Dive Brief:
- Supply chain constraints impacted Columbia Sportswear’s performance as delays led to higher order cancellations in fall 2022, according to a Feb. 2 earnings call.
- The company, which posted a 27% YoY decrease in operating income for Q4, noted that cancellations were mainly driven by “significantly later” deliveries from Asia, CEO Tim Boyle said during the call.
- Columbia Sportswear anticipates a more normalized shipping pattern moving into spring 2023, with on-time delivery percentage improving and approaching pre-pandemic service levels, CFO Jim Swanson said.
Dive Insight:
Amid Columbia Sportswear’s tempered Q4 performance, the company continues to invest in and optimize its operations to prevent further cancellations in the year ahead.
“When it comes to supply chain capabilities, we are investing in people, processes and systems to improve supply and demand planning, drive inventory efficiency and support growth,” Boyle told investors.
As inventory availability was severely hampered throughout 2022 due to shipping delays, Columbia Sportswear has concluded its spring order book and is in the process of shipping it now, the CEO explained.
“In fact, we’re in great shape,” Boyle said. “We’ve brought our service levels nearly back to pre-pandemic levels, and we’re shipping like crazy right now. We’ve had no substantial [cancellations] and don’t expect any.”
Columbia Sportswear has faced supply chain headwinds throughout 2022, and in Q2 was already attempting to mitigate potential disruptions by taking orders earlier from its retail partners and placing orders earlier with its factory partners, Boyle told investors in an earnings call last summer.
As supply chains continue to face disruptions due to factory closures from ongoing COVID-19 outbreaks and shipping delays in the Asia Pacific region, some retailers have looked to diversify their sourcing operations. Gap, for instance, aims to rebalance its sourcing to rely less on a single origin after lockdowns in Vietnam delayed deliveries in 2022. In turn, the apparel company said it increasingly anticipates sourcing from Mexico and Central America.
Last week Columbia Sportswear Company also committed to Central America sourcing, and intends to purchase up to $200 million in products from the country.
