Supply chain issues took a bite out of the business at Columbia Sportswear in the fourth quarter and year.
The Portland, Oregon-based outdoors brand reported that operating income in the fourth quarter dropped 27 percent to $155.4 million from $211.6 million in the same period last year. Net income decreased 20 percent to $125.7 million compared to $157 million in the year-ago period and diluted earnings per share fell 15 percent to $2.02, compared to $2.39 in the fourth quarter of 2021.
Sales in the period ended Dec. 31 increased 4 percent to $1.17 billion, a record for the company. Growth was stronger outside the U.S. with a 6 percent rise in international sales and a 2 percent gain in the U.S. The flagship Columbia brand drove the increases with an 8 percent gain while Sorel sales fell 13 percent, Mountain Hardwear dropped 12 percent and Prana was down 6 percent. The company said Mountain Hardwear and Prana were especially hard hit due to supply chain disruptions and retailer cautionness in the period.
For the year, operating income fell 13 percent to $393.1 million, down from $450.5 million in the prior year. Net income fell 12 percent to $311.4 million compared to $354.1 million in the prior year and diluted earnings per share dropped 7 percent to $4.95 compared to $5.33 in 2021. Sales for the period increased 11 percent to $3.5 billion, also a record for the company and the news that chairman, president and chief executive officer Tim Boyle focused on.
“For the year, net sales grew 11 percent to a record $3.5 billion, and were up 14 percent on a constant-currency basis,” he said. “I believe this financial performance could have been even higher, absent supply chain constraints which severely delayed inventory availability throughout the year.”
But the situation has improved and is leading to a brighter outlook for this year.
Boyle said Columbia is entering 2023 “in a position of strength, with strong consumer demand for our innovative products. With the early receipt of spring merchandise, we are well positioned for timely deliveries, and have strategies in place to profitably and efficiently reduce inventory levels. Our financial strength, with over $400 million in cash and no debt, and our operating discipline will enable us to navigate near-term headwinds and position us to emerge in a stronger position.”
He pointed to several growth opportunities for the company going forward and said Columbia is investing in creating differentiated product that is functional and innovative, working to enhance customer experiences and focusing on omnichannel, global distribution.
Looking ahead, for the first half, net sales are expected to rise in the midsingle-digit range compared to the first half of 2022, the company said, with diluted earnings per share seen coming in at 75 cents to 90 cents.
For the year, Columbia is projecting that net sales will increase 3 to 6 percent to $3.57 billion to $3.67 billion, operating income is expected to be $413 million to $448 million and net income $322 million to $347 million.
Breaking it down, the company said net sales are expected to be led by gains in Sorel and Columbia while Prana and Mountain Hardwear are anticipating “modest declines.”