolidated net sales decline of 3 percent was driven by a 6 percent decline in US net sales to 484.8 million dollars, 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 dollars.

These declines, the company said, were partially offset by 8 percent net sales growth in the Europe, Middle East and Africa (EMEA) region to 73 million dollars, 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 dollars, 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.

Through the first nine months of 2016, net sales increased 32.8 million dollars or 2 percent (3 percent constant-currency), to 1,659.6 million dollars. Year-to-date net income decreased 3 percent, to 107.2 million dollars, or 1.52 dollars per diluted share, compared with net income of 111 million dollars, or 1.56 dollars per diluted share, for the comparable 2015 period.

Sales performance across brands and categories

Global Columbia brand net sales decreased 4 percent to 587.3 million dollars. Global Sorel brand net sales increased 2 percent (1 percent constant-currency) to 87.6 million dollars and global prAna brand net sales increased 11 percent to 38.1 million dollars, while global Mountain Hardwear brand net sales declined 12 percent (13 percent constant-currency) to 30.5 million dollars.

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

Revises FY16 outlook

The company currently expects full year net sales growth of approximately 4 percent, including less than 1 percentage point negative effect from changes in foreign currency exchange rates, on a base of 2015 net sales of 2.33 billion dollars. The company expects operating income to increase up to 4 percent, to between 250 million dollars and 259 million dollars, resulting in anticipated 2016 operating margin of up to 10.7 percent.

The company expects net income after non-controlling interest to increase up to 8 percent, to between approximately 180 million dollars and 187.5 million dollars, or approximately 2.55 dollars to 2.65 dollars per diluted share, compared with 2015 net income of 174.3 million dollars, or 2.45 dollars per diluted share.

The board of directors authorized a 6 percent increase in the company's regular quarterly dividend to 0.18 dollars per share, from the prior 0.17 dollar per share.

Picture:Columbia Sportswear

Columbia Sportswear