Columbia makes a controversial move to flip consecutive sales declines

For people who enjoy outdoor activities like hiking, snowboarding, fishing, and hunting, finding a brand that offers good quality and long-lasting outdoor wear can be difficult for anyone who wants to spend less than a thousand dollars on a jacket.

Columbia Sportswear Company has long been a more affordable staple brand for outdoor activity lovers. This American company manufactures and distributes active lifestyle gear and outdoor apparel at lower prices than most of its rival brands.

💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸

Although the brand is still considered among the top ten outdoor wear brands in the U.S., it has been experiencing some rough patches and reporting declining sales for the last four consecutive quarters.  

Related: Peloton faces subscription challenges, stock price soars anyway

Maybe it’s the current state of the economy, growing competition, or possibly fallout from global warming, but despite all outside factors, Columbia refuses to let a rocky road prevent it from trying to exit this sales slump.  

Columbia unveils turnaround plan to flip its sales decline

On Thursday, Columbia published its third-quarter earnings for 2024, and although the company met analysts’ expectations, sales continued to follow a pattern of negative numbers.  

According to Columbia’s earnings report, total sales declined by 5% compared to the same time last year, and the Columbia brand decreased by 1%.

The company reported earnings per share of $1.56, which declined from $1.70 in Q3 2023 yet exceeded analysts’ expectations by $0.20.

Related: Keeping Up With Fashion: Abercrombie, Zara, and H&M controversies come back to haunt them

Nonetheless, Columbia  (COLM)  decided that enough was enough and unveiled a turnaround plan to fix its declining sales, although part of its new approach might be a little controversial.

“In recent months, the Columbia brand embarked on ACCELERATE, a growth strategy intended to elevate the brand and attract younger and more active consumers,” said Columbia CEO Tim Boyle.

He also stated that this multi-year plan will be accomplished through multiple changes in the company’s brand, product, and marketplace strategies.

Columbia’s desire to target a “younger and more active consumer” is a strategy that might work for the brand, but if not managed properly, it could go south really fast. 

This is not the first time a company has tried targeting a specific customer. Abercrombie & Fitch  (ANF)  is famously known for making this business move, and the consequences of it continue to haunt the brand to this day. 

Abercrombie & Fitch hired Mike Jeffries as its CEO in 1992, and during his time leading the company, he transformed the brand into a true teen obsession. He targeted ‘good-looking’ teens and young adults, making the company thrive on its exclusivity and profiting from people’s desire to fit the brand.

However, this strategy soon landed the company in muddy waters, as people began accusing the brand of racism and lack of inclusion, which led to a plummet in sales and multiple controversies.

Although Abercrombie & Fitch took a much more drastic approach to refocusing its target audience, Columbia could also be in a similar situation if it takes this strategic move too far.

In addition to redirecting its target audience to a younger and more active one, Columbia will narrow its assortment and increase its creation investment to develop more innovative products. The company will also enhance its customer experience and focus on its online presence, omnichannel, and global distribution.

To conduct the revamp of its creative and marketing strategy, Columbia announced it had hired Matthew Sutton last month as Senior VP and Head of Marketing and named Adam&eveDDB as its new agency of record.

Columbia reveals its full-year outlook for 2024

This last reported quarter seemed to decrease Columbia’s optimism as it cut its previous full-year outlook for 2024.

The company now expects sales to decrease by around 5% to 3%, a steeper decline than its previous prediction of 4% to 2%. 

More Retail:

• Adidas long-time feud with Kanye over Yeezy takes a major turn
• Two major fashion handbag brands were just dealt a big blow by the U.S. government 
• Guinness parent makes major investment in a surprising market

However, in its preliminary first half of 2025 commentary, Columbia forecasted mid-single-digit percent growth in global wholesale net sales.

As of Friday’s post-trading hours, Columbia’s stock is down by nearly 3%. 

Related: Veteran fund manager sees world of pain coming for stocks

Source link