Columbia Sportswear Company Reports Fourth Quarter 2020 Financial Results and Provides Full Year 2021 Financial Outlook; Announces Quarterly Dividend and $400 Million Increase in Share Repurchase Authorization

Rhea-AI Summary

Columbia Sportswear Company (NASDAQ: COLM) reported its fourth quarter 2020 results, revealing net sales of $915.7 million, down 4% year-over-year. Despite a challenging environment, gross margin improved to 50.6%, while net income fell 16% to $95.8 million ($1.44 per diluted share). The company achieved significant e-commerce growth of 41% and announced plans to resume share repurchases and pay a quarterly dividend of $0.26 per share. CEO Tim Boyle highlighted ongoing pandemic-related risks but expressed optimism for continued recovery in 2021.

Positive

• E-commerce net sales increased 41% year-over-year.
• Cash and short-term investments exceed $790 million with no borrowings.
• Board approved a quarterly cash dividend of $0.26 per share.
• Plans to resume share repurchase activities in 2021.

Negative

• Net sales decreased 18% year-over-year for the full year.
• Operating income decreased 65% to $137 million for the full year.
• Gross margin contracted 90 basis points to 48.9% for the full year.

Columbia Sportswear Company (NASDAQ: COLM, the "Company"), a leading innovator in active outdoor lifestyle apparel, footwear, accessories and equipment, today announced fourth quarter 2020 financial results for the period ended December 31, 2020.

Chairman, President and Chief Executive Officer Tim Boyle commented, "I’m encouraged to see better than expected fourth quarter results and broad-based momentum across our powerful brand portfolio as we begin 2021. These results are particularly impressive with the backdrop of a global pandemic and demonstrate the dedication and commitment of our global workforce of employees who overcame the impact of COVID-19 safety protocols, supply chain constraints and regional lockdowns. E-commerce net sales grew an impressive 41 percent year-over-year in the quarter, representing nearly a quarter of our total sales mix. With strong Fall 2020 sell-through rates, our wholesale partners are well positioned to exit the season with clean inventory positions.

“As we begin 2021, there is continued uncertainty and business risks surrounding the ongoing pandemic, including the timing and effectiveness of global efforts to contain the spread of COVID-19. With that said, I’m encouraged by our e-commerce growth as well as wholesale orders for the Spring and Fall 2021 seasons, which we anticipate fueling our continued recovery in 2021.

“Our profitable growth trajectory and fortress balance sheet, with cash and short-term investments of over $790 million and no borrowings, have given our Board of Directors the confidence to approve a quarterly cash dividend, increase our share repurchase authorization and return to our pre-pandemic capital allocation strategy. We are committed to driving sustainable and profitable long-term growth and investing in our strategic priorities to:

• drive brand awareness and sales growth through increased, focused demand creation investments;
• enhance consumer experience and digital capabilities in all our channels and geographies;
• expand and improve global direct-to-consumer operations with supporting processes and systems; and
• invest in our people and optimize our organization across our portfolio of brands."

CFO's Commentary Available Online

For a detailed review of the Company's fourth quarter 2020 financial results and additional updates relating to the COVID-19 pandemic, please refer to the CFO Commentary exhibit furnished to the Securities and Exchange Commission (the "SEC") on a Current Report on Form 8-K and published on the Investor Relations section of the Company's website at http://investor.columbia.com/results.cfm at approximately 4:15 p.m. ET today. Analysts and investors are encouraged to review this commentary prior to participating in our conference call.

COVID-19 Update

While there were isolated temporary store closures resulting from local regulations or safety concerns, the majority of the Company's owned stores remained open throughout the fourth quarter. Overall brick & mortar store traffic trends remain well below prior year levels. We delivered fourth quarter 2020 results ahead of our financial outlook, despite port congestion, logistics and parcel shipping capacity constraints and enhanced distribution center health and safety protocols that strained fulfillment service levels. During fourth quarter 2020, the Company realized approximately $30 million in SG&A savings from cost containment actions and lower variable expenses. Please refer to the CFO Commentary exhibit for a detailed review of COVID-19 pandemic related issues and our response.

Fourth Quarter 2020 Financial Results
(All comparisons are between fourth quarter 2020 and fourth quarter 2019, unless otherwise noted).

