Columbia Sportswear Company Reports First Quarter 2021 Financial Results and Raises Full Year 2021 Financial Outlook.
First Quarter 2021 Highlights
Net sales increased 10 percent to
Operating income of
Diluted earnings per share of
Exited the quarter with
The Company repurchased
On
Full Year 2021 Financial Outlook
The following forward-looking statements reflect our expectations as of
Net sales of
Operating income of
Diluted earnings per share of
Chairman, President and Chief Executive Officer
'Based on first quarter results and visibility provided by early Spring 2021 sell-through, our Fall 2021 order book and business fundamentals, we are increasing our full year financial outlook. I'm encouraged by the strong start to the year, but mindful that we must continue to carefully navigate operational challenges and quickly adapt to changing business conditions and ongoing pandemic related disruptions.
'Our fortress balance sheet remains strong, with cash and short-term investments totaling
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 and Financial Review Presentation Available Online
For a detailed review of the Company's first quarter 2021 financial results and additional updates relating to the COVID-19 pandemic, please refer to the CFO Commentary and Financial Review presentation furnished to the
COVID-19 Update
The Company's top priority throughout this pandemic remains to protect the health and safety of our employees, their families, our customers and our communities. 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 first quarter 2021. Overall brick & mortar store traffic trends vary by region but remain below prior year levels. First quarter 2021 results include the impact of port congestion and logistics constraints that resulted in later timing of Spring 2021 inventory receipts and deliveries. Please refer to the CFO Commentary and Financial Review presentation for a detailed review of COVID-19 pandemic related issues and our responses.
First Quarter 2021 Financial Results
(All comparisons are between first quarter 2021 and first quarter 2020, unless otherwise noted.)
Net sales increased 10 percent to
Gross margin expanded 360 basis points to 51.4 percent of net sales from 47.8 percent of net sales for the comparable period in 2020. Gross margin expansion was primarily driven by decreased reserve provisions related to less excess inventory, lower DTC promotional levels and favorable channel and region sales mix.
SG&A expenses decreased 8 percent to
Operating income of
Net income of
Balance Sheet as of
Cash, cash equivalents and short-term investments totaled
The Company had no borrowings, compared to short-term borrowings of
Inventories decreased 9 percent to
Cash Flow for the Three Months Ended
Net cash flow from operating activities was
Capital expenditures totaled
Share Repurchases for the Three Months Ended
In first quarter 2021, the Company repurchased 108,987 shares of common stock for an aggregate of
At
Quarterly Cash Dividend
The Board of Directors approved a regular quarterly cash dividend of
Full Year 2021 Financial Outlook
(Additional financial outlook details can be found in the CFO Commentary and Financial Review presentation.)
The Company's 2021 Financial Outlook is forward-looking in nature, and the following forward-looking statements reflect our expectations as of
Net sales are expected to increase 21.5 to 23.0 percent (prior 18 to 20 percent) to
Gross margin is expected to improve 110 to 130 basis points to 50.0 to 50.2 percent of net sales (prior approximately 50 percent) from 48.9 percent of net sales in 2020.
SG&A expenses are expected to increase at a slower rate than net sales growth. SG&A expenses as a percent of net sales is expected to be 38.7 to 39.1 percent (prior 39.2 to 39.7 percent), compared to SG&A expenses as a percent of net sales of 43.9 percent in 2020. Demand creation as a percent of net sales is anticipated to be 6.0 percent in 2021, compared to 5.7 percent in 2020.
Operating income is expected to be
Effective income tax rate is expected to be approximately 22 percent. The effective income tax rate may be affected by unanticipated impacts from changes in international, federal or state tax policies, changes in the Company's geographic mix of pre-tax income, other discrete events, as well as differences from our estimate of the tax benefits associated with employee equity awards and our estimate of the tax impact of various tax initiatives.
Net income is expected to be
Foreign Currency
Foreign currency translation is anticipated to increase 2021 net sales growth by approximately 130 basis points.
Foreign currency is expected to have essentially no impact on earnings as favorable foreign currency translation impacts are anticipated to be offset by foreign currency transactional effects from hedging of production.
Balance Sheet and Cash Flows
Operating cash flow is expected to be
Capital expenditures are planned to be
First Half 2021 Commentary
Our annual net sales are weighted more heavily toward the Fall/Winter season, while operating expenses are more equally distributed throughout the year, resulting in a highly seasonal net sales and profitability pattern weighted toward the second half of the year.
Based on first quarter 2021 results, advance wholesale orders for the Spring 2021 season and plans for growth in our global DTC businesses as we anniversary prior year temporary store closures, we believe mid to high-20 percent first half year-over-year net sales growth is achievable (prior high-teens percent to low-20 percent). In second quarter 2021, year-over-year net sales growth by channel will be impacted by the anniversary of prior year temporary brick & mortar store closures as well as elevated DTC e-commerce net sales penetration levels as demand shifted online when consumers were unable shop in store.
Please note the second quarter is typically our lowest volume sales quarter and small changes in the timing of product shipments and expenses can have a material impact on reported results. Historically, second quarter profitability has been challenging given our fixed cost structure, resulting in the Company reporting a second quarter earnings loss in most years.
Conference Call
The Company will hold its first quarter 2021 conference call at
Second Quarter 2021 Reporting Date
Supplemental Financial Information
Since
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 full year 2021 net sales, gross margin, SG&A expense, demand creation spend, operating income, effective income tax rate, net income, diluted earnings per share, foreign currency translation, inventory, cash flows, and capital expenditures, as well as growth of its global DTC businesses, and first half 2021 net sales growth. 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
1) Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates againstthe 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 intoUnited States dollars at the average exchange rates that were in effect during the comparable period of the prior year.
See full release at: https://investor.columbia.com/news-events/press-releases/detail/306/columbia-sportswear-company-reports-first-quarter-2021
Director of Investor Relations and Competitive Intelligence
(503) 985-4112
aburns@columbia.com
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