Columbia Sportswear – D2C Playbook & Strategic Shake-
up – 27 April 2021
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Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Joe Craig (JC)
Former SVP, Sales, North America at Columbia Sportswear Co
Agenda:
1. Brand awareness and portfolio update for Columbia Sportswear (NASDAQ: COLM)
2. Strategic challenges across footwear and apparel
3. Promotional activity and D2C margin expansion
4. Geographic growth outlook
Contents
Q: Could you provide an overview of the athletic footwear and apparel industry? What are the main drivers?
3
Who are some of the top competitors? Feel free to include accessories and other categories.
Q: What were 2-3 trends you noticed within the industry pre-coronavirus relating to Columbia’s core
4
categories?
Q: What are some of the biggest challenges facing the athletic footwear and apparel industry?
4
Q: How would you assess Columbia’s ability to capitalise on industry trends, given its unique breakdown in
4
apparel, footwear and other accessories?
Q: How has Columbia’s brand evolved over the years? How has it incorporated smaller brands into its wider
5
portfolio?
Q: What do you think was the strategic rationale behind Columbia undercutting prices over the years? How
does that compare to what other brands have done such as North Face? What does that mean for Columbia’s
5
overall brand strength?
Q: When do you think Columbia realised that promotional activity isn’t the right direction? How can it get out
6
of the hole that it may have put itself in?
Q: Is Columbia sacrificing volume for price? Do you think Amazon’s relationship with the company has
6
expanded Columbia into the markets that it may not have accessed previously?
Q: Could you outline Columbia’s distribution strategy? Are there any inefficiencies within its model? How
7
would you assess its distribution via Amazon, the D2C approach or its large retail physical footprint?
Q: Could you elaborate on the importance of Columbia’s relationships with retailers? What role has that played
in the loss of market share within Dick’s Sporting Goods vs the loss being due to a lack of innovation or strategic
7
missteps?
Q: You mentioned Columbia is focused on the 25-years-plus demographic. How does that differ between
men’s and women’s? Where do you think the missed opportunity is, perhaps with the millennial generation?
8
How can Columbia get up to speed with trendier brands such as Patagonia and North Face?
Q: Columbia needs to consider what its brand stands for. Could you elaborate on the effectiveness of marketing
that and some of the differences you’ve noticed between competitors such as North Face and Patagonia? You
can improve your manufacturing pipeline and make it more sustainable, but the consumer may not know if
you’re not communicating that message effectively. What are the strengths and weaknesses of Columbia’s
marketing efforts and digital exposure? You mentioned Patagonia has a new editorial piece and Nike is going
9
full-fledged into a global digital atmosphere.
Q: How important are partnerships in expanding a brand within Columbia’s performance lines? Nike is
notorious for getting very famous athletes to partner with its brand. I haven’t noticed that strategy within
9
Columbia. How can it leverage athletes to promote its brand?
Q: Where do you think the opportunity for Columbia is globally? Where might management be targeting as
10
its secondary market to focus penetration efforts on?
Q: You touched on the increase of participation in outdoor sports and activities pre-coronavirus and how that’s
also increased throughout the pandemic. Could you elaborate on Columbia’s exposure to traditional sports
that were all shut down vs sports that didn’t require government intervention such as hiking or camping? 10
Q: How does the production pipeline work within Columbia? How has it dealt with some of the bottlenecks it
10
may have faced when trying to get extra capacity online?
Q: What’s your outlook on the recovery across Columbia’s distribution channels?
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Q: How would you assess Columbia’s appetite for M&A? How conservative is it in making new acquisitions of
11
start-up brands or newer entrants?
Q: Would you say the barriers to entry have changed for some of Columbia’s segments, including fishing and
11
outdoor activities?
Q: Is there anything you think the investor community should know regarding Columbia’s management team
11
and its ability to execute on priorities?
Columbia Sportswear – D2C Playbook & Strategic
Shake-up
Transcription begins at 00:00:00 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Columbia Sportswear – D2C Playbook & Strategic
Shake-up. I’m Nyree Hinton and I will be facilitating today’s Interview with Mr Joe Craig, former SVP of Sales,
North America, at Columbia Sportswear.
Joe, before we get started with today’s Interview, please state I agree or I disagree to the following statement:
You understand the definition of material non-public information and agree not to disclose any such
information, or any other information which is confidential, during this Interview.
JC: Yes, I agree.
