Columbia outlines impacts and potential impacts of coronavirus
28/02/2020
In an update on how the coronavirus has impacted their business, Columbia Sportswear said there will be near-term effects but that China remains one of the companies largest long-term geographic opportunities.
Chairman, president and CEO Tim Boyle credited the company’s fortress balance sheet, which includes no long-term debt, and diversified global business model will enable them to overcome the current challenges.
According to the company, last year China represented around 5% of total net sales; the Asia-direct business (Japan, China and Korea), represented around 15%. Stores have begun to reopen in China, though about half of owned and partner stores there remain temporarily closed. Those that have reopened are experiencing a drop in traffic and sales, and stores in Japan and Korea have experienced losses as well.
As with many other companies, Columbia said, the outbreak is impacting their supply chain. Although only a low-double-digit percent of finished goods are made in China, the brand’s contract manufacturers source a large portion of raw materials from the company. Factory closures and the slow return of workers has affected their ability to source some raw materials, which prevents the timely production of finished goods. This and other supply chain impacts will likely affect the company’s ability to meet consumer demand.
However, as the company has already received substantially all of its Spring 2020 product, potential order fulfillment delays are expected to impact future seasons.
Mr Boyle began the statement by saying the company’s number one priority is the health and safety of employees and partners. “Thankfully, we have no reported incidents of our employees contracting the virus to date,” he said, “and many of them are working remotely from home to help maintain business operations.”
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