Columbia Sportswear

Columbia Sportswear

Corporate Research Paper

Introduction:

Columbia Sportswear (referenced as Columbia or CS) was founded in 1938 in Portland, Oregon. Originally Columbia Sportswear was a family-owned regional hat distributor and was incorporated in 1961. Today CS has evolved from hats and currently designs, sources, markets, and distributed active outdoor apparel, footwear, and accessories under four primary brands (Columbia Sportswear Co). Columbia Sportswear is most known for its Columbia brand, but also owns and operates Mountain Hardware, Sorel, and Montrail. Columbia is one of the largest footwear and apparel companies in the world and has products sold in approximately 100 countries. In the next sections Columbia Sportswear will be analyzed on their international presence, and their ability to manage the risks associated with foreign exchange. It is important to note that Columbia competes in its niche markets with little debt. The Debt/Equity ratio is currently .01% (Forbes).

Global Reach:

Columbia is able to have a global presence because of their multi-faceted distribution processes. In an effort to reach the global market Columbia utilizes wholesale distribution, direct-to-consumer distribution, as well as independent distributors and licensees. Columbia operates in four different geographic segments. The segments are:

1. The United States

2. Latin America and Asia Pacific (LAAP)

* Region includes: Australia, New Zealand, Latin America, & Asia

3. Europe, Middle East and Africa (EMEA)

* Region includes: Russia, portions of Europe, Germany, Ireland, Italy, Netherlands, Spain, Belgium, Austria, Finland, France, United Kingdom, Middle East, & Africa.

4. Canada

Although the United States carries a significant weight in sales, all segments primarily operate with the same structure; design, development, marketing and distribution of their products. Below is a look at sales per market segment.

The United States: The United States accounts for Columbia's largest market. Historically it has produced over 50% of Columbia's sales and is the largest contributor to maintaining their growth. Products are sold in this segment to approximately 3,400 wholesale customers and through Columbia's own direct-to-consumer channels. Columbia reported on December 31, 2012 operations of 55 outlet retail stores and 8 branded retail stores in various locations across the United States. Columbia's product lines are also sold through e-commerce websites, and income is also generated through licensing income. Columbia's United States operations are based out of distribution centers in both Portland, Oregon and Robards, Kentucky.

LAAP: The LAAP segment is Columbia's next largest contributor to sales. This segment has continued to grow sales year of year and is a significant to Columbia's sales growth. Columbia has approximately 300 wholesale customers in Japan and Korea and approximately 14 independent distributors. The independent distributors reach approximately 700 wholesale customers in the LAAP region. In addition to wholesale distribution Columbia operated 124 stores, as well as 258 dealer operated, branded, outlet shop-in locations. The LAAP region also provides licensing income for Columbia as products are sold through e-commerce websites within the operating segment.

EMEA: The EMEA segment ranks third on sales volume for Columbia Sportswear. Although it is not seeing the same consistency in sales volume (declining sales over the last three years) the EMEA like the other segments is important to Columbia's sales volume health. The EMEA segment sells products through 5,700 wholesale customers and approximately 12 independent distributors who reach 700 wholesale customers throughout the region. The majority of the products sold in the EMEA come from a distribution center that Columbia Sportswear owns in Canbrai, France. Columbia also sells through ecommerce in this segmented as well as operate 7 retail stores, and 3 branded retail stores, as of December 31, 2012.

Canada: Canada is the smallest sales segment for Columbia Sportswear. The Canada segment sells products to approximately 1,000 wholesale customers as well as one retail store operated by Columbia. Additionally, Sorel products are sold through e-commerce in Canada. Most of the products are distributed by two distribution centers. One of the distribution centers is leased and is located in Strathroy, Ontario and the other is owned and located in London, Ontario.

Foreign Exchange Risk Management:

Columbia Sportswear operates out of multiple locations worldwide. These location consist of headquarter offices, distribution facilities, and administrative operation facilities. The locations are:

* Corporate Headquarters: Portland, Oregon (owned)

* U.S Distribution Facilities: Portland, Oregon (owned), Robarbs, Kentucky (owned)

* Canadian Operation & Distribution Facilities: Strathroy, Ontario (leased), London, Ontario (owned)

* Europe Headquarters: Geneva, Switzerland (leased)

* Europe Administrative Operation: Strasbourg, France (owned)

* Europe Distribution Facility: Cambrai, France (owned)

Columbia Sportswear has decentralized risk management operations and uses teams for managing each country's financial risk. Although it is not clearly stated Columbia operates two headquartered locations of which executive management makes decisions. Columbia Sportswear executive management includes: Timothy Boyle; CEO, Michael Blackford; President of Global Innovation, William Tung; VP of Latin America/Asia Pacific & Distribution Sales. There is also a significant amount more of VP's titles specifically to the global market.

Columbia is exposed to a variety of risks as a result of international operations. The risks include global financial and capital markets, primarily currency exchange rate risk, interest rate risk, and equity market risk. All of these risks are regular monitored and managed at Columbia and