NH: Could you introduce your background?
JC: Hi. Yes. I’ve been in the outdoor industry my entire career. I started working in a ski shop, going to
college, and then went onto become a manufacturer’s rep, worked for a number of different companies over
the years, primarily in the outdoor space. Skiwear brands, footwear brands and outdoor equipment brands. In
1995, I went to work for Columbia Sportswear, managing a region for them as an independent contractor, and
expanded the region to 12 states, basically, from Michigan to South Carolina in the United States. Then, in
2009, I moved to Portland and became National Sales Manager and Director of Sales for Men’s’ Apparel and
Accessories. By the end of 2009, I was running all apparel business sales in the US. Then through my career, I
continued to be promoted, and when I retired from Columbia in 2018, I was Senior Vice President of North
America Sales for Apparel and Footwear and Accessories. I stayed on for, I think it was nine months longer, as
a consultant, exclusively for Columbia during that period. That’s my career. I’ve done consulting for other
brands since then.
[00:02:24]
Q: Could you provide an overview of the athletic footwear and apparel industry? What are the main drivers?
Who are some of the top competitors? Feel free to include accessories and other categories.
JC: In the United States and Canada, I’ll start with the brands that are the primary competitors. When you
look at the athletics side, the athletics side is made up of three brands, Nike being the largest, Adidas, then
Under Armour. You go into the outdoor side of the business, which is the side of the business I’m much more
familiar with, and the side of the business that Columbia Sportswear competes in, and the primary brands are
The North Face, Patagonia. In footwear, Merrell is a very strong brand. You also have brands that sell to
department store, direct-to-consumer, like an Eddie Bauer, that are competitive. Then if you look at who are
the retail customers, Amazon, because Amazon competes in all markets. Dick’s Sporting Goods, large big-box
sporting goods and online. REI, Recreational Equipment Inc out of Seattle, competes with brick-and-mortar
stores and online. You’ve got MEC, which is similar to REI, but it’s a Canadian company, Mountain
Equipment. Also, in Canada, the largest sporting goods company is The Forzani Group, which is a division of
Canadian Tire. Their largest-format stores are Sport Chek. They also have Sports Experts, which are more
specialised. Then you have competitors in a Bass Pro Shops that is camping, hunting, fishing. They have
purchased Cabela’s and they just recently, in 2020, purchased Sportsman’s Warehouse. That gives a pretty
good lay of the land. In straight athletic footwear, you have somebody like Foot Locker or Champs also.
Private and confidential 3
[00:04:49]
Q: What were 2-3 trends you noticed within the industry pre-coronavirus relating to Columbia’s core
categories?
JC: One thing in the outdoor category, we’re noticing more people getting involved in outdoor sports. As
climate change has become a more important issue to younger people, they tend to look to the outdoors.
Paddle sports were starting to increase. Cycling was an increase. Electric bikes were just coming on prior to
COVID. They were getting increased sales every year. Camping was picking up in popularity. Trail running was
on the increase. Those are sports in the area where Columbia competes. Fishing was also noticing growth prior
to COVID.
NH: How have these trends evolved due to coronavirus? What does that mean for sales growth?
JC: What happened was the cycling trend continued. It gave people a way to get outside, exercise and get a
workout in. It was something also families could do. By the probably Q3 2020, electric bikes were hard to even
find. They had sold out most everywhere. Then you had home gyms. Home gyms were a big thing, Peloton
being the biggest contributor to that. The whole workout arena changed. People were working from home, so
they were buying sports apparel and active apparel, sweatpants, etc, to wear at home. Again, trail running on
the increase. Things like paddle boards, stand-up kayaks, sit-upon kayaks, all kayaks, canoes, things like that,
were selling out in the summer, as people got outdoors. Camping was starting to pick up. Others things like
golf, tennis, pickleball were all on the increase and strong. Then, as far as consumer trends, consumers were
purchasing more obviously on the internet, because there was a period of time that stores were shut down. As
stores opened up, one of the first things that happened was the buy-online, pick-up-in-store trend, and that
has continued.
[00:07:41]
Q: What are some of the biggest challenges facing the athletic footwear and apparel industry?
