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Columbia Sportswear Company (COLM),
Q3 2009 Earnings Call
October 22, 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
Michael W. McCormick - Executive Vice President of Global Sales & Marketing
Peter J. Bragdon – Vice President and General Counsel
Kate Mcshane - Citi Investment Research
Robert Drbul - Barclays Capital
Reed Anderson - D. A. Davidson & Co.
Michelle Tan - Goldman Sachs
Analyst for Mitch Kummetz - Robert W. Baird & Co.
Previous Statements by COLM
» Columbia Sportswear Q2 2009 Earnings Call Transcript
» Columbia Sportswear Company F1Q09 Earnings Call Transcript
» Columbia Sportswear Company Q4 2008 Earnings Call Transcript
After the speakers’ remarks, there will be a question and answer session. (Operator Instructions)
I would now like to turn the call over to Mr. Parham.
Thanks, Kara. Good afternoon and thanks for joining us on today’s call. Earlier this afternoon we issued a press release announcing our third quarter results, our spring 2010 backlog, our increased outlook for the remainder of 2009, and the board’s authorization of a 12.5% increase in our quarterly dividend.
With me today to discuss those results and answer your question 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 like to remind everyone that this conference call will contain forward statements regarding Columbia business opportunities and anticipated results of operation. 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 past year of December 31, 2008 and the 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, now I’ll turn the call over to Tim.
Thanks, Ron. Welcome everyone and thank you for joining us this afternoon. As Ron noted in his introduction, today’s press release contains several important pieces of information that selectively provide insight into the current state of our business and early signs of market acceptance of the strategic product and marketing initiatives that we’ve been working on for the past two years.
I want to touch quickly on a couple of highlights from the third quarter and let Tom cover the financials and our improved fiscal year 2009 outlook in more detail. Most of my comments will focus on Spring 2010 backlog and what we think are the important takeaways when you look beyond the raw comparison against Spring 2009 back log.
As most of you know, the third quarter is typically our largest sales in earnings quarter of the year. Overall, third quarter sales were stronger than we expected and together with better than expected gross margins, controlled spending, and a slightly lower tax rate, we produced greater profitability than forecast.
Consolidated sales, while still down 4% from last year’s Q3, were more than $30 million above the outlook we gave in July. That increase was driven by the US region where we experienced greater than expected demand and better inventory availability to fulfill that demand. We also benefited from stronger international currencies.
Q3 US sales declined only 1% as our operations team did an outstanding job delivering fall orders so that our retail partners could have their stores ready for the cooler weather that is already begun to settle across North America.
Nothing could have pleased me more than tuning into the New England Patriots game against Tennessee this past Sunday and seeing a snow-covered field and a stadium full of fans bundled against the cold in mid-October or the Yankees-Angels playoff game over the weekend with rain and temperatures in the 40s. We continue to believe that US retail channel inventories are lean, a credit to the discipline of retailers over the past year. The weather helps, but we also believe our innovative products, enhanced design, and increased marketing investments are beginning to drive consumer demand.
Footwear was our strongest category during the quarter, registering a double digit sales increase. This increase was driven by the Sorel brand, partially offset by a small decline in Columbia footwear. We will launch a new Sorel print advertising campaign in the November issue of Vogue magazine, targeting a more fashion conscious female consumer.
We also launched the Sorel e-commerce site this week where consumers can see the full breadth of our restyled Sorel line.
Turning to the EMEA region, sales in both our direct and distributor business declined low teens. This was consistent with the fall backlog we announced in April and reflects the significant macroeconomic challenges in Russia, together with the brand challenges we face in Western Europe.