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Columbia Sportswear Company (NASDAQ:COLM), a leading innovator in the global active outdoor apparel and footwear industries, today announced preliminary financial results for the fourth quarter ended December 31, 2012 that are below the company’s prior outlook provided on October 25, 2012.
The company now expects to report fourth quarter net sales of approximately $499.0 - $503.0 million, a decline of approximately 5 percent compared with fourth quarter 2011 net sales of $526.1 million. Prior fourth quarter outlook anticipated net sales growth of up to 1.5 percent.
Net sales were hampered by a combination of mild winter weather in North America during most of the holiday shopping period, general consumer caution and reduced retail traffic in key markets, and a more promotional environment. These factors, among others, combined to produce lower-than-expected direct-to-consumer sales, as well as higher order cancellations and fewer reorders from wholesale customers, primarily in the U.S. In addition, approximately one-third of the fourth quarter net sales shortfall reflected a timing shift into the first quarter of 2013 of factory-direct shipments of international distributors’ Spring 2013 advance orders.
The company now expects fourth quarter gross margin to contract approximately 120 to 130 basis points, to 41.2 to 41.3 percent. Prior fourth quarter outlook anticipated gross margin contraction of 50 to 75 basis points from gross margin of 42.5 percent in last year’s fourth quarter. Lower-than-expected gross margin primarily reflects increased promotional activity and liquidation of excess inventory in response to the slower sales discussed above.
Consolidated inventories at December 31, 2012 are expected to be essentially equal to those at December 31, 2011.
The company now expects fourth quarter selling, general and administrative (SG&A) expenses to decline to approximately $158 to $162 million, or approximately 31.5 percent to 32.3 percent of sales. Prior fourth quarter outlook anticipated SG&A expense of approximately 32.0 percent to 32.5 percent of sales, compared with 34.0 percent of sales, or $178.6 million, in last year’s fourth quarter. The reduction in SG&A expense reflects continued disciplined management of discretionary spending.