Columbia Sportswear Company (COLM)
Q4 2008 Earnings Call
January 29, 2009 5:00 pm ET
Ron Parham - Director of Investor Relations
Gertrude Boyle - Chairman of the Board
Timothy Boyle – President and CEO
Thomas B. Cusick - Vice President of Finance and Chief Financial Officer
Bryan L. Timm – Executive Vice President and Chief Operating Officer
Peter J. Bragdon – Vice President and General Counsel
Robert Drbul – Barclays Capital
Reed Anderson – D.A. Davidson
Mitch Kummetz – Robert W. Baird
Jim Duffy - Thomas Weisel Partners
Howard Tubin - RBC Capital Markets
Chris Svezia - Susquehanna Financial
Sam Poser - Sterne, Agee & Leach
Rick [Ludawic] - Levin Capital Strategies
Previous Statements by COLM
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Thank you, Rachel. Good afternoon and thanks for joining us on today’s call. Earlier this afternoon we issued an earnings release and financial schedules covering the results of our fourth quarter and full year 2008 and also guidance on our expectations for the first quarter of 2009. The press release and financial schedules are available on the investor relations portion of our website at www.columbia.com.
With me today to discuss the results and answer your questions are Columbia’s Chairman, Gert Boyle, President and CEO, Tim Boyle, Vice President of Finance and Chief Financial Officer Tom Cusick, Executive Vice President and Chief Operating Officer Bryan Timm, and Vice President and General Counsel Peter Bragdon.
Before we begin, our Chairman Gert Boyle has an important reminder.
Good afternoon. I’d like to remind everyone that this conference call will contain forward-looking statements regarding Columbia’s business opportunities and anticipated results of operations. Please bear in mind that forward-looking information is subject to many risks and uncertainties and actual results may differ materially from what is projected.
Many of these risks and uncertainties are described in Columbia’s quarterly report on Form 10-K for the year ending December 31, 2007 and filed with the SEC. Forward-looking statements in this conference call are based on our current expectations and beliefs and we do not undertake any duty to update any of the forward-looking statements after the date of this conference call to conform the forward-looking statements to actual results or changes in our expectations.
Thank you, Gert, and Tim will take over from here.
Thanks, Ron. Welcome everyone and thank you for joining us this afternoon. We were pleased with our fourth quarter results which came in slightly better on an operating basis than the guidance we gave back in October. The winter weather that arrived in key markets in December helped to stimulate demand for outerwear, cold weather footwear, and accessories.
Combined with gross margins that were better than we anticipated, our operating results, excluding impairment charges, were $0.15 per share above the midpoint of our October guidance. Before going into detail on Q4 results, I want to take a look back at 2008 which was a year of investment for Columbia.
We used our fortress balance sheet and strong cash flow to begin investing in several strategic growth initiatives. Virtually all of our incremental $45 million SG&A spend during 2008 was focused on the two strategies we articulated at the beginning of the year: to expand our retail operations and to increase our brand marketing and advertising.
The goals of these investments are to elevate our brand, to increase consumer and retail awareness of the full depth and breadth of our offerings, and to build stronger emotional connections with consumers over time.
We renewed our focus on technical innovation and enhanced design across all of our product categories. Our Omni-Shade, Omni-Tech, and Tech Lite products generated strong sell throughs for our retail partners during the year of very challenging consumer headwinds. In 2009 we will add Omni-Shield technology for advanced repellency against liquids and stains, extending our technical performance foundation for future innovations that are already under development for 2010 and beyond.
We continue to build a strong footwear team that is bringing meaningful innovation to the outdoor footwear market. Anecdotal feedback from last week’s outdoor retail seller show at Salt Lake City gives us increased confidence in the new course we’re charting in this important category.
We developed and launched a new global branding campaign in partnership with a new advertising agency. The pioneers of Columbia’s greater outdoors is a global platform that speaks to the accessibility of the outdoors for everyone. While our best products are frequently used for summit assaults, we want to be the brand of choice for anyone with a passion for the outdoors, especially during challenging economic times, the outdoors offers affordable activities for everyone of every skill level.
In November we opened four branded stores, one at the Portland International Airport, one at the Mall of America in Minneapolis, and a Columbia store with an adjacent Mountain Hardware store in Seattle. Along with the new Portland Mountain Hardware store that we opened in April, we met our goal of opening five branded retail stores during ’08.
We opened 16 new outlet stores around the world in 2008, including 15 in the US and one in the UK. This channel is becoming increasingly important to help cushion the impact of the seasonal nature of our business and the volatile and unpredictable consumer environment that we expect to continue.