Columbia Sportswear Co. hit its financial break-even point in the first quarter as the coronavirus pandemic took a swing at its brick-and-mortar business.
The Portland, Ore.-based company missed analysts’ profit and revenue expectations: Its net income declined 100% to $0.2 million, or $0.00 per diluted share, while sales decreased 13% to $568.2 million. Wall Street had forecasted earnings of 59 cents per share and revenues of $612.5 million for the three-month period ended March 31.
“It is important to note that we entered into this crisis in a position of strength, with a fortress balance sheet and top quartile operating margin performance in our industry in 2019,” said chairman, president and CEO Tim Boyle. “As consumers look to make every dollar they spend count within this challenging economic environment, we believe the Columbia brand’s differentiated innovation and exceptional value are as important as ever.”
At the start of the year, the COVID-19 outbreak spread across China, shuttering many stores across the mainland and subsequently dragging down sales. In early February, the illness had made its way to Korea and Japan, and by mid-March, North America and Europe were already heavily impacted.
In an effort to bolster its liquidity, Columbia announced two weeks ago that it had drawn down $375 million from its total credit line of $631 million. (As of Dec. 31, it had $686 million in cash and equivalents, with no debt on its balance sheet.) At the time, the outdoor apparel company had already suspended quarterly dividend payments and share repurchases, as well as reduced fall inventory orders as it anticipated a decline in consumer demand.
What’s more, its CEO cut his pay to $10,000 a year, while at least 10 other top executives took a voluntary 15% salary reduction. (According to SEC filings, Boyle took home total compensation of $3.3 million in 2018. Figures for 2019 have not yet been disclosed.)
“It is impossible to predict when this crisis will pass, but we have weathered many storms during Columbia’s long history, which spans more than 80 years, and I am confident that we will get through this one as well,” Boyle added. “We have quickly taken steps to enhance liquidity, preserve capital, contain costs and manage inventory to mitigate the financial impact of the pandemic, and we are keenly focused on emerging in a stronger competitive position.”