Columbia Sportswear 1999 Annual Report Download - page 3

Shareholders and friends,
1999 was a very successful year for Columbia Sportswear. We grew revenues during 1999 to $471 million, up 10% over 1998
revenues of $427 million. Operating income also rose during 1999 to $60 million, up 8% over 1998 operating income of
$56 million. We achieved this operating income growth despite some very significant additional expenses that we incurred
during the year to improve our operations for future growth.
Coming into 1999, the implementation of the newest phase of our U.S. distribution center and company-wide information
systems were primary focal points for the Company. I am pleased to say that while implementing these operations was no easy
task, we are already experiencing the benefits of this investment. Though the substantial increases in depreciation expense
associated with these projects had a dampening effect on earnings growth for the year, we believe that these investments were
critical to position the Company to seize the growth opportunities we see over the next several years.
Additional key objectives during the year included further developing the international business, especially in Europe, as well
as continuing to diversify our product offerings by focusing on growing our sportswear and footwear categories. I’m pleased
to report significant progress on both objectives. On the European front, we were able to grow European direct revenues for
1999 to $41 million, a 52% increase over 1998 European revenues of $27 million. Additionally, with the continued growth in
management infrastructure in Europe, the level of customer penetration throughout Europe has positioned us for further
expansion in all European markets.
Sportswear and footwear also performed well during 1999. With sportswear revenues increasing a solid 25%, and footwear
growing impressively with an increase of 39% during the year, the Columbia head-to-toe merchandising strategy is working
well, and today the Columbia brand is stronger than ever. As a key driver of these successes, the Columbia concept shop, or
store-in-store, merchandising strategy has helped immensely in raising the awareness of the Columbia brand with consumers
while attractively displaying our products in retail stores. As you will learn later in this report there are plenty of opportunities
to expand this program.
An additional noteworthy initiative that was undertaken during 1999 was the Company’s move into the licensing arena. Early
in 1999 we entered into our first agreement in which we will license the Columbia name for the production and marketing of
active outdoor socks. The first offering of Columbia socks will be available at retail for the Fall 2000 season and we anticipate
that over time this category will be a meaningful addition to the overall business. We have since signed two additional license
agreements, one for adventure travel bags and packs, and one for small personal leather goods. We look forward to the con-
tributions each of these licenses will provide to the business in the future.
Moving forward, we remain committed to the four basic strategies we have established for growing the Company. Specifically,
we will focus on enhancing the retail productivity of our customers, leveraging the Columbia brand in international markets,
further developing our existing merchandise categories, and selectively broadening our retail distribution. The balance of this
report is devoted to more fully elaborating on each of these growth strategies and how we see them fitting together to help
drive growth at Columbia Sportswear for the year 2000 and beyond.
Thank you for your continued support. I look forward to updating you on Columbia Sportswear’s progress during the year
2000 in next year’s report.
Sincerely,
Timothy P. Boyle
President and Chief Executive Officer
Columbia Sportswear Company