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.
Fourth Quarter 2020 Highlights
Lower net sales and profitability in fourth quarter 2020 compared to fourth quarter 2019 primarily reflect the ongoing negative effects of the COVID-19 pandemic.
- Net sales decreased 4 percent to $915.7 million, compared to fourth quarter 2019. Net sales benefited from later shipment of Fall 2020 wholesale orders as outlined in the third quarter 2020 earnings release.
- In the direct-to-consumer channel, e-commerce net sales increased 41 percent year-over-year while brick & mortar store traffic and sales trends improved sequentially but remained well below prior year levels.
- Operating income decreased 11 percent to $123.7 million, or 13.5 percent of net sales, compared to fourth quarter 2019 operating income of $138.6 million, or 14.5 percent of net sales. Fourth quarter 2020 operating income includes $18.1 million in retail impairments and store closure charges and a $17.5 million prAna trademark impairment.
- Diluted earnings per share decreased 14 percent to $1.44 compared to fourth quarter 2019 diluted earnings per share of $1.67.
- Exited the quarter with $791.9 million in cash and short-term investments and no borrowings. The Company also refinanced its domestic credit agreement with a new agreement providing a $500 million five year unsecured revolving credit facility.
- On January 29, 2021, the Board of Directors approved a quarterly dividend at its pre-pandemic level of $0.26 per share.
- On January 29, 2021, the Board of Directors approved a $400 million increase in share repurchase authorization, bringing total available share repurchase authorization to $482 million.
Full Year 2021 Financial Outlook
The following forward-looking statements reflect our expectations as of February 4, 2021 and are subject to significant risks and business uncertainties, including those factors described under “Forward-Looking Statements” below. These risks and uncertainties limit our ability to accurately forecast results. This outlook reflects our estimates as of February 4, 2021 regarding the impact on our operations of the COVID-19 pandemic, economic conditions, supply chain and logistics capacity constraints, and changes in consumer behavior and confidence, as well as geopolitical tensions. This outlook assumes a sequential recovery in brick & mortar retail traffic and sales throughout 2021. However, it is not possible to determine the ultimate impact on our operations for 2021, or whether other currently unanticipated direct or indirect consequences of the pandemic are reasonably likely to materially affect our operations.
- Net sales of $2.95 to $3.00 billion, representing a net sales growth of 18.0 to 20.0 percent.
- Operating income of $320 to $346 million, representing operating margin of 10.8 to 11.5 percent.
- Diluted earnings per share of $3.75 to $4.05.
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.
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.