JC: Challenges for the industry, COVID is still a challenge, although I believe the CDC is opening up today
that you don’t need to wear masks outside. Youth sports were shut down, so any equipment being sold to the
youth sports, whether it be football equipment, baseball, soccer, basketball, those were shut down in some
areas and in some areas they were cut back. Maybe the high school teams were playing. Obviously, the colleges
had a limited schedule, but the city sports and the leagues were shut down for the most part. Those are coming
back now and what we’ll see coming back is real growth in the outdoor. I just read this morning that Thule
racks, which makes bicycle, ski racks, canoe racks, water sport racks, their sales in Q1 have increased 46%.
National parks in the month of March had a 37% increase in visitors, so people were getting outside. Fishing
licence sales are going up. Those are all good things to help drive the market.
[00:09:11]
Q: How would you assess Columbia’s ability to capitalise on industry trends, given its unique breakdown in
apparel, footwear and other accessories?
JC: One of the things that continues to be strong, it was good going into COVID and it’s strong coming out of
it, is their fishing apparel business, their brand PFG, which stands for Performance Fishing Gear. It’s been
very strong. It’s especially strong in the south-eastern US, but it’s gaining strength across the US and in
Canada. A little slower in Canada. Things that Columbia has done well is concentrating on the outdoor
consumer. Places where I think they’re still behind is they’re not doing a good job attracting millennials, Gen
Z, people of colour. I think they’re lacking there. As I look at their demographic, I see, my opinion, is they’re
Private and confidential 4
really still catering to the 25- to 34-year-old men and women with a family. Even though that’s a good market,
that younger market with brands like Patagonia and The North Face, when you look at outdoor footwear,
brands like Hoka are doing well with. Columbia is lacking there. Does that answer your question? Did you
want me to also speak about the other Columbia brands, Sorel, Prana and Mountain Hardwear?
[00:10:59]
Q: How has Columbia’s brand evolved over the years? How has it incorporated smaller brands into its wider
portfolio?
JC: Columbia got their strength back into the 1980s, early ’90s with outerwear. The Bugaboo jacket was one of
their big successes and that grew in sales. They had a great deal of success there in outerwear and they became
the outerwear brand in North America, and was making penetration in Europe as well. To balance their
business, because outerwear is very cold-weather dependent, they got more involved in sportswear early to
mid ’90s, became very involved in their sportswear business and with that, as well as the footwear business.
Their first entry into the footwear business was a boot call the Bugaboot, which was a cold-weather boot.
They’ve been expanding those businesses and that helps balance sales throughout the year. One of their
biggest successes has been the PFG line, which is the Performance Fishing Gear. They are the largest company
in the States and in Canada with performance fishing apparel. They have some competitors out there. Under
Armour is a competitor. They’ve got a couple of other competitors out there, a brand called HUK is a
competitor, and then they compete with store private label. Columbia continues to try to grow footwear.
Footwear has been a challenge for them, but PFG has grown well. They have done relatively well in casual and
hiking apparel, but most of it is promotional price points and Columbia is no more in the outdoor industry, is a
promotional brand. They have the line divided into items that are only promoted a few times a year and items
that are promoted almost weekly. The items that are promoted in that almost weekly category are the largest
portion of the Columbia product line. Fleece is a big part of that. Technical fleece and casual fleece. I’m talking
polyester fleece, as opposed to cotton fleece. They’re in the cotton fleece business, but not nearly as big as the
polyester fleece business.
Then the first brand they acquired was Sorel, which was known as a cold-weather boot brand. When the
current president, I’m trying to remember here, I think Mark Nenow, who is President of Sorel, I think he
started in 2010 or ’11. When he looked at the brand, he thought it would be a great women’s brand and it has
developed as primarily a women’s outdoor, cold-weather brand. In the last couple of years, they’ve got into the
four seasons business with sandals, etc, but his goal was to be the most fashionable outdoor brand and the
most outdoor fashionable brand. Sorel has done a very good job. I think their sales are well over USD 300m
now by the annual report at Columbia. Then the next brand they bought was Mountain Hardwear. Mountain
Hardwear is what I call a proper mountain brand. They make gear for consumers that aspire to climb
mountains like Mount Everest, etc. When Columbia first bought the brand, it was growing quite nicely in
speciality outdoor stores and at REI, and MEC in Canada, and then they started to homogenise the brand,
bringing price points down, trying to get a broader consumer base, and they lost some of the authenticity by
doing that, and again that’s my opinion, and sales dropped substantially. They’re just starting to come back
and become a more authentic top-of-the-mountain brand and sales are starting to increase there. Then the
other brand that Columbia bought was Prana. Prana, their consumers align with sustainability and a healthy
lifestyle, and I think Prana, for Columbia, is doing a better job at getting that younger consumer involved. If
you go to their website, or into one of their stores, they talk about sustainability a lot and that means a lot to
the younger consumer, and just the outdoor consumer right now is very concerned about sustainability and
aligning with brands that represent a healthy lifestyle and sustainability.