Net sales decreased 4 percent to $915.7 million from $954.9 million for the comparable period in 2019.

Gross margin expanded 50 basis points to 50.6 percent of net sales from 50.1 percent of net sales for the comparable period in 2019.

SG&A expenses were essentially flat at $343.3 million, or 37.5 percent of net sales, from $344.4 million, or 36.1 percent of net sales, for the comparable period in 2019.

Operating income decreased 11 percent to $123.7 million, or 13.5 percent of net sales, from operating income of $138.6 million, or 14.5 percent of net sales, for the comparable period in 2019.

Net income decreased 16 percent to $95.8 million, or $1.44 per diluted share, from net income of $114.0 million, or $1.67 per diluted share, for the comparable period in 2019.

Full Year 2020 Financial Results
(All comparisons are between full year 2020 and full year 2019, unless otherwise noted.)

Net sales decreased 18 percent to $2,501.6 million from $3,042.5 million in 2019.

Gross margin contracted 90 basis points to 48.9 percent of net sales from 49.8 percent of net sales in 2019.

SG&A expenses decreased 3 percent to $1,098.9 million, or 43.9 percent of net sales, compared to $1,136.2 million, or 37.3 percent of net sales, in 2019.

Operating income decreased 65 percent to $137.0 million, or 5.5 percent of net sales, from operating income of $395.0 million, or 13.0 percent of net sales, in 2019.

Net income decreased 67 percent to $108.0 million, or $1.62 per diluted share, compared to net income of $330.5 million, or $4.83 per diluted share, in 2019.

Balance Sheet as of December 31, 2020

Cash, cash equivalents and short-term investments totaled $791.9 million, compared to $687.7 million at December 31, 2019.

The company had no borrowings at quarter-end. During fourth quarter 2020, the Company refinanced its domestic credit agreement with a new agreement providing a $500 million five year unsecured revolving credit facility.

Inventories decreased 8 percent to $556.5 million, compared to $606.0 million at December 31, 2019.

Share Repurchases for the Twelve Months Ended December 31, 2020

In first quarter 2020, the Company repurchased 1,557,184 shares of common stock for an aggregate of $132.9 million, or an average price per share of $85.34. As part of a broader capital preservation effort during the ongoing COVID-19 pandemic, the Company suspended share repurchases and has not repurchased shares since first quarter 2020. Management intends to resume share repurchase activity in 2021.

At its regular board meeting on January 29, 2021, the Board of Directors approved an additional $400.0 million share repurchase authorization. This is in addition to the $82.2 million currently remaining available under the prior share repurchase authorization. The share repurchase authorization does not obligate the company to acquire any specific number of shares or to acquire shares over any specified period of time.

Quarterly Cash Dividend

The Board of Directors approved a regular quarterly cash dividend of $0.26 per share, payable on March 22, 2021 to shareholders of record on March 9, 2021.

Conference Call

The Company will hold its fourth quarter 2020 conference call at 5:00 p.m. ET today. Dial (877) 407-9205 to participate. The call will also be webcast live on the Investor Relations section of the Company's website at http://investor.columbia.com.

First Quarter 2021 Reporting Date

Columbia Sportswear Company plans to report first quarter 2021 financial results on Thursday, April 29, 2021 at approximately 4:00 p.m. ET.

Supplemental Financial Information

Since Columbia Sportswear Company is a global company, the comparability of its operating results reported in United States dollars is affected by foreign currency exchange rate fluctuations because the underlying currencies in which it transacts change in value over time compared to the United States dollar. To supplement financial information reported in accordance with GAAP, the Company discloses constant-currency net sales information, which is a non-GAAP financial measure, to provide a framework to assess how the business performed excluding the effects of changes in the exchange rates used to translate net sales generated in foreign currencies into United States dollars. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into United States dollars at the average exchange rates that were in effect during the comparable period of the prior year. Management believes that this non-GAAP financial measure reflects an additional and useful way of viewing an aspect of our operations that, when viewed in conjunction with our GAAP results, provides a more comprehensive understanding of our business and operations. In particular, investors may find the non-GAAP financial measure useful by reviewing our net sales results without the volatility in foreign currency exchange rates. This non-GAAP financial measure also facilitates management's internal comparisons to our historical net sales results and comparisons to competitors' net sales results.

