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Tiffany Montgomery
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Columbia records flat U.S. sales in Q1

By Tiffany Montgomery
April 29, 2008 7:04 AM

I found some interesting business information in Columbia Sportswear's earnings last week that could be useful to action sports executives - namely, how Columbia's retail customers are dealing with the soft economy and details about Columbia's retail expansion plans.


First, some numbers.


Sales

Worldwide sales grew 3 percent to $297.4 million. Columbia's U.S. sales were flat at $156 million in the quarter compared to the same period last year. Sportwear was down 1 percent, while outdoorwear grew 16 percent. Footwear sales fell 3 percent.


Backlog

The company's worldwide backlog for spring and fall combined totaled $849.8 million, down 4 percent. And it would have been worse if exchange rates hadn't contributed a benefit of 4 percentage points. In the U.S. for fall, the backlog is down high single digits as retailers plan conservatively. In Europe, backlog is down mid single digits as the company's European operation continues to struggle.


Economic climate

Columbia's retail customers are ordering more conservatively, the company said. Because of that, Columbia is also decreasing its speculative position in outerwear, which the company typically stocks above and beyond the orders on the books to meet in-season demand. "This will be the smallest speculative position that we have taken in several years - smaller than last year by a pretty considerable allowance," said Chairman Gertrude Boyle.


Overall, national retail chains are being the most cautious, the company said.


Retail

Despite the economy, Columbia will continue its plan to expand its outlet stores and Columbia branded stores thanks to its strong balance sheet. The company has $278.1 in cash and short term investments on the books. For 2008, the company will spend $30 million on the retail expansion.


The company plans to open 15 outlet stores this year, five Columbia branded stores and three Mountain Hardwear stores. The outlet stores are planned for "A" malls and most of the branded stores for downtown locations.


Guidance

The company anticipates a sales increase of 6 percent in the second quarter. Earnings per share are expected to drop significantly - 3 cents per share vs. 27 cents per share - as marketing and retail expansion squeeze profits.


"What it really comes down to is investing in our brands for the long term," CFO Bryan Timm said.


For the full year, net sales are expected to increase 2 percent.


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