Columbia Sportswear, a global leader in outdoor and lifestyle products offering a variety of items such as apparel, footwear, accessories, and equipment, anticipates finishing a round of layoffs by the end of the first quarter due to economic and geopolitical uncertainty.
The company's net sales dropped by 9% compared to the fourth quarter of 2022, and Columbia's operating income also fell by 27% compared to 2022.
Reduction in Columbia's Corporate Workforce by the End of the First Quarter
The company currently employs 9,450 people in its workforce, with 3,140 headquartered in Washington County, as reported by The Oregonian, Columbia.
According to brand spokesperson Mary Ellen Glynn, 3% to 5% of Columbia's corporate workforce would be laid off in March. The impending layoff was revealed during an investors' call on Thursday, along with the company's 2023 financial report, where CEO and president Tim Boyle explained that the overall headcount and personnel expenses "have outpaced the growth of our business."
A Negative Trend Persisting in 2024
As per the announcement, Columbia Sportswear experienced a mere 1% growth in 2023's net sales, with overall operating income declining by 21% and a potential additional drop of 2% to 4% in net sales, which is a negative trend that Columbia's leaders anticipate to persist in 2024.
In the fourth quarter, Columbia's sales were $1.06 billion, marking a 9% decrease compared to the previous year. Boyle attributed the layoffs to a disappointing earnings report, expecting lower sales and profits to persist through 2024.
Columbia Sportswear's "Multi-Year Profit Improvement Program"
The company plans to initiate a "multi-year profit improvement program" that might lead to annual savings of up to $150 million by 2026.
Boyle stated that the layoffs will be finished by the end of March, ensuring the process will be conducted with respect and thoughtfulness in line with the company's core values while taking required actions for sustainable growth. Columbia aims to reduce costs by $75-90 million through employee layoffs and operational savings.
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Columbia reported sales of $1.06 billion and earnings per share of $1.55 in the last quarter, falling below analyst expectations of $1.08 billion and $1.95.
Boyle foresees 2024 as a "challenging year," citing cautious retailer orders and ongoing economic and geopolitical uncertainty. Per the statement, Columbia Sportswear aims to maximize sales and enhance product, brand marketing, and marketplace strategies to boost growth in 2025 and beyond.
Other Outdoor Retailers' Challenges
In December, Nike, located nearby, also revealed a $2 billion cost-cutting and restructuring plan involving a reduction in the workforce at its corporate headquarters in Beaverton. The company anticipates up to $450 million in restructuring charges for the quarter ending Feb. 29, mainly due to severance costs.
In late January, outdoor retailer REI announced its intention to lay off over 357 employees nationwide. CEO Eric Artz cited "financial necessity," explaining that the company experienced revenue losses in 2023 and anticipates a challenging 2024.
The announcement was made shortly before REI closed its last Portland location for safety reasons.