The non-GAAP financial measures should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP. The Company provides a reconciliation of non-GAAP measures to the most directly comparable financial measure calculated in accordance with GAAP. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" table included herein. The non-GAAP financial measures presented may not be comparable to similarly titled measures reported by other companies.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws, including statements regarding the Company’s expectations, anticipations or beliefs about brick and mortar retail traffic, net sales, operating income and diluted earnings per share for 2021. Forward-looking statements often use words such as "will," "anticipate," "estimate," "expect," "should," "may" and other words and terms of similar meaning or reference future dates. The Company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis; however, each forward-looking statement involves a number of risks and uncertainties, including those set forth in this document, those described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors," and those that have been or may be described in other reports filed by the Company, including reports on Form 8-K. Potential risks and uncertainties include those relating to the impact of the COVID-19 pandemic on our operations, which is highly dependent on numerous factors that we may not be able to predict or control, including: the duration and scope of the COVID-19 pandemic, including any recurrence due to variants; actions that may be taken to contain the pandemic or to treat its impact, including lock-downs and the speed of the vaccination roll-out; economic slowdowns that have and may continue to result from the pandemic; workforce staffing and productivity; our ability to continue operations in affected areas; supply chain and logistics capacity constraints; and consumer demand and spending patterns, as well as the effects on suppliers, creditors, and wholesale customers, all of which are uncertain. The Company cautions that forward-looking statements are inherently less reliable than historical information. The Company does not undertake any duty to update any of the forward-looking statements after the date of this document to conform them to actual results or to reflect changes in events, circumstances or its expectations. New factors emerge from time to time and it is not possible for the Company to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

About Columbia Sportswear Company

Columbia Sportswear Company has assembled a portfolio of brands for active lives, making it a leader in the global active outdoor lifestyle apparel, footwear, accessories, and equipment industry. Founded in 1938 in Portland, Oregon, the Company's brands are today sold in approximately 90 countries. In addition to the Columbia® brand, Columbia Sportswear Company also owns the Mountain Hardwear®, SOREL® and prAna® brands. To learn more, please visit the Company's websites at www.columbia.com, www.mountainhardwear.com, www.sorel.com, and www.prana.com.

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
		December 31,
(in thousands)		2020				2019
ASSETS
Current Assets:
Cash and cash equivalents		$	790,725			$	686,009
Short-term investments		1,224				1,668
Accounts receivable, net		452,945				488,233
Inventories, net		556,530				605,968
Prepaid expenses and other current assets		54,197				93,868
Total current assets		1,855,621				1,875,746
Property, plant, and equipment, net		309,792				346,651
Operating lease right-of-use assets		339,244				394,501
Intangible assets, net		103,558				123,595
Goodwill		68,594				68,594
Deferred income taxes		96,126				78,849
Other non-current assets		63,636				43,655
Total assets		$	2,836,571			$	2,931,591
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable		206,697				255,372
Accrued liabilities		257,278				295,723
Operating lease liabilities		65,466				64,019
Income taxes payable		23,181				15,801
Total current liabilities		552,622				630,915
Non-current operating lease liabilities		353,181				371,507
Income taxes payable		49,922				48,427
Deferred income taxes		5,205				6,361
Other long-term liabilities		42,870				24,934
Total liabilities		1,003,800				1,082,144
Shareholders' equity		1,832,771				1,849,447
Total liabilities and shareholders' equity		$	2,836,571			$	2,931,591

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended December 31,										Twelve Months Ended December 31,
(In thousands, except per share amounts)		2020					2019					2020					2019
Net sales		$	915,623				$	954,867				$	2,501,554				$	3,042,478
Cost of sales		452,586					476,212					1,277,665					1,526,808
Gross profit		463,037					478,655					1,223,889					1,515,670
		50.6		%			50.1		%			48.9		%			49.8		%
Selling, general and administrative expenses		343,284					344,419					1,098,948					1,136,186
Net licensing income		3,940					4,397					12,108					15,487
Income from operations		123,693					138,633					137,049					394,971
Interest income (expense), net		(293		)			932					435					8,302
Other non-operating income (expense), net		(169		)			1,241					2,039					2,156
Income before income tax		123,231					140,806					139,523					405,429
Income tax expense		(27,475		)			(26,781		)			(31,510		)			(74,940		)
Net income		$	95,756				$	114,025				$	108,013				$	330,489
Earnings per share:
Basic		$	1.45				$	1.69				$	1.63				$	4.87
Diluted		$	1.44				$	1.67				$	1.62				$	4.83
Weighted average shares outstanding:
Basic		66,225					67,544					66,376					67,837
Diluted		66,642					68,086					66,772					68,493

