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Tim Boyle, Columbia Sportwear Company Chairman of the Board, CEO & President joins Yahoo Finance Live to discuss how the retail industry is faring amid the pandemic and his outlook for this year.
AKIKO FUJITA: Welcome back to "Yahoo Finance Live." It has been a tough go for many retailers across the board as COVID-19 restrictions dramatically reduce in-store traffic. Columbia Sportswear saw sales drop 4% in the most recent quarter, with earnings off 14%. But the company forecasting a big bounceback projecting 20% growth in sales for this year. And we are seeing the stock up more than a percent today in the session.
Let's bring in the CEO of Columbia Sportswear, Tim Boyle. We've also got Brian Sozzi back in on the conversation. Tim, it's good to talk to you today. Give me a sense of where you are in this bounceback story. Certainly, it sounds like you think a lot of momentum is going to return in the second half of the year.
TIMOTHY BOYLE: Well, you know, our company is comprised on the revenue side from our own direct-to-consumer business, both brick and mortar as well as e-com. But the bulk of the business, and historically, the business has been supported by wholesale sales globally.
So in 2019, we had about 40% of our sales outside the US. And many of our markets are still in turmoil with COVID. But there's a number of markets that are open and quite robust.
So when we look across the landscape, we see great opportunity for the outdoor business specifically. So we make stuff to go skiing and hiking and fishing. And those are the primary products that the company makes.
And you know, during COVID there are only a few things that you've been encouraged to do. One of them is outside activity. And so thank god, we aren't making neckties and sportcoats for work. That's what's supported our business, and that's where we see significant demand from consumers-- to be casual, as well as performance outdoors.
BRIAN SOZZI: That's right, Tim. It's not a good time to be in the necktie business, even though I am wearing a new one right now. But how do you order books look like? What do they look like for spring and fall 2021?
TIMOTHY BOYLE: Well, you remember, the business is an advance-order system for retailers. So we concluded our order books sometime in July, August of 2020, when things were still quite unsettled. And we're in the process of concluding our order book for fall '21. But frankly, we have a lot of orders on hand already.
Formerly, prior to our growth of our own direct-to-consumer business, we would issue bookings reports on a very frequent basis, a couple of times a year. And we understood that that confused investors, because our own retail stores-- obviously, we report the revenue when that sale happens. And people were confused. So we spent a lot of time discussing our order book.
Today we just give very high-level guidance and say, the business is so complex when you include the geographies, the categories, the channels, so we just give guidance at a very high level and as a part of that guidance.
ZACK GUZMAN: And Tim, I mean, as an outdoor sportswear brand you might have expected sales to not be down 4% in Q4. But you guys have quite a bit of cash on hand here, $791.9 million to be exact, by the end of the year.
You seem confident, though. As Akiko was talking about there, you not only approved the cash dividend, but also a $400 million in share buybacks. I guess that sounds very confident. But is there a reason maybe to go that route rather than maybe investing in the supply chain? Talk to me about the decision there around how you're going to be using the cash.
TIMOTHY BOYLE: Well, yeah, we're very fortunate to have such a strong balance sheet. Our board has been, for years, preaching fortress balance sheet. And frankly, when the pandemic hit in March of last year, or February, you know, when other companies were contracting we were able to really stay focused on what it is that we do, and with a high degree of confidence.
So our business is going to continue to invest, not only in supply chain efficiencies-- and remember that we, like everybody else in the footwear and apparel business, utilize subcontract factories throughout Asia and Central America. So that doesn't require investment. But inventory management, order management, efficiencies all through the chain are really important.
And we'll continue to invest there, as well as, you know, consumers now are buying products and learning about products online. So we have to have a very robust and up-to-date system of not only taking orders, but explaining our sometimes quite complex products to consumers. And that's where we'll be making the bulk of our investments over the next several years.
BRIAN SOZZI: And speaking of online, I was on your site this morning. And I sense there's a style shift underway on Columbia Sportswear, maybe repositioning a bit to more streetwear. Take us through that. How has the brand changed over the past year?
TIMOTHY BOYLE: Well, you know, we've always prided ourselves on our innovations and our performance as being points of differentiation. We talk always about there being plenty of apparel and footwear companies globally. Nobody needs another one. You'd better have a point of differentiation if you're going to be good at this and you're going to be recognized.
So we spend a lot of time on the performance aspects of the products. But at the end of the day, many of our consumers are buying the products to walk their dog or to, you know, maybe just hang around in their house casually, be in their backyards, et cetera. So we have to have a point of differentiation, which for us is innovation.
We talk about the insulations we use, the reflective fabrics on the inside, the sun deflector fabrics on the exterior. So we have a lot of complex product characteristics to talk about. But at the end of the day, many of our products are used for everyday use, and they have to be comfortable and look good.
AKIKO FUJITA: Tim, you were very vocal of the previous administration and its China trade policy. You look at the new administration, President Biden has made it pretty clear he doesn't intend to have a drastic difference from the previous administration when it comes to the tariffs on Chinese goods coming in. What kind of headwinds does that create for you as you look to really build on the momentum from the economy opening up, and yet have to really look at the costs that are adding up from the tariffs?
TIMOTHY BOYLE: Well, manufacturing products in Asia and distributing them globally requires an incredibly complex web of sources. So as it relates to merchandise coming into the US-- what you're talking about, these tariffs, which don't exist outside the US-- in other words, products coming from China going to Europe or other countries that don't have those kinds of prohibitive tariffs.
We don't import very much merchandise from China into the US. It's a small percentage. The bulk of our production is spread around Asia, including Vietnam, Bangladesh, Indonesia, and other countries. So we have a quite broad sourcing base. But you know, we have a big business and a big opportunity to sell our products in China.
So additionally, the company's based in Oregon, which is primarily an agricultural part of the country. And frankly, a big market for our products that are grown here in Oregon is China. So we have to have a relationship with an enormously large market like China, which is going to be beneficial for, really, all of our citizens of the United States, as well as the world. And we need to keep China close, in my opinion, to make sure that we work together on a number of projects, not the least of which would be the vaccine and COVID itself.
ZACK GUZMAN: All right. Tim Boyle, Columbia Sportswear Company Chairman of the Board and CEO and President, alongside Yahoo Finance's Brian Sozzi. We appreciate you taking the time here to join us today.