[00:16:23]
Q: What do you think was the strategic rationale behind Columbia undercutting prices over the years? How
does that compare to what other brands have done such as North Face? What does that mean for Columbia’s
Private and confidential 5
overall brand strength?
JC: By lowering price, and a couple of years ago, McKinsey came in and did a study for each of Columbia’s key
categories. What are the key price points to sell a lot of it, to maximise sales? I think that was good for
maximising sales in those areas, but, in my opinion, by promoting your product so often, yes, you get a lot of it
into the marketplace, but you also lose a little bit of that brand lustre and that desire the consumers want for
your product. One part of their product line that they don’t promote is PFG and PFG has continued to be a
strong point. If you’re selling Performance Fishing Gear and, for example, it used to be promoted quite
heavily. We built extra margin in so the retailers could sell it at 20% off and still make a good margin. It was
my opinion that that was not a good strategy. That when you’re selling at a discount, it’s hard to say it’s
performance product but it’s on sale all the time. The pricing was changed and we took the pricing so you had
the retailers really needed to say at the manufacturer’s suggested retail to make an acceptable margin.
Then when that was done, sales continued to increase and the brand was able to get more speciality store
business back. PFG is business that you’ll see in a fishing speciality store. You’ll also see it in a Dick’s Sporting
Goods. You’ll see it in REI. It’s a very large brand with Bass Pro Shops, Cabela’s and Sportsman’s Warehouse.
That’s been good. I’m very concerned about the promotional aspect of the brand. You don’t see that with North
Face. You don’t see it with Patagonia. You see it with Eddie Bauer, but, basically, Eddie Bauer is a direct-to-
consumer brand. They have stores in malls, in outlet malls, and they also have just started a programme with
Kohl’s department stores and in Kohl’s department stores, the brand will be promoted very, very regularly.
That’s the type of brand that that is. You don’t see that from brands like Nike and Adidas in the same way. I do
think, as I said, it takes some of the lustre off the brand.
[00:19:42]
Q: When do you think Columbia realised that promotional activity isn’t the right direction? How can it get out
of the hole that it may have put itself in?
JC: I think you get out of it by segmenting your product. I know. I feel confident you get out of it by
segmenting your product. If you look at a brand like Nike, Nike has some promotion business. They sell their
brand to a department store like Kohl’s that will promote the brand on a regular basis. Then they have better
product that they segment to stores like a Dick’s Sporting Goods, or Foot Locker. The better retailers have this
better product and the consumer that’s an active athlete recognises that better product and buys it. I think
Columbia could segment product for a Dick’s Sporting Goods, for REI, for outdoor speciality companies, for
Sport Chek, for Sports Experts, Sporting Life in Canada, Sail in Canada, Bass Pro, and use that segmented
product, of which the PFG line is that, but I think they could have segmented outdoor-, hiking-, ski-type
product too that they would do the same thing with. I think it would really help their brand.
I think you also asked, “Why? Why haven’t they done that?” That’s the thing that always puzzles me. They’re in
very deep with Amazon. I think that’s a tough one to get out of. When I consult with brands and they ask about
Amazon, my suggestion is to run a branded store on Amazon where the brand controls what’s sold and at what
prices, but don’t sell directly to Amazon, where they’re controlling your inventory, your purchases and the
price of your product. Columbia sells direct to Amazon. Competitors, Nike, does not, Adidas does not, North
Face does not, Patagonia does not. Amazon, I believe, is Columbia’s largest wholesale customer and I think
that’s a big risk for them overall. Obviously, gives a lot of sales, but I think it makes it tougher for them to grow
with stores like Dick’s, REI, Sports Experts and Sport Chek.
[00:22:47]
Q: Is Columbia sacrificing volume for price? Do you think Amazon’s relationship with the company has
expanded Columbia into the markets that it may not have accessed previously?
