Columbia Sportswear warns of COVID-19 impact on sales

Following the coronavirus outbreak in China, Columbia Sportswear Company has announced that uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and actions that may be taken by governmental authorities to contain the outbreak or to treat its impact, makes it difficult to forecast any effects on its 2020 results. However, it expects the results to be significantly affected.

“While this outbreak will have a material impact on our near-term financial performance in China, we continue to believe China represents one of our largest long-term geographic opportunities. We believe our fortress balance sheet, including no long-term debt, and diversified global business model will enable us to overcome this present adversity and unlock the full potential of our brand portfolio in this market over time,” said the company’s Chairman, President and Chief Executive Officer Tim Boyle.

In 2019, China represented approximately 5 percent of total net sales and the Asia-direct business, which includes Japan, China and Korea, represented approximately 15 percent of total net sales of Columbia Sportswear. While stores have begun to reopen in China, approximately half of company-owned and partner stores there remain temporarily closed and stores that are open in China have experienced a material decline in traffic and corresponding sales. There has also been an impact of the COVID-19 outbreak in Japan and Korea. Until normality returns, the company expects a continued unfavourable impact on sales in our Asia-direct business.

The company further added that the COVID-19 outbreak is also impacting its supply chain. While only a low-double-digit percent of our finished goods are manufactured in China, the company’s contract manufacturers source a large portion of raw materials from China. Temporary factory closures and the pace of workers returning to work have impacted contract manufacturers’ ability to source certain raw materials and to produce and fulfil finished goods in a timely manner. The outbreak is also impacting distribution and logistics providers’ ability to operate in the normal course of business and the company expects potential order fulfilment delays to impact future seasons.

Picture:Columbia Sportswear website