REI Posts Sales for 2006

Outdoor retailer Recreational Equipment, Inc. (REI), the nation’s largest consumer cooperative, today announced that $58 million will be distributed to its active members through the annual patronage refund based on the co-op’s 2006 sales of $1.18 billion. These record financials mark the second consecutive year where sales rose more than 15 percent.

While anyone may shop at REI, only members share in the co-op’s profits. This week, 3.1 million active REI members will receive their patronage refunds calculated at 10 percent of their eligible 2006 purchases.

Based on 2006 results, the outdoor retailer will dedicate $3.6 million through its grants program in support of conservation and recreational access around the country in the coming year.

“The financial health of REI has never been stronger and we are pleased to share our success with our members, communities and employees,” said Brad Johnson, REI’s chief financial officer. “We are also taking steps to reinvest in our infrastructure to improve our operations, introducing exciting new products in response to marketplace opportunities, and looking at additional ways to better serve our members and thank them for their involvement in the cooperative.”

For the year, REI’s operating income increased 22.8 percent from $86 million to $105.5 million, and net income increased from $32.7 million to $40.3 million, or 23 percent. REI’s comp store sales remained high in 2006 at 9.5 percent, marking two consecutive years of 9.5 percent or higher. The company’s direct sales channel, which includes online and catalog sales, gained 19 percent.

Supporting REI’s sales growth is the addition of more than 551,000 members joining the cooperative, or a 10 percent increase. The company also opened seven new stores — Santa Monica, Calif., Mountain View, Calif., Chula Vista, Calif., Maple Grove, Minn., Greensboro, N.C., Pineville, N.C., and Austin, Texas.

“Contributing to our success in 2006 were our merchandising, marketing and direct teams that worked collaboratively to bring high quality product to our members and customers,” said Brian Unmacht, senior vice president, Sales, Store Development and Logistics for REI. “The success of our new stores and comp stores was the direct result of our dedicated store staff who offer great customer service through expert advice to help people enjoy the outdoors.”

Being financially sound has enabled REI to invest in the company’s future growth, increase its support for the communities where it does business, and take steps to reduce its environmental impact. Actions include breaking ground on a new east region distribution center in Bedford, Penn., and announcing plans to construct a prototype store in Boulder, Colo. that will embody the values that make REI unique – high quality gear and apparel, community involvement, environmental stewardship and a commitment to serve as a gateway to the outdoors. Additionally, the company launched REI Outdoor School, classes and one-day guided outings that teach the basics of hiking, cycling, kayaking and more, in 23 stores in five cities.

In 2006, REI’s involvement and positive impact in its local communities reached new heights. For example, 169,015 individuals volunteered in REI-supported environmental stewardship projects, equating to more than 900,000 hours of caring for outdoor recreation areas. The company also partnered with VolunteerMatch to help REI employees, members and customers connect to volunteer opportunities within their communities.

In the area of environmental stewardship, REI purchased renewable energy for 20 stores and its Pittsburgh store earned a Leadership in Energy and Environmental Design for Commercial Interiors (LEED-CI) Silver® rating from the United States Green Building Council. The company also announced that all REI Adventures trips beginning in 2007 would be carbon neutral at no additional cost to customers. REI Adventures was the first U.S.-based adventure travel company to offer carbon-neutral travel on this scale.

For 10 consecutive years, REI has been recognized by FORTUNE magazine as one of “100 Best Companies to Work for in America.” In 2007 the company ranked 27th overall and first among companies that encourage employees to balance work and personal lives. On the heels of being named to FORTUNE’s “100 Best” list, the Great Places to Work® Institute recognized REI as the 2007 winner in its “ Workplace Pride” category. Information on employment opportunities can be found online at www.rei.com/jobs.

REI is an outdoor retail co-op dedicated to inspiring, educating and outfitting its members and the community for a lifetime of outdoor adventure. Founded in 1938 by a group of Pacific Northwest mountaineers seeking quality equipment, REI operates retail stores nationwide, two online stores – REI.com and REI-OUTLET.com – and an adventure travel company, REI Adventures. REI offers products from all of the top brands for camping, climbing, cycling, hiking, outdoor fitness, paddling, snowsports and travel, including its own line of award-winning gear and apparel. As an active supporter of the communities in which it does business, REI is committed to promoting environmental stewardship and increasing access to outdoor recreation through education, volunteerism, gear donations and financial contributions.

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EDITOR’S NOTE: REI’s condensed consolidated balance sheets and statements of income for 2006 and 2005 follow this press release.