Private and confidential 6
JC: I’m not sure that it’s expanded them in the markets they’ve not been in. Probably to a degree, but Amazon
is what I refer to as the easy button. It’s real easy to go to Amazon and click “Columbia” if you like Columbia
product, and whatever you’re looking for, and you look at it and you can find the lowest price on Amazon.
Normally, their algorithm will find other prices in the marketplace and always beat those prices. I think,
obviously, that that’s not good for the brand, but I don’t know, it’s giving them a lot of sales, but I think, I
realise, it’s taking sales from some of the better retailers.
[00:24:08]
Q: Could you outline Columbia’s distribution strategy? Are there any inefficiencies within its model? How
would you assess its distribution via Amazon, the D2C approach or its large retail physical footprint?
JC: If you look at their channels of distribution, there’s the department store channel, they have some
business with Macy’s. Kohl’s is a very large account. Kohl’s is an account I believe they can work with. They
have the right product in there for the Kohl’s consumer, but still not be selling them items like the PFG line. I’ll
keep referring to that, because that’s one very pure price point performance part of a line that the brand does
segment. They don’t sell Sorel, Mountain Hardwear or Prana for Kohl’s. They also do business with Belk
department store. Belk has had some financial challenges in the last year, but Belk had built up a business of
the promotional product, but also because they’re a south-eastern retailer, they’ve done well with the PFG line
and done well with maintaining price of that product category. That’s the department store. That’s the
strength of their department store channel. Then they have their sporting goods and outdoor channels. The
primary players would be Dick’s Sporting Goods, REI, Bass Pro and the Bass Pro division, and Academy
Sports out of Texas. In that channel, they sell better product and they sell promotional product and they have a
good business there, but Columbia used to be the largest outdoor brand selling to Dicks’s Sporting Goods. If
you go back to probably about 2005, I think would be a point where Columbia was the big outdoor brand at
Dick’s Sporting Goods. Now, I believe North Face is 3-4 times the size of Columbia at Dick’s Sporting Goods
and I think that was all lost because Columbia stayed in the promotional product line at Dick’s and North Face
built a better product business at Dick’s Sporting Goods.
Dick’s Sporting Goods is also layered on Patagonia. Then, when it comes to outdoor footwear, Merrell is their
big brand and it is substantially bigger than Columbia’s outdoor footwear business there. Then, from there
they have some business in the farm channel, with farm retail stores, and then speciality retail stores that their
business with speciality retail has been dropping from year to year. Then online. Online, again, their biggest
retailer, Amazon, but they also do business with speciality online stores like Moosejaw and Backcountry
Outdoor, and then they have a big business with the off-price retail market that they use to move some of their
excess inventory, as well as they manufacture goods for it, and that includes TJ Maxx, Marshalls, Costco,
Nordstrom Rack, Ross Stores and Bealls Outlet out of Florida. Those are the channels of distribution. Then
you have direct-to-consumer. Direct-to-consumer consists of their online business, which is growing. You take
2020 aside because of COVID, the online business has been growing YoY. It’s a bit promotional, so it falls right
into that Columbia promotional category. Then you have their brick-and-mortar stores and 90%-plus of their
brick-and-mortar stores are outlet and, again, that falls right into the whole promotional part. The branded
stores that are not outlets have not done well for Columbia. They have struggled with branded retail, unlike
The North Face, unlike Patagonia, who have done quite well with branded retail, much more so than with
outlet or off-price retail.
[00:29:14]
Q: Could you elaborate on the importance of Columbia’s relationships with retailers? What role has that
played in the loss of market share within Dick’s Sporting Goods vs the loss being due to a lack of innovation or
strategic missteps?
JC: All of Columbia’s large accounts, they have a key account team that manages it, so it’ll be a key account
manager and then sales reps and sales analysts within that. What Columbia does a very good job of is watching
Private and confidential 7
their business. If you look at Dick’s Sporting Goods, Columbia does a great job of watching the sell-through
and helping Dick’s Sporting Goods keep in stock on items that are selling real well, direct them to better
sellers. Where the struggle has been is for Columbia to develop products that have technologies, styling and
appeal, to go up against a North Face or a Patagonia. So much of their product has been sold promotionally,
it’s made it difficult for them to sell the better product and Columbia, the design team doesn’t concentrate on
the better product as much as they do the promotional product. In 2010, Columbia launched Omni-Heat.
