Sorel was Columbia Sportswear Company’s fastest-growing brand in the third quarter, helping the company achieve another period of sales gains despite facing multiple headwinds.
In the third quarter of 2022, the Portland, Ore.-based sportswear company reported on Thursday that total net sales in the period increased 19% to $955.0 million from $804.7 million for the comparable period in 2021. The increase in net sales primarily reflects earlier shipment of higher fall 2022 wholesale orders and direct-to-consumer growth, Columbia said.
By brand, overall sales at Sorel, which will be moving to a new headquarters next year, increased 28% to $112.4 million, driven by strong wholesale and DTC e-commerce performance. “Sorel’s growth rate in the quarter was aided by favorable timing of fall shipments compared to the prior year,” president and CEO Tim Boyle said on the company’s quarterly earnings call on Thursday. “The Sorel brand continues to outperform, fueled by function-first fashion footwear. We believe Sorel is well on its way to $1 billion in sales and becoming the next global footwear force.”
Boyle added that during the quarter, growth at Sorel was led by winter style categories as well as strong performance in year-round sneaker and wedge styles. “The Sorel business has really grown tremendously, and it really is a function of the concentration on women’s,” Boyle told investors. “I think we looked this morning prior to the call, and we talked about something like 80% of the Sorel sales being non-winter and something like 85% being women’s.”
As for its flagship Columbia brand, net sales increased 19% in Q3 to $773.3 million. Growth was relatively balanced across apparel and footwear, Boyle added.
It wasn’t all great news on the Thursday call, however. Boyle noted that Columbia’s inventory position was not ideal, having to deal with order cancellations and promotional activity. “We experienced both these trends in the third quarter and anticipate similar headwinds in the fourth quarter as the marketplace seeks to rationalize inventory levels,” he said. Exiting the third quarter, the company’s inventories were up 47%.
Pressed further by analysts on the call, Boyle admits that the quarter’s cancellations were mostly due to the company’s “inability to deliver on time” and not for lack of demand. He noted that “virtually all” of the cancellations are of fall 2022 product and is expecting to be “much more timely” in deliveries for spring 2023.
“This resulted in our current inventory excess,” Boyle said. “Our plan is to liquidate that over time in a ‘non-panic’ way through sales to regular retailers as a result of demand in the fall as well as our own outlet stores in the future.”
Looking ahead, Boyle said the company is reiterating its full year net sales and diluted earnings per share financial outlook given its strong third quarter performance. Net sales are expected to increase 10% to 12% to $3.44 to $3.50 billion for the full fiscal year 2022.
“I’m confident we have the right strategies in place to navigate this dynamic environment and unlock the significant growth opportunities we see across the business,” Boyle said.