The acquisition is expected to add another $100 million in sales this year with an operating margin in the low double digits. That puts good news on top of good news: Columbia also reported Tuesday that—thanks in part to a very cold winter—its first quarter sales jumped 22% to a record $424.1 million compared with $348.3 million a year ago.
The deal to buy PrAna from Steelpoint Capital Partners and other investors is expected to close in the second quarter, giving Columbia a cushion against relying solely upon winter apparel as well as adding millions of socially conscious consumers to its products.
‘Outstanding Q1 Results’
“PrAna fits Columbia’s strategic priorities to expand into categories that appeal to complementary consumer segments, reduce our dependence on cold-weather products, and leverage Columbia’s global operational platforms to expand across key geographic markets,” said CEO Tim Boyle.
Columbia also reported its first quarter profit rose 120% to $22.3 million or 63 cents a share.
PrAna, which sells yoga legwear, jeans and shirts woven with organic cotton, is expected to contribute about $55 million in incremental sales to Columbia this year. PrAna’s sales grew more than 30% annually between 2010 and 2013, according to the statement. The transaction is expected to bring $4 million in one-time fees, as well as about $9 million in integration expenses this year, Columbia said.
Columbia also raised its full year outlook.
“Our outstanding first quarter results reflect robust demand for the Columbia and Sorel brands, especially across U.S. wholesale and direct-to-consumer channels, and the successful launch of our China joint venture,” Boyle said. “Wholesale demand for our Fall 2014 products has accelerated in many key markets around the world, prompting us to increase our sales and operating income expectations for the full year. Excluding the anticipated financial effects ofthe PrAna acquisition, we now expect 16% to 18% sales growth and approximately 25% growth in operating income in 2014, driven by renewed growth in our wholesale businesses and continued expansion of our global direct-to-consumer business, coupled with incremental contributions from our China joint venture.”
For its first quarter, Apparel, Accessories & Equipment net sales increased 29% to $59.4 million to $353.7 million, and footwear net sales increased 30% to $16.4 million.
By brand, Columbia brand net sales increased 25% to $376 million. Sorel brand sales were up 4% to $12.9 million. Mountain Hardwear net sales increased 1% to $32.4 million.