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Year Ended December 31,
(In thousands)		2020					2019
Cash flows from operating activities:
Net income		$	108,013				$	330,489
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and non-cash lease expense		146,601					121,725
Provision for uncollectible accounts receivable		19,156					(108		)
Loss on disposal or impairment of intangible assets, property, plant, and equipment, and right-of-use assets		31,342					5,442
Deferred income taxes		(11,263		)			(1,808		)
Stock-based compensation		17,778					17,832
Changes in operating assets and liabilities:
Accounts receivable		22,885					(37,429		)
Inventories		64,884					(84,058		)
Prepaid expenses and other current assets		33,712					(15,068		)
Other assets		(21,224		)			(3,547		)
Accounts payable		(49,275		)			(10,419		)
Accrued liabilities		(52,115		)			18,863
Income taxes payable		9,082					(9,402		)
Operating lease assets and liabilities		(52,112		)			(54,197		)
Other liabilities		8,613					7,137
Net cash provided by operating activities		276,077					285,452
Cash flows from investing activities:
Purchases of short-term investments		(35,044		)			(136,257		)
Sales and maturities of short-term investments		36,631					400,501
Capital expenditures		(28,758		)			(123,516		)
Net cash provided by (used in) investing activities		(27,171		)			140,728
Cash flows from financing activities:
Proceeds from credit facilities		402,422					78,186
Repayments on credit facilities		(403,146		)			(78,186		)
Payment of line of credit issuance fees		(3,278		)			—
Proceeds from issuance of common stock related to stock-based compensation		6,919					19,793
Tax payments related to stock-based compensation		(4,533		)			(5,806		)
Repurchase of common stock		(132,889		)			(121,702		)
Purchase of non-controlling interest		—					(17,880		)
Cash dividends paid		(17,195		)			(65,127		)
Net cash used in financing activities		(151,700		)			(190,722		)
Net effect of exchange rate changes on cash		7,510					(1,244		)
Net increase in cash and cash equivalents		104,716					234,214
Cash and cash equivalents, beginning of period		686,009					451,795
Cash and cash equivalents, end of period		$	790,725				$	686,009
Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities		$	3,831				$	9,543

COLUMBIA SPORTSWEAR COMPANY
Reconciliation of GAAP to Non-GAAP Financial Measures
Net Sales Growth - Constant-currency Basis
(Unaudited)
		Three Months Ended December 31,
		Reported Net Sales				Adjust for Foreign Currency					Constant- currency Net Sales					Reported Net Sales				Reported Net Sales			Constant- currency Net Sales
(In millions, except percentage changes)		2020				Translation					2020(1			)		2019				% Change			% Change(1)
Geographical Net Sales:
United States		$	599.1			$	—				$	599.1				$	634.0			(6	)%		(6	)%
Latin America and Asia Pacific		163.6				(6.3		)			157.3					171.6				(5	)%		(8	)%
Europe, Middle East and Africa		85.6				(3.9		)			81.7					99.8				(14	)%		(18	)%
Canada		67.4				0.3					67.7					49.5				36	%		37	%
Total		$	915.7			$	(9.9	)			$	905.8				$	954.9			(4	)%		(5	)%
Brand Net Sales:
Columbia		$	699.7			$	(8.5	)			$	691.2				$	751.1			(7	)%		(8	)%
SOREL		150.0				(1.2		)			148.8					143.5				5	%		4	%
prAna		36.9				—					36.9					33.1				11	%		11	%
Mountain Hardwear		29.1				(0.2		)			28.9					27.2				7	%		6	%
Total		$	915.7			$	(9.9	)			$	905.8				$	954.9			(4	)%		(5	)%
Product Category Net Sales:
Apparel, Accessories and Equipment		$	661.4			$	(7.0	)			$	654.4				$	698.3			(5	)%		(6	)%
Footwear		254.3				(2.9		)			251.4					256.6				(1	)%		(2	)%
Total		$	915.7			$	(9.9	)			$	905.8				$	954.9			(4	)%		(5	)%
Channel Net Sales:
Wholesale		$	446.0			$	(4.6	)			$	441.4				$	470.8			(5	)%		(6	)%
DTC		469.7				(5.3		)			464.4					484.1				(3	)%		(4	)%
Total		$	915.7			$	(9.9	)			$	905.8				$	954.9			(4	)%		(5	)%

