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The latest round of earnings reports again showcases just how high this industry is riding amid Covid-driven demand for apparel and gear. As we wrote in the first part of our Q2 recap, publicly traded companies in this space are notching impressive revenue and income gains.
But while public corporations with one or more outdoor brands in their portfolios continue to crush it, severe headwinds are building—namely, supply chain issues that could stunt the movement of goods in the third and fourth quarters.
Several CEOs addressed this on their earnings calls with analysts, though they were quick to assure the investment community that they are managing the disruptions. Indeed, these companies appear to have the scale needed to navigate such obstacles and might have an advantage over smaller businesses when it comes to sourcing and shipping.
One benefit for many publicly traded companies is their strong balance sheets heading into what’s shaping up to be an end-of-year supply-and-demand imbalance. Take Black Diamond, for example. The brand’s sales are booming, and BD and its parent company, Clarus Corp., are working to keep that momentum going.
“We continue to work with our supply chain partners to dynamically manage our inventory levels to seek to meet demand,” Black Diamond/Clarus CFO Aaron Kuehne said on the company’s recent earnings call. “We have and will continue to use our strong balance sheet to proactively manage our supply chain and, most importantly, be better positioned to deliver product for our retail partners and consumers. We believe having the option to be flexible in how we manage our balance sheet and cash flows for the remainder of the year is the most prudent in continued value creation.”
Other companies, like cooler, drinkware, and accessories brand YETI are likewise focused on controlling what they can against the backdrop of material shortages, shipping delays, and increased transportation costs.
“We remain diligent and thoughtful as we contain and mitigate global supply chain volatility and cost pressures, with a focus on what we directly control—driving brand passion, consideration, and demand,” said Matt Reintjes, YETI’s president and CEO, on the brand’s earnings call.
That point—controlling what you can—was echoed by Columbia Sportswear Co.’s president and CEO, Tim Boyle, who added that supply chain is just one of the problems brands are working to address in the new business cycle.
“Industrywide supply chain disruptions are causing production and delivery delays as well as shipping cost pressures,” Boyle said. “Ongoing periodic lockdowns and temporary store closures also impact DTC, wholesale and brick and mortar store performance in several international markets.”
Other businesses had similar takes when reviewing their Q2 performances. Still others, especially smaller manufacturers—many of them privately held—are touting their Made in the USA abilities as a distinct advantage. No need to worry about sourcing raw material overseas or waiting for an open cargo box on a container ship, they argue.
What does all this mean for Q3 and even Q4? Will domestic manufacturers pull ahead of foreign producers in the eyes of retailers looking to keep their shelves stocked as the holidays approach? Stay tuned. In the coming weeks and months, we will address these supply-and-demand issues in depth.
In the meantime, below is the second installment of our Q2 earnings recap. Part one includes updates from VF Corp., Wolverine Worldwide, Emerald, Thule Group, and more.
Adidas AG (OTC: ADDYY): +51.5%
The big news out of Adidas is that the brand is unloading Reebok for $2.5 billion to Authentic Brands Group, but the company’s second-quarter performance provided some equally eye-raising storylines. The German-based athletic and footwear giant reported sales of €5.1 billion (US$6 billion), up 51.5 percent from Q2 2020, and net income of €387 (US$452.8 million), up from a loss of €243 million (US$285.2 million) a year ago. Adidas CEO Kasper Rorsted said “sales in our strategic growth markets EMEA and North America almost doubled. Revenues in our key categories football and outdoor even grew at triple-digit rates.” More details on Adidas’ website.
ANTA Sports Products Ltd. (OTC: ANPDY): +55.5%
ANTA, the owner of Amer Sports and its portfolio of outdoor and snow sports brands—Suunto, Salomon, Arc’teryx, Armada Skis, and Atomic—reported sales for the first half of the year of RMB22.8 billion (US$3.5 billion), a 55.5 percent spike from the first half of 2020. Profit more than doubled to RMB4.1 billion (US$630 million). Said Ding Shizhong, ANTA’s chairman, of the company’s outdoor and snow sports portfolio: “Amer Sports continued to implement its long-term strategies to develop its footwear and apparel business, DTC model, and China market.” More details on ANTA’s website.
Callaway Golf Co. (NYSE: ELY): +207.7%
The parent company of European-based outdoor brand Jack Wolfskin (which now has a growing presence in North America), reported sales for the second quarter of $914 million, a 207.7 percent jump from the year-ago quarter. Net income of $92 million was up from a loss of $168 million in 2020. President and CEO Chip Brewer said this of the company’s outdoor asset: “The team at Jack Wolfskin has done a fantastic job of revitalizing this business and putting us in a strong position to grow on the top and bottom line as Covid-19 restrictions abate in the brand’s key markets of Europe and China and as the brand grows and strengthens appeal.” More details on Callaway’s website.
Camping World Holdings Inc. (NYSE: CWH): +28.3%
RV dealer Camping World reported sales for the second quarter of $2.1 billion, which marked a 28.3 percent increase from 2020. Net income grew 88 percent to $109.2 million. As a result of the strong quarter, the company raised its 2021 fiscal year guidance. More details on Camping World’s website.
Canada Goose Holdings Inc. (NYSE: GOOS): +115.7%
Apparel and footwear brand Canada Goose reported revenue of C$56.3 million (US$43.9 million) for the first quarter of fiscal 2022, a 115.7 percent spike from a year ago, though the company also reported a loss of C$56.7 million (US$44.2 million), compared with a loss of C$50.1 million (US$39.1 million) in the first quarter of fiscal 2021. Said Dani Reiss, president and CEO: “Our digital business continued at a rapid pace of growth globally, alongside improving retail trends. With strong momentum in a less disrupted operating environment, and an exciting product pipeline—including our growing apparel business and footwear launch later this fall—we are well-positioned for fiscal 2022.” More details on Canada Goose’s website.