Omni-Heat was only for better accounts. It had very good margin in it for the retailers. It was a huge success at
places like Dick’s Sporting Goods, Bass Pro Shops, Sport Chek, and that was great, but since then Omni-Heat
has been sold promotionally and into more promotional retailers, and that has been a challenge. What does
Columbia do well with the major accounts? They service them really well and they watch their businesses very
well. The challenge has been getting better product into better retailers and developing better product for
better retailers.
NH: How would you associate some of these challenges with the new operational leadership changes,
including a new COO and CSO? What implications do you think this has for putting the business on the right
track?
JC: If you look at Columbia’s upper management, the COO that left the company, Tom Cusick, was CFO prior
to that. Tom is a great numbers guy. He was a very, very good business partner to work with. Me in sales, him
in finance. His protégé, who’s the new chief financial Officer, Jim Swanson, came right along. They know how
to manage money. They listen to everybody within the company. They’re really on top of business and want to
know what’s going on in the business. Watching the margins, watching expenses. When Tom went over and
became COO, he went over and he had a very open mind to the overall business, and had it running very
smoothly. Did a great job. Lisa Kulok, who manages supply chain and things like that, does a phenomenal job
at managing the supply chains. Columbia is very strong there. Managing from getting product made, planning
how much needs to be made, getting it delivered on time, all those things, in a profitable manner, Columbia is
very good at. The challenge has become product, so they made some changes there. They now have a chief
product manager and that’s a new position, and they realised that, there was a realisation within the company,
I believe, that they were trying to make global product and, in trying to make global product, it may not be
strong for every market. It maybe that you try to make it appeal to one market, but that makes it less appealing
to another market. The product became very vanilla. A lot of their outerwear and things like that did not
appeal to the US consumer, so now they’re looking more at being a US brand, and what a US brand looks like,
and selling that to the rest of the world. That’s what they’re working on developing, is my understanding. I
think that’s a step in the right direction, but if they don’t do it with segmented product for better consumers,
and if they don’t look at the millennials, Gen Z, people of colour, I don’t think they’re going to fully succeed.
[00:35:26]
Q: You mentioned Columbia is focused on the 25-years-plus demographic. How does that differ between
men’s and women’s? Where do you think the missed opportunity is, perhaps with the millennial generation?
How can Columbia get up to speed with trendier brands such as Patagonia and North Face?
JC: I think they’re seen as the Prana brand was a bit stalled and Prana has almost always been a brand that
was considered a sustainable brand. It uses sustainable materials and that. Prana is really excelling that, but
they’re excelling in sustainable at a little higher price point than Columbia. North Face is really talking to that
consumer. Patagonia is talking to that consumer. I think Columbia has done a good job with not advertising,
but editorialising, “Stop racism”, “Open our parks back up”. They’ve made some strong political-type
statements that appeal to a younger consumer, but they haven’t been consistent and they appeal for a day,
where other brands are really listening to that consumer and that consumer is becoming very loyal to
sustainable brands right now. It’s my opinion that, now more than ever, consumers are looking at brands and
they want a brand that reflects the way they feel.
If they’re concerned about conserving water, if they’re concerned about protecting the outdoors, if they’re
concerned about racial equality, they want brands that stand for that and I think a young consumer that looks
at the Columbia board, which isn’t really diversified, I think there are two women on the board, there’s nobody
Private and confidential 8
of colour, there are a lot of people with financial background, but not a lot of consumer background strength,
as far as marketing and what consumers want, and there’s not that balance of colour on the board. I think as
America changes, as Columbia wants to be more of a global brand, they need to take those things into
consideration. I think consumers are going to become more and more critical of brands and in the future, they
may not buy from a brand that doesn’t have a diverse board of directors, that doesn’t have a sustainability
statement, that doesn’t talk about how they’re going to save water in their manufacturing process. Those
things, I think, are all very important to the younger consumer and the people of colour. They want to feel
represented.
[00:38:55]
Q: Columbia needs to consider what its brand stands for. Could you elaborate on the effectiveness of
marketing that and some of the differences you’ve noticed between competitors such as North Face and
Patagonia? You can improve your manufacturing pipeline and make it more sustainable, but the consumer
may not know if you’re not communicating that message effectively. What are the strengths and weaknesses of
Columbia’s marketing efforts and digital exposure? You mentioned Patagonia has a new editorial piece and
Nike is going full-fledged into a global digital atmosphere.
