Columbia Net Sales First Break $2 Billion Mark

The US outdoor apparel giant Columbia recently released its fourth quarter and annual performance bulletin in 2014. Its net sales for the first time exceeded the $2 billion mark.

The main points are as follows:

Net sales for the year amounted to $2 billion 100 million, an increase of 25% over the same period last year, without considering the impact of merger and acquisition, and the endogenous growth rate was 12%.

Annual operating profit was 198 million 800 thousand US dollars, up 51% over the same period last year.

The operating profit margin was 9.5%, an increase of 1.7 percentage points compared with 2013.

Net profit for the year was $137 million 200 thousand, an increase of 45% over the same period last year.

Earnings per share were US $1.94.

Net sales in the fourth quarter amounted to US $677 million, up 27% over the same period last year.

Operating profit increased 57% to 82 million 100 thousand US dollars over the same period, and net profit increased 51% to 55 million 600 thousand US dollars over the same period last year.

According to product category:

Clothing, accessories and equipment contributed about 80% of the group's sales, an increase of 22% over the same period.

Outstanding performance, net sales accounted for about 20% of the group, an increase of 37% over the same period.

According to brand:

Columbia brand is still the main force of the group, contributing 83% of the revenue to the group.

Net sales were $1 billion 750 million, an increase of 24% over the same period.

The group's second largest brand is Sorel (Bing Xiong), the main snowshoe, with net sales of US $166 million 200 thousand, up 29% over the same period last year.

Last year, the group's newly acquired Yoga brand prAna performed well, with a net sales of $53 million 700 thousand.

However, sales of brand Mountain Hardwear, which accounted for 5.7% of the group's sales, fell 10% to $119 million 800 thousand over the same period last year.

By Region:

The world's largest

The United States contributed 57% of its sales, benefiting from the group's acquisition of prAna, and US sales increased by 23% to about $1 billion 200 million over the same period last year.

Canadian net sales increased 28% to $151 million over the same period last year.

Canada could have done better, but negative exchange rate changes had a negative impact on Canadian sales by about 8%.

And the Asia Pacific region grew most strongly, with sales totaling 492 million US dollars, up 39% over the same period last year.

The joint venture in China contributed $161 million in revenue, and the two emerging markets benefited a lot.

The EMEA region (Europe, the Middle East and Africa) showed signs of weakness.

Even with the benefit of the favorable exchange rate, sales increased by only 8% to $259 million.

Outlook 2015

In 2014, sales growth exceeded expectations. On this high base, group sales in 2015 are expected to achieve single digit growth.

Operating profit margin is expected to increase by 0.2 percentage points to 9.7%.

Earnings per share are expected to grow 11% to 2.10-2.20 US dollars per share.

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In early 2014, Prada group planned to set up 10-15 stores in China and 80 new stores worldwide.

However, after the mid term financial report released last year, Prada group reduced the number of stores worldwide to 65.

Donatello Galli, the group's chief financial officer, also said it would cut costs and adjust the product structure. The target of adding 50 new stores in 2015 will be canceled or delayed, thereby enhancing the gross profit margin of the company.

Among the brands under the Prada group, Prada, the main brand that accounts for over 80% of the group's revenue, has become the worst hit area that has dragged down the performance of the 2014 financial year.

In the case of MIUMIU growth of 4% and Church 's growth of 14.8%, Prada fell 1.7%.

"For some brands, there is saturation and brand fatigue in specific markets such as Asia," Scilla HuangSun, head of Julius Baer luxury brand fund, told the media.

Some commentators believe that Prada is the victim of brand fatigue.

After Gucci's performance has declined year by year, Prada has become another brilliant luxury brand.

The Prada group said in its financial report that the Prada brand's performance in the different regional markets is quite different. At the same time, the decline in Asia Pacific performance is attributable to the adverse effects of political factors in China's Hongkong and Macao markets in the second half of last year, while the mainland market affected the group's sales in January due to the Chinese New Year.

The industry believes that the decline and expansion of the brand is the cause of the decline in brand value.

Over the past year, Prada has been one of the most popular luxury brands.

After passing the bonus period of Asian market, the excessive expansion of the old luxury goods has made the brand exposure too high, and the luxury image of the brand has been greatly reduced in the minds of consumers.

At the same time, in the process of self-help, many luxury brands still choose to raise prices to stabilize and enhance brand positioning.

For example, Gucci has cut down many low price products, but over the past 4-5 years, the price of products has increased by more than 40%.

The emergence of low-priced luxury brands and fashion brands further diverts young customers.

The industry generally believes that the old luxury goods are facing challenges of remodeling and innovation, while Prada is inferior to LV and Hermes in terms of product innovation and brand image maintenance.

LV has launched Nicolas Ghesquiere after the departure of Marc Jacobs, a creative designer. Hermes is committed to creating the image of high-end luxury goods, and Prada has been short of change and fashion in recent years.

Industry analysts and investors say that lack of creativity affects brand reputation, which will ultimately hurt investors' interest and growth prospects.