Canadian Tire Corp. (OTC: CDNAF): +23.9%
The parent company of Helly Hansen reported revenue growth of 23.9 percent to C$3.9 billion (US$3.1 billion). Meanwhile, Helly Hansen’s external revenue was C$100.6 million (US$79.7 million), up 45.9 percent from the same period a year ago—though the company didn’t elaborate specifically on Helly Hansen’s performance during the quarter aside from mentioning that it was another period of sales growth. The brand is still in need of a new CEO after the April announcement that Paul Stoneham was stepping down. More details on Canadian Tire’s website.
Clarus Corp. (Nasdaq: CLAR): +144.2%
Clarus Corp.—the parent of Black Diamond Equipment, Rhino-Rack, and Pieps—reported revenue of $73.3 million, a record for the company and a 144.2 percent increase from Q2 2020. Net income of $1.8 million was up from a loss of $2.7 million a year ago. Black Diamond sales were up 122 percent to $44.9 million, “driven by growth across all geographies, sales channels, and categories, given the continued recovery within the outdoor space,” noted CFO Aaron Kuehne. During the quarter the company announced the acquisition of Rhino-Rack. In July it opened a store in Boulder, Colo. And earlier this week, Black Diamond added some new talent to its ski category team. More details on Clarus’ website.
Columbia Sportswear Co. (Nasdaq: COLM): +78.9%
Columbia Sportswear Co.—the parent company of Columbia, Mountain Hardwear, prAna, and SOREL—reported sales for the second quarter of $566.4 million, up 78.9 percent from the year-ago quarter. Columbia’s profit of $40.7 million was up significantly from a loss of $50.7 million last year. All brands posted impressive numbers in the period. Mountain Hardwear sales improved 97 percent to $19.3 million; Columbia brand’s sales grew 79 percent to $484.3 million; SOREL’s sales jumped 71 percent to $23.1 million; and prAna’s sales increased 43 percent to $39.7 million. Said Tim Boyle, Columbia’s chairman, president, and CEO: “We eclipsed pre-pandemic first half 2019 financial results, marking an important milestone in our recovery. It is clear that our brand portfolio is resonating with consumers and we are well-positioned to benefit from current consumer and outdoor trends.” More details on Columbia’s website.
Dick’s Sporting Goods Inc. (NYSE: DKS): +20.7%
Dick’s Sporting Goods raised its 2021 outlook after posting Q2 revenue of $3.3 billion, a 20.7 percent increase from the year-ago period. Net income of $495.5 million marked a 79 jump from last year. Said Lauren Hobart, president and CEO: “Based on the strength of our business and our expectations for continued strong consumer demand, we are pleased to increase our full-year sales and earnings outlook for the second time this year.” The company will open its two planned outdoor-focused retail stores called Public Lands in October—one each in Pittsburgh, Pa., and Columbus, Ohio. More details on Dick’s Sporting Goods’ website.
GoPro (Nasdaq: GPRO): +85.9%
GoPro reported revenue grew 85.9 percent to $249.6 million in the second quarter, while net income of $17 million was up from a loss of $51 million a year ago. The company raised its outlook for the remainder of the year and continued touting its business model shift from wholesale to direct. “In Q2, strong execution further revealed the benefits of the strategic shifts we’ve made in our business to a more direct-to-consumer, subscription-centric model,” said Brian McGee, GoPro’s CFO and COO. “We believe the changes to our business will continue to result in a more predictable and profitable GoPro.” More details on GoPro’s website.
Johnson Outdoors (Nasdaq: JOUT): +54.3%
Johnson Outdoors—the parent company of two outdoor brands (Eureka and Jetboil) and two watercraft brands (Old Town and Ocean Kayak)—reported fiscal third-quarter revenue of $213.6 million, up 54.3 percent from the same quarter in fiscal 2020. Net income of $28.8 million was more than double its profit of $12.9 million a year ago. Said Helen Johnson-Leipold, chairman and CEO: “Strong demand delivered another quarter of unprecedented results. Momentum in fishing, camping, and watercraft recreation continued,” all of which benefited from the lifting of pandemic-related travel restrictions. More details on Johnson Outdoors’ website.
Samsonite International SA (OTC: SMSEY): -3.2%
The parent company of Gregory Mountain Products and High Sierra continued to benefit from increased travel around the world, although revenues remain well shy of pre-pandemic levels. Samsonite’s revenue for the first six months (the company didn’t break out Q2) was $799.5 million, down 3.2 percent from last year (and down 54.6 percent from the same period of 2019. Gregory has been one of the bright spots in Samsonite’s portfolio; the brand’s net sales for 1H 2021 increased 33.6 percent year-over-year. Meanwhile, High Sierra’s sales dipped 31.7 percent in the period. More details on Samsonite’s website.
Yeti Holdings Inc. (NYSE: YETI): +44.8%
The cooler, drinkware, and outdoor accessory brand reported sales grew 44.8 percent to $357.7 million and net income jumped 67.9 percent to $56.2 million in the second quarter. Said Matt Reintjes, president and CEO: “Demand and passion for the YETI brand remained robust during the second quarter. [Sales were] driven by strong direct-to-consumer performance throughout the quarter including Mother’s Day and Father’s Day, significant year-over-year recoveries in channels such as wholesale that experienced outsized impacts during the pandemic, and a more than three-fold gain in our international business.” More details on YETI’s website.