JC: I think digital and social media are a big way, and I don’t know the numbers, but when I left Columbia, I
think North Face had more than five times the number of followers on Facebook than Columbia, and that, I
believe, was the same with Instagram and things like that. Columbia has not done a good job with social
media, in my opinion. They’re on social media, but they haven’t done a great job in getting to that younger
consumer and to that person of colour.
[00:40:58]
Q: How important are partnerships in expanding a brand within Columbia’s performance lines? Nike is
notorious for getting very famous athletes to partner with its brand. I haven’t noticed that strategy within
Columbia. How can it leverage athletes to promote its brand?
JC: They have been very inconsistent. For example, last year, they signed on Bubba Wallace with Nascar and
I’ve read editorial that said, “This is great. They’re bringing in a person of colour that happens to be a
fisherman too,” so there’s outdoor sports, but it’s in Nascar, which is gasoline-fuel-driven vehicles that support
the extractive industries that are affecting the earth, and Columbia is an outdoor brand. This editorial that I
read was a complete just blasting Columbia for what they had done. In their opinion, they did it just to get
somebody that was black on their athlete team. Didn’t look at everything that it represented to the outdoor
consumer, who is riding their bike to work, trying not to use their car, things like that. I think North Face has
used people over the years that are climbers, outdoor people, that go out and they talk to younger people about
the outdoors, and they become kind of heroes of the outdoors. Patagonia has done the same thing. Merrell
footwear is doing that right now. In fact, one of Merrell’s athletes started working with Columbia as a Director
of Toughness, and Columbia didn’t keep her, so there hasn’t been that consistency that when you think of
Nike, you think of Jordan, you think of LeBron, you think of all these athletes, obviously. Then Columbia has
not had anybody that has been consistent, that people think of with relation to the brand. They’ve done stuff
with Zac Efron, they’ve done things with different people, Macklemore, but they’re for a short period of time
and they really don’t get the impression out there. They don’t stay with it long enough and I think that affects
them in the long run.
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[00:44:04]
Q: Where do you think the opportunity for Columbia is globally? Where might management be targeting as its
secondary market to focus penetration efforts on?
JC: Obviously, North America is the number one market for the brand. After North America, they’ve really
been looking at Europe a lot and concentrating, they supporting the UTMB, which is the ultra-marathon Mont
Blanc. They’re a primary supporter of that. I think they’re still doing that. I know they were signed up for it last
year, but I don’t think the race took place last year. They look at that market. China has been important.
They’ve tried many different strategies in China. Right now, Peter Rauch, who’s heading up the China
operations, Peter is a very smart guy, he’s a great guy, again, when it comes to numbers and things like that,
but he doesn’t have product, marketing or sales experience and I think he needs a really good team. I don’t
think they’ve put that together for him yet. China, as we all know, is a huge market, but they have struggled
there over the years and that’s been a major challenge. I’ve never worked on that market, but I’ve been in
meetings involving that market and trying to manage that market. Europe is one that Columbia really wants to
grow in and they’ve been challenged there for a number of years. I know they’re limiting their emphasis on
certain countries, to grow Germany and the UK and France first, probably Spain, and then expanding into
other countries, whereas at one point they went and they put sales teams in all countries and they just were
spread too thin and they weren’t able to make an impact at that point.
[00:46:20]
Q: You touched on the increase of participation in outdoor sports and activities pre-coronavirus and how
that’s also increased throughout the pandemic. Could you elaborate on Columbia’s exposure to traditional
sports that were all shut down vs sports that didn’t require government intervention such as hiking or
camping?
JC: When it comes to traditional sports like football, baseball, basketball, Columbia’s product is worn by the
spectator. If they’re going to a cold-weather football game, or a rainy football game, they’ll buy Columbia rain
wear or outerwear, things like that. Athletes really aren’t wearing the product. I used to like to say that when
mum goes to Dick’s Sporting Goods to get football cleats for her son, she might pick up one Columbia coat for
herself to watch her son play sports. It’s that type of effect. The biggest thing, I think, that hurt Columbia last
year was they panicked at the beginning of COVID and did not manufacture enough merchandise. When the
market came back, they did not have enough merchandise to fill demand. I think that hurt them last year and
was one of the big things, since they have such long lead time. Decisions they made in March and April ended
up affecting their business in November and December.
[00:48:21]
Q: How does the production pipeline work within Columbia? How has it dealt with some of the bottlenecks it
may have faced when trying to get extra capacity online?
