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Columbia Sportswear Co. cut its second-quarter loss as reductions in expenses more than compensated for a 3.4 percent decrease in sales.
The Portland, Ore.-based outerwear and sportswear marketer also cut its forecast for full-year sales, calling for a decline of up to 2.5 percent in revenues versus its forecast three months ago of a “slight” decrease for the year.
In the three months ended June 30, the company’s net loss was $7.1 million, or 21 cents a diluted share, better than the $10.8 million, or 23 cents, in red ink registered during the second quarter of 2012.
Net sales during the quarter, historically the company’s lowest-volume period, were $280.5 million, down from $290.4 million in last year’s period.
The performance exceeded analysts’ median expectations for a loss of 38 cents a share on revenues of $278 million.
Gross margin improved to 42.9 percent of sales from 40.6 percent a year ago.
Helping the bottom-line performance were a 7.1 percent reduction in cost of goods sold, to $160.2 million, and a 0.9 percent cut in selling, general and administrative costs, to $132 million. On a year-on-year basis, inventories were down 19 percent to $423.8 million from $523.1 million.
“Ultimately, our year-end inventory will be based on fall 2013 sell-through and timing of spring 2014 receipts,” said Thomas Cusick, chief financial officer, on a Thursday evening conference call, “but our expectation today would be that inventory would be down high single digits.”
Tim Boyle, president and chief executive officer, termed the spring launch of the Omni-Freeze Zero and Cool.Q Zero cooling technology successful. “Sell-through of our spring season products improved as our marketing programs drove consumer awareness and warm weather arrived in key markets,” he said. “Operationally, we improved our inventory flow and continued to demonstrate focused expense management.”
Asked to elaborate on the expected decline in sales for the year, Boyle said, “A couple of our Latin American countries are facing all kinds of geopolitical issues, and we’re having difficulty importing into those countries and converting their currencies into dollars. And that’s predominantly Argentina and Venezuela. And then we’ve got small declines in the U.S. wholesale and retail business related to our prior outlook.”
During the second quarter, the company hired Shawn Cox as senior vice president of retail and Russ Hopcus as senior vice president of North American sales. Additionally, Samson Wong was named president of Columbia’s new joint venture in China with Swire Resources Ltd. Wong has been with Swire for 23 years and had overseen its prior relationship with Columbia, as its exclusive distributor in China, as executive director for the past year.
For the first six months of 2013, Columbia’s net income was $3 million, or 9 cents a diluted share, reversing a loss of $4 million, or 12 cents, in the 2012 period. Revenues rose 0.9 percent to $628.8 million from $623.5 million.