Company Analysis AssignmentPRT 503

Addie Kimball

Columbia Sportswear Company Analysis

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Table of Contents

Executive Summary.........................................................................................................................3Company Profile..............................................................................................................................4

History.................................................................................................................................4Mission Statement...............................................................................................................5Objectives............................................................................................................................5

Economic Issues...............................................................................................................................6Revenue and Expenditure Summary................................................................................................7Assets and Liabilities Summary.......................................................................................................8Financial Analysis and Ratios..........................................................................................................9Future Trends.................................................................................................................................12Addendum/Appendix.....................................................................................................................13

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Executive Summary

Columbia Sportswear has been successful since 1938 because they are constantly being innovative and creating new technologies for their clothing and apparel lines. Using these new technologies helps the company stay up-to-date and successful against their competition year after year. Even though Columbia Sportswear is well known for their heavy winter clothing they are creating more clothing to keep people cooler in the warmer weather.

Columbia Sportswear has stayed fiscally strong for the small company they are compared to companies like Nike. Because Columbia Sportswear is a smaller company they are not able to produce a large profit like Nike and be able to expand the company with more stores and outlets without going into a deficit. Not being able to grow as fast as other big name companies is a disadvantage for Columbia Sportswear.

The winters of 2011 and 2012 were so mild that the company lost some of their profit due to the lack of consumers needing to purchase heavier winter wear. Columbia has been producing more clothing to be used to keep people cool in warmer climates and during warmer months, and in order to increase some of their sales during the slower months even though they are considered an all season company. Columbia Sportswear continues to produce new technologies for their merchandise which helps keep the company fresh and with the trends which in turn allows customers to become repeat and loyal customers. Each year they have several new technologies to keep you drier, warmer, cooler, insect free, etc.

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Company Profile

History:

Columbia Sportswear is a family business gone global. Chairman Gert Boyle's parents — German nationals who fled Nazi Germany in 1938 — purchased a small hat company upon their arrival in Portland and named it Columbia Hat Company, after the river that inspired their new home. This humble beginning was of huge significance to the family, marking new found freedom and a fresh start. Her husband later took over, and after he died Gert ran the show, going from housewife to executive overnight. Today, her son Tim Boyle is the longtime president and CEO. The family — like the business — has experienced its ups and downs, but enjoying the outdoors together has always been an inseparable part of the program. (Columbia Sportswear)

Columbia is made up of real people who are as passionate about the outdoors as you are. And, while their products are available around the world, they’re based in the great Pacific Northwest, where majestic forests frame volcanic mountains and a rugged coast. This is where the family likes to hike, ride, fish, hunt, climb, camp, golf, paddle, run, and just enjoy fresh air with friends. (Columbia Sportswear)

• 1938- Columbia Hat Company established• 1960- Columbia Hat Company becomes Columbia Sportswear Company• 1975- Company goes international; first to introduce Gore-Tex Parka• 1984- Youth line introduced• 1985- Sportswear line introduced• 1991- Omni-Tech: Columbia’s proprietary waterproof-breathable technology developed• 1993- Footwear line introduced• 1997-Omni-Dry: high performance moisture management technology developed• 1998- Company goes public• 2000- Columbia acquires Sorel• 2006- Columbia acquires Montrail and Pacific Trail Products; available in 72 countries• 2008- Omni-Shade: Columbia’s proprietary sun protection technology developed• 2009: Omni-Shield: Advanced Repellancy, Omni-Shield Blood ‘N Guts, Omni-Freeze

Advanced Cooling technologies developed• 2010- Omni-Heat Thermal Reflective, Omni-Heat Thermal Electric technologies

developed• 2011- Fluidpost & Fluidframe, Insect Blocker, Omni-Dry Ultrabreathable Waterproof,

OutDry technologies developed; Magazine’s Gear of the Year award• 2012- Omni-Wick EVAP, Omni-Freeze ICE, Omni-Wind BLOCK technologies

developed; Apparel Magazine names Columbia as a top innovator• 2013- Omni-Freeze ZERO technology developed

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Mission Statement and Objectives

Mission Statement:

The mission of Columbia Sportswear is “to design and deliver authentic, outdoor, high-value products for active consumers of all ages.”

Objectives:• Value ethical and fair treatment of people and practices. Columbia Sportswear has

several projects through the company. One example is HERproject which focuses on worker wellbeing and works to change women’s lives through workplace programs that provide access to women’s health education.

• Committed to assuring that the partners with whom we do business share these values• Reduce the impact on the environment from our facilities and operations

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Economic Issues

Columbia Sportswear has struggled in recent years to quickly grow financially stronger. They are far behind companies such as Nike who brings in $25 billion a year whereas Columbia Sportswear only brings in about $2 million a year (Baker, 2013, p.1). Each year the company brings in more money but they still need to grow faster than they have in recent years. Due to 2012’s mild winter, Columbia Sportswear did not have huge sales in their winter inventory which set them back financially (Baker, 2013, p.1). Columbia Sportswear does benefit from being an all season company therefore allowing for consistent sales all year round. However, with mainly being a company for heavier wear they are turning towards creating more clothing to be used in warmer climates.

In the future, competition from other companies such as the North Face, Under Armour, and Nike will make it more difficult for Columbia Sportswear to be successful. The success of the company in previous years was largely due to the lack of competition and the ability to produce such a high level of profitability (Admin, 2013). The competition from companies like Under Armour who is producing similar merchandise as Columbia Sportswear, and North Face who produces heavy winter clothing as well, is providing a challenge for Columbia Sportswear to be successful over those other companies. These issues will cause economic issues in the future for Columbia Sportswear.