JC: Columbia has been working on it over the years, I’m not sure exactly where they stand right now, is some
quick-to-market product, but it’s been small tests. One that they developed in a quick-to-market strategy was
ball caps and it’s a good business, but it’s not a huge business that’s going to move the needle, but they did
develop a quick-to-market strategy on that. The thing, when you look at fast retail, fast retail does such a good
job of this and has for years. Columbia is extremely good at working with factories that have very good grades
in human rights issues and things like that. In many instances those factories take longer to get products to
market, and Columbia would, ethically and morally, always rather work with those factories and be a little
slower getting to market than work with a factory that may be questionable when it comes to human rights
and the way they treat their employees. That has held Columbia back. They’ve also been narrowing the
number of factories that they work with so that they can be more important in the factories and trying to limit
the number of fabrics and things like that that they use, so that they can become more efficient and quicker to
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market, but they do have long lead times. The entire time I was with Columbia, their lead times are much
longer than many brands.
[00:50:38]
Q: What’s your outlook on the recovery across Columbia’s distribution channels?
JC: I think when in their forward-looking statement at the end of Q4 2020, they said that they would be up
18-20% in the year 2021. I think they will be. Columbia, when they say they’re going to do something, they’re
normally accurate about that and I think the way COVID, the situation is improving out there in the
marketplace, stores are open, sports are open, things like that, I think they will be up. I think 2021 is going to
get them back to 2020 numbers, or above it. Long term, I think Prana is on track for growth. I think Mountain
Hardwear is going to be regaining market share at a slower pace. I think Sorel is going to be gaining market
share. Columbia has me more concerned, because the brand is so strong within places like Amazon and I think
it’s going to take them a few years, and hopefully they’re working on this, on segmented product that will help
them increase their business in the better retail. Dick’s Sporting Goods, Sport Chek, Sports Experts, REI, Bass
Pro. Right now, when I look at their selection in an REI, it’s a very bland selection. It’s very basic and you don’t
sustain growth with a product selection like that.
[00:52:41]
Q: How would you assess Columbia’s appetite for M&A? How conservative is it in making new acquisitions of
start-up brands or newer entrants?
JC: My understanding is they’re not looking at purchasing any more brands. Unlike Vanity Fair, who
continues to buy up brands, my understanding, Columbia is going to stay with these brands and I wouldn’t be
surprised, another brand they bought was Montrail. They’ve incorporated Montrail as a subcategory of the
Columbia footwear brand, but they were trying to sell Montrail prior to doing that. My understanding is that
they will not be looking at buying up brands. If anything, they may grow a brand or two and, in growing it, try
to sell it, if the opportunity comes. That’s my understanding.
[00:53:55]
Q: Would you say the barriers to entry have changed for some of Columbia’s segments, including fishing and
outdoor activities?
JC: I think right now, for you to be a strong outdoor brand, if somebody is starting as a new outdoor brand,
everything I’m looking at on social media is about what that brand is doing as far as sustainability and their
whole social culture, and that is what appeals to people. Again, especially that younger consumer. To enter
into the business, yes, you need unique product, but you definitely need a sustainability story and I think that’s
extremely important in the outdoor industry. Does that answer your question?
[00:55:06]
Q: Is there anything you think the investor community should know regarding Columbia’s management team
and its ability to execute on priorities?
JC: I think Columbia does a good job of making money for investors. They’ve done a very good job. My
concern, and stock sitting at USD 113 right now, that’s really good. I own stock, but I think there’s a little bit of
Private and confidential 11
a blinder situation. My advice, if I was on the board, things that I would be telling the brand are to diversify
their product collection, to put together a design team, to attract younger consumers and people of colour, to
just completely redo marketing. I think they understand that, I know they understand their marketing,
compared to their major competitors, and I would work on marketing, especially social marketing. Then I
would segment parts of the product line away from places that promote, like an Amazon, and I still would try
to move the business away from Amazon. It’ll cost you some business upfront, but I think having, as a first
step, a Columbia store on Amazon that Columbia controls rather than selling to Amazon, would be a wise
investment for the future of the brand.
[00:57:10]
NH: We will now end the Interview. Let me close by saying thank you for your input and thank you, clients,
for joining Third Bridge Forum’s Interview today. If any clients would like to arrange a private meeting or
consultation, please contact your relationship managers. Goodbye.
JC: Thank you. Cheers.
Transcription ends at 00:57:20 of the recorded material
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