(1) Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates against the United States dollar between comparable reporting periods. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into United States dollars at the average exchange rates that were in effect during the comparable period of the prior year.

COLUMBIA SPORTSWEAR COMPANY
Reconciliation of GAAP to Non-GAAP Financial Measures
Net Sales Growth - Constant-currency Basis
(Unaudited)
		Twelve Months Ended December 31, 2020
		Reported Net Sales				Adjust for Foreign Currency					Constant- currency Net Sales					Reported Net Sales				Reported Net Sales			Constant- currency Net Sales
(In millions, except percentage changes)		2020				Translation					2020(1			)		2019				% Change			% Change(1)
Geographical Net Sales:
United States		$	1,603.8			$	—				$	1,603.8				$	1,943.0			(17	)%		(17	)%
Latin America and Asia Pacific		424.5				(3.6		)			420.9					529.3				(20	)%		(20	)%
Europe, Middle East and Africa		298.9				(5.6		)			293.3					367.1				(19	)%		(20	)%
Canada		174.4				0.5					174.9					203.1				(14	)%		(14	)%
Total		$	2,501.6			$	(8.7	)			$	2,492.9				$	3,042.5			(18	)%		(18	)%
Brand Net Sales:
Columbia		$	1,996.9			$	(7.0	)			$	1,989.9				$	2,487.7			(20	)%		(20	)%
SOREL		293.5				(1.6		)			291.9					314.2				(7	)%		(7	)%
prAna		131.6				—					131.6					151.5				(13	)%		(13	)%
Mountain Hardwear		79.6				(0.1		)			79.5					89.1				(11	)%		(11	)%
Total		$	2,501.6			$	(8.7	)			$	2,492.9				$	3,042.5			(18	)%		(18	)%
Product Category Net Sales:
Apparel, Accessories and Equipment		$	1,867.6			$	(6.2	)			$	1,861.4				$	2,341.2			(20	)%		(20	)%
Footwear		634.0				(2.5		)			631.5					701.3				(10	)%		(10	)%
Total		$	2,501.6			$	(8.7	)			$	2,492.9				$	3,042.5			(18	)%		(18	)%
Channel Net Sales:
Wholesale		$	1,403.3			$	(5.2	)			$	1,398.1				$	1,782.8			(21	)%		(22	)%
DTC		1,098.3				(3.5		)			1,094.8					1,259.7				(13	)%		(13	)%
Total		$	2,501.6			$	(8.7	)			$	2,492.9				$	3,042.5			(18	)%		(18	)%

(1) Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates against the United States dollar between comparable reporting periods. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into United States dollars at the average exchange rates that were in effect during the comparable period of the prior year.

 

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FAQ

What were Columbia Sportswear's fourth quarter 2020 earnings results for COLM?

Columbia Sportswear reported net sales of $915.7 million, a 4% decrease year-over-year, and net income of $95.8 million, down 16%.

How did Columbia Sportswear perform in e-commerce for the fourth quarter 2020?

E-commerce net sales grew an impressive 41% year-over-year, reflecting a shift in consumer purchasing behavior.

What is the cash dividend declared by Columbia Sportswear for Q1 2021?

The Board of Directors declared a quarterly cash dividend of $0.26 per share, payable on March 22, 2021.

What challenges did Columbia Sportswear face during the fourth quarter of 2020?

The company faced challenges from the COVID-19 pandemic, including supply chain constraints and reduced store traffic.

What guidance did Columbia Sportswear provide for the future?

CEO Tim Boyle indicated optimism for 2021, boosted by e-commerce growth and clean inventory positions for wholesale partners.