Columbia Predicts Double-Digit Wholesale Decline in First Half of 2024
Photo courtesy of Columbia
Posted by: Outdoor Retailer (Bart Schaneman) / October 27, 2023
Columbia Sportswear CEO Tim Boyle announced in a recent investor conference call that the company is facing challenges in 2023, leading to a reduced full-year guidance. These challenges include inventory issues, cautious retailers, and impending product regulations. The company now expects annual net sales to increase only by 0.5% to 2%, ranging from $3.48 billion to $3.53 billion, down from the previous projection of 2% to 3.5% growth.
In the United States, retailers are approaching inventory management and orders cautiously due to slowing consumer demand, persistently high interest rates, and economic uncertainty. Similar conditions are emerging in European markets as well. Columbia doesn't foresee an improvement in these conditions in the early part of 2024 and anticipates a challenging season in Spring 2024.
Despite these challenges, the company reported a 3% increase in sales in constant currency for the third quarter of 2023, with gross margins expanding. The strongest growth was seen in international markets, particularly in Canada, Europe, and China. In contrast, sales in Europe, the Middle East, and Africa declined.
Columbia's namesake brand is performing well, with a 4% increase in sales. Sorel, a sub-brand, also saw an 8% growth in constant currency sales. However, Prana and Mountain Hardwear experienced declines.
To manage inventory, the company has opened temporary outlet stores. They are also phasing out products made with perfluoroalkyl and polyfluoroalkyl substances (PFAS) chemicals, impacting their wholesale business. Weather conditions, such as unseasonably warm weather, may further affect sales.
The company's outlook for Q4 and full-year 2023 indicates lower growth than previously expected, with net sales increasing by 0.5% to 2%, and lower net income forecasts. In Q4, net sales are expected to decline between 5% and 10% compared to the same period in 2022.