Despite a decline in sales, REI financial report glowing

REI today declared a $38.7 million patronage refund to its active members on 2002 sales of $735 million. REI also announced that, based on the 2002 results, its corporate giving commitment will increase by 80 percent to $1.8 million, the largest amount in company history.

For 2002, the company’s operating income increased from $38.5 million to $50.1 million, and net income more than doubled from $7.5 million to $16.0 million. The increase in net income is attributed to a companywide commitment to focusing on REI’s core business practices, along with better-than-expected new and relocated store performance (Boulder, Colo., for example), as well as savvy financial management (helps to have a former banking executive as COO.)

While the company’s income statement shows a decline in total sales from 2001’s $740 million to $735 million in 2002, the statement is not entirely accurate. In 2001, sales and income from subsidiary companies subsequently sold in 2001 were included in previous years’ statements. REI’s actual sales growth, from 2001 to 2002 if you remove the sales of the subsidiaries, was a modest, but still healthy 3 percent.

Comp store growth for 2002 was about 1 percent. Direct Sales posted an overall gain of 2.5 percent, led by double digit growth at REI.com, the company’s online direct sales channel. REI’s Direct Sales division includes REI.com, REI-OUTLET.com, and catalog and phone sales.

In 2002, REI opened new retail stores in Santa Rosa and Roseville, Calif., and Tukwila and Tacoma, Wash. The company also relocated a Denver area retail store to Boulder, Colo. In 2003, REI has planned for the opening of seven new stores and the relocation of its Houston store. The company presently operates 63 retail stores in 24 states, two online stores, and an adventure travel company, REI Adventures.