Columbia reports disrupted sales and supply chain operations due to coronavirus
Feb 28, 2020
Sportswear and outdoor company Columbia Sportswear has announced further disruption to its supply chain and distribution from the coronavirus, in addition to the closures of many of its Chinese stores.
Columbia said in a statement that it expects its full year 2020 financial results to be "significantly affected" by the impact of the coronavirus.
Currently, approximately half of Columbia's owned and partner stores in China remain temporarily closed, and its stores that are open in the country have experienced "a material decline in traffic and corresponding sales," the company added.
Meanwhile, the outbreak has also impacted the company's supply chain. Columbia's contract manufacturers source a large portion of raw materials from the China, the company said, and temporary factory closures as well as the slowed return of workers have impacted its contract manufacturers’ ability to source certain raw materials and produce and fulfill finished products on time.
Combined with further disruption to the company's distribution and logistics providers, Columbia said it expects its supply chain issues to affect its ability to fulfill orders and meet consumer demand in a timely manner, and that potential order fulfillment delays would impact future seasons.
According to Columbia, China represented approximately 5% of its total net sales in 2019, and its Asia-direct business--which includes Japan, China and Korea--represented approximately 15 percent of total net sales. In addition to harming Columbia's China business, the company said the virus has also impacted business in Japan and Korea.
"Until normality returns, we expect a continued unfavorable impact on sales in our Asia-direct business," the company said.
Tim Boyle, the company's chairman, president and chief executive officer, emphasized that, to date, there have been no reported incidents of employees contracting the virus, and that many employees have been working from home to maintain business operations.
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