REI Thrives in 2005 with Record Sales

Today, outdoor retailer Recreational Equipment, Inc. (REI) – the nation’s largest consumer cooperative – announced a record member refund of more than $50 million on 2005 annual sales topping $1 billion, a first in the co-op’s 67-year history. In recognition of this milestone, REI will dedicate $1 million to 100 community parks across the country, above and beyond its more than $3 million in grants previously earmarked this year for outdoor recreation and conservation causes.

While anyone may shop at REI, only members share in the co-op’s profits. Next week more than 2.8 million active REI members will begin receiving their annual dividend packets, including 10 percent patronage refunds based on their eligible 2005 purchases.

“REI had an amazing 2005, said Sally Jewell, who assumed the REI president and CEO post in March of last year. “As a co-op we share our success with our members, employees and the communities in which we do business. I can’t think of a better way to celebrate our success than by dedicating $1 million to support parks in every community with which REI has a presence across the country.”

“These community parks serve as natural playgrounds and tranquil escapes for our members, close to where they live, work and play. The importance of these parks is immeasurable in getting people outdoors – as recreation areas, as community gathering spaces and often, as our children’s first introduction to the natural world,” added Jewell. “Last year REI supported environmental stewardship projects with 572,000 volunteer hours of sweat equity. By extending an additional $1 million for parks around the country, we’ll continue to help ensure that community parks remain a vital and valued resource.”

The donations have been driven by REI’s strong 2005 financial results. For the year, the company’s operating income increased from $72 million to $86 million, and net income increased by 29.3 percent – from $25.3 million to $32.7 million. In addition, REI’s sales increased by 15 percent, from 2004’s $887 million to more than $1 billion in 2005. REI comp store growth was also up sharply from 5.3 percent in 2004 to 9.6 percent in 2005 – approximately three times the national retail average; and direct sales posted an overall gain of 20.7 percent, led by online growth from REI.com and REI-OUTLET.com.

Also supporting REI’s 2005 growth was a 10 percent increase in active membership and the strong performance of six new retail stores in Bend, OR, Huntington Beach, Calif., Marlton, N.J., Pittsburgh, Pa, Plano, Texas and Raleigh, N.C. Additionally, REI credits its success to a year of seasonally appropriate weather for outdoor recreation, a strong focus on customer service and a continued investment in product assortment and inventory.

“With an exceptional year and having liquidated our final piece of long-term debt, we have a strong balance sheet and find ourselves debt-free for the first time since 1985,” said REI Chief Financial Officer Brad Johnson. “Running a successful and sound business, not only enables us to share the majority of our profits with REI members, but also lays the groundwork for a strong future by allowing us to invest in our growth and operations.”

REI’s record sales capped a banner year highlighted by the announcement of plans for an eastern region distribution center in Bedford, Pa; the unprecedented extension of health benefits to all part-time employees; successful Bay Area pilot of the REI Outdoor School; a top 10 ranking on FORTUNE magazine’s “100 Best Companies to Work for in America” list; as well as an all-time high in volunteer participation levels for REI-supported environmental stewardship projects.

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.