Columbia Sportswear (COLM)
Q2 2009 Earnings Call
July 28, 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
Robert Drbul - Barclays Capital
Eric Tracy - BB&T Capital Markets
Kate McShane - Citigroup
Reed Anderson - D.A. Davidson & Co.
Michelle Tan - Goldman Sachs
Christopher Svezia - SIG Capital
Mitch Kummetz - Robert W. Baird
Tara Gary - RBC Capital Markets
Analyst for Jim Duffy - Thomas Weisel Partners
Previous Statements by COLM
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Thank you, Operator. Good afternoon, everyone and thanks for joining us on today’s call. About an hour ago, we issued our press release and financial schedules covering the results of our second quarter of 2009. With me today to discuss those 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; Executive Vice President of Sales and Marketing, Mick McCormick; and Vice President and General Counsel Peter Bragdon.
Before we begin, our Chairman, Gert Boyle, has an important reminder.
I would 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 annual report on Form 10-K for the year ending December 31, 2008 and its most recently filed quarterly report on Form 10-Q, as well as subsequent filings 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 to report changes in our expectations.
Thank you, Gert. I will hand the call over to Tim.
Thanks, Ron. Welcome, everyone, and thank you for joining us this afternoon to discuss the results of our second quarter. I am going to keep my prepared remarks very brief today for two reasons; first, the second quarter is by far our smallest quarter of the year, typically accounting for approximately 15% of our annual net sales. Our fixed operating costs are not absorbed as effectively as in other quarters and we report the lowest operating earnings or loss, in this case, of any quarter. Second, during last quarter’s conference call, I focused my comments on the weak condition of the global retail environment. Since April, we have all seen and heard the continuing reports of weak retail sales, increasing unemployment, mounting mortgage foreclosures and additional corporate and individual bankruptcies.
You are all well aware of these realities and that we and other consumer companies are operating under and I am not likely to add anything to the discussion that would be different than what you are hearing from others.
As you know, the typical product cycle in this industry is about 18 months from product concept to retail floor. Over the past 18 months, you have heard us repeatedly describe the emphasis increasingly we are placing on product innovation focused around technologies that are easy to understand and that solve real problems for outdoor consumers.
As one measure of that new focus, I am pleased to note that we have had more pending product -- excuse me; more pending patent applications today than at any time in our 71-year history. You have also heard us describe our new focus on developing products that address the needs of outdoor consumers within six broad categories -- winter, water, trail, travel, fish/hunt, and golf.
Over the past year, you have watched as we launched our greater outdoors global brand campaign developed by our new brand agency. After nine months, market research performed by NPD tells us that our message of inclusiveness and democratic access to the outdoors is resonating with outdoor consumers of all abilities, ages, genders, and geographic regions.
Over the past 18 to 24 months, you have heard us describe the talent that we are attracting to our team, including product merchandising, e-commerce, [inaudible] management, retail, as well as the internal promotion of several leaders who are working with these new teammates to drive our strategic initiatives.
I am very encouraged by how far our go-to-market initiatives have evolved over the past 18 months.
Our fall 2009 products that have already started shipping partially reflect the influence of these new leaders and new initiatives. We are looking forward to consumers seeing these products at retail beginning this fall.
Even more, we are looking forward to delivering our spring 2010 line because it will be the first to fully reflect the influence of our new go-to-market efforts. We have been showcasing this line at trade shows and order writing shows around the world, including last week at the outdoor retailer summer market trade show in Salt Lake City, the European outdoor show in Friedrichshafen, Germany, and at numerous shows in Japan, China, and Russia.
As a company, we are committed to an increased focus on product innovation, enhanced design, brand enhancing distribution, and new marketing strategies because we believe strongly that they will generate long-term value for shareholders by creating a stronger brand with strong emotional connections to consumers.