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Revenue and Expenditures Summary

Columbia Sportswear has been fiscally responsible and stable throughout the history of the company. Looking at the graphs below show that there is a steady increase in the revenue of the company with the exception of 2012 because of the warmer winter they experienced a drop in sales. Note in the quarterly graph that most of the sales are made in the Fall and Winter due to colder weather (which Columbia Sportswear is known for making winter clothing).

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Assets and Liabilities Summary

These graphs show what Columbia Sportswear owns (assets) and owes (liabilities). Over the past four years the liabilities has stayed steady between $215,000,000 and $315,000,000 with an increase for a couple of years and then a decrease again in 2012. The assets have increased steadily over the last four years with no decrease between the years. The graphs show how big of a difference there is between their assets and liabilities.

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Financial Analysis and Ratios

Current Ratios

The current ratio is the measure of short-term liquidity. In 2010 Columbia Sports wear had $3.94 in current assets for every $1.00 in current liabilities. The 2012 current ratio showed an improvement since 2010 since they were reported covering their liabilities 4.45 times over.

all dollar amounts are in thousands2012Current Assets / Current Liabilities = Current Ratio$1,122,603 / $252,059 = 4.45 times

2011 Current Assets / Current Liabilities = Current Ratio$1,049,526 / $267,002 = 3.93 times

2010Current Assets / Current Liabilities = Current Ratio$990,880 / $251,626 = 3.94 times

Total Debt Ratio

The total Debt Ratio for Columbia Sportswear confirms that over a period of three years their debt has decreased in relation to their assets. In 2010 Columbia Sportswear had $0.23 in debt for every $1.00 in assets. In 2012 it decreased to $0.20 in debt for every $1.00 in assets.

all dollar amounts are in thousands2012Total Assets-Total Equity / Total Assets = Total Debt Ratio$1,458,842 - $1,166,167 / $1,458,842 = 0.2 times

2011Total Assets-Total Equity / Total Assets = Total Debt Ratio$1,382,542 - $1,074,545 / $1,382,542 = 0.22 times

2010 Total Assets-Total Equity / Total Assets = Total Debt Ratio $1,294,754 - $1,001,974 / $1,294,754= 0.23 times

Receivable Turnover and Days’ Sales in Receivables

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These ratios reflect that Columbia Sportswear took about 85 days to collect on credit sales from 2010. The average was about the same in 2012 still taking about 85 days to collect on credit sales.

all dollar amounts are in thousands2012Sales / Accounts Receivable = Receivable Turnover365 / Receivable Turnover = Days’ Sales in Receivables$1,669,563 / $385,253 = 4.33 times365 / 4.33 times = 85 days

2011 Sales / Accounts Receivable = Receivable Turnover365 / Receivable Turnover = Days’ Sales in Receivables$1,693,985 / $404,023 = 4.19 times365 / 4.19 times = 88 days

2010Sales / Accounts Receivable = Receivable Turnover365 / Receivable Turnover = Days’ Sales in Receivables$1,483,524 / $345,272 = 4.30 times365 / 4.30 times = 85 days

*all Days’ Sales in Receivables are rounded to the next day*

Profit Margin

The following equations show the Profit Margin for Columbia Sportswear for 2010, 2011, and 2012. A 5% profit margin in 2010 shows that Columbia Sportswear was making a $0.05 profit for every $1.00 in sales. In 2012 the profit margin increased to 6% indicating that Columbia Sportswear was making a $0.06 profit for every $1.00 in sales.

all dollar amounts are in thousands2012Net Income / Sales = Profit Margin$99,859 / $1,669,563 = $0.06

2011Net Income / Sales = Profit Margin$103,479 / $1,693,985 = $0.06

2010 Net Income / Sales = Profit Margin $77,037 / $1,483,524 = $0.05

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Future Trends

Based on the financial information for Columbia Sportswear it would be safe to say that this family based company will continue to grow financially. If they continue to change the way they manufacture clothing to make them more successful and beneficial to the consumers to stay with the trends they will be successful. If there continues to be warmer winters Columbia Sportswear will need to figure out a different way to bring in revenue instead of relying on purchases of heavier winter wear like they have in the past.

Columbia Sportswear currently employees 4,000 people in several locations such as United States, Canada, China, and more (Bloomberg Business Week). The company has room to expand and grow in its business and increase revenue each year. Columbia Sportswear needs to continue with new innovations through the years and continue with a profitable income.

I can see Columbia Sportswear continuing to be successful as they have been since 1938. The company continues to increase revenue each year and will continue to do so as long as they keep up with the trends. Columbia Sportswear can also continue to grow in its company size with building more stores and outlets which in turn will also help increase revenue.

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Addendum/Appendix

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References

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Admin (2013, June 19). Columbia Sportswear: you can buy the clothes but not the stock. Reshoring: Bringing News Back. Retrieved from http://reshoringmfg.com/columbia-sportswear-you-can-buy-the-clothes-but-not-the-stock-seeking-alpha/

Baker, L. (2013). Tim Boyle charts the future as Columbia Sportswear turns 75. Oregon Business. Retrieved November 18, 2013, from http://www.oregonbusiness.com/articles/122-february-2013/9088-tim-boyle-profile-columbia-sportswear

http://www.columbia.com/history/About_Us_History,default,pg.html

(2013, November 19) Company overview of Columbia Sportswear company. Bloomberg Businessweek. Retrieved from http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=384300

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