Columbia Sportswear will spend more to reignite top-line growth.
The apparel firm will increase its marketing spend to 6.5 percent of sales versus 5.9 percent of sales in 2024, according to company chairman, president and CEO Timothy P. Boyle, who described the marketing strategy as “targeted demand creation.” Boyle made his comments during a fourth quarter conference call on Tuesday.
“To activate the brand and product strategies, we will be elevating the brand storytelling and consumer experience across the marketplace,” Boyle said.
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The company disclosed in the third quarter company call its Accelerate Growth Strategy. Boyle reminded investors on Tuesday that the strategy is aimed at elevating the brand and attracting “younger and more active consumers while continuing to serve existing customers with accessible outdoor essentials.” He said the company in 2024 laid the foundation for the strategy, which included a refreshed marketing direction, enhanced drill-down on customer segmentation and new products in the pipeline.
However, the caveat is that the new brand voice won’t be visible until the fall marketing campaigns, Boyle said. Meanwhile, the product teams are pushing ahead on innovation-led offerings and new collections to market. And the company is evolving its Columbia.com platform.
“In brick-and-mortar, we’re opening a small number of branded stores in high-traffic centers in North America,” he told investors on the call. For the Columbia brand, he said the company has been “thoughtful about how, when and where” it utilizes promotions across channels and customer segments.
On the international front, Boyle said the outdoor industry is experiencing a “powerful growth trend in China,” helped by growing interest in outdoor brands and activities. The company is capitalizing on this trend through localized product collections and a “robust” digital strategy, the CEO said.
Boyle said the company is also making investments in product offerings and brand positioning in its emerging brands Mountain Hardwear and PrAna. And while 2024 was challenging for its Sorel brand, Boyle said the product team has made progress in “refining future seasonal product assortments.”
The good news is that Boyle said the order book for spring and fall “will be up,” adding that China and Europe will be the firm’s “fastest growing markets.” He said that those two areas are where the company has historically underperformed. Also returning to growth is the U.S. market.
Boyle said the company’s financial performance in 2024 was “short” of his personal growth and profitability goals. The good news was that inventories were down 7 percent, which is expected to support the company’s outlook for gross margin expansion, he said.
The company said gross margin is expected to expand 80 basis points to 51 percent of net sales from 50.2 percent of net sales in 2024.
For the fourth quarter ended Dec. 31, net income rose 9.2 percent to $102.6 million, or $1.80 a diluted share, from $93.3 million, or $1.55, in the same year-ago period. Net sales were up 3.5K percent to $1.1 billion from $1.06 billion.
For the year, net income fell 11.2 percent to $223.3 million, or $3.82 a diluted share, from $251.4 million, or $4.09, in 2023. Net sales were down 3.4 percent to $3.37 billion from $3.49 billion.
Looking ahead, the company projected 2025 diluted earnings per share in the range of $3.80 to $4.15, versus $3.82 in 2024. Net sales were guided to rise 1 percent to 3 percent to the range of $3.40 billion to $3.47 billion.
