Seventy-five-year old Columbia Sportswear
) has grown into an apparel behemoth, making products that weather storms of the meteorological variety. It’s stayed that way by withstanding those that brew in the retail industry.
Most challenging of late have been the successive warm winters that have left retailers hesitant about placing orders for waterproof boots and down jackets. But Columbia’s stock has climbed to levels not seen in several years, adding president and CEO Tim Boyle to the ranks of the world’s billionaires.
It’s also raised questions about how a company that hasn’t strayed too far from its founding mission of producing hats can create new demand for a traditional product.
Speaking from company headquarters in Portland, Boyle says he’s learned not to read too much into Wall Street’s whims. The stock has risen 24% in the past 12 months; the company sports a $2.3 billion market capitalization on 2012 revenues of $1.7 billion, with revenues projected to hold steady for 2013.
“Our share price will rise based on the color of the precipitation in New York City,” Boyle told Forbes. “If it snows, the share price goes up, so it’s hard to connect more strategic happenings with the share price.”
It hasn’t snowed on Wall Street yet this season, but the CEO’s 41% stake in Columbia Sportswear, worth $982 million, plus recent dividends, put him above the $1 billion mark (Boyle had previously appeared on the Forbes 400, most recently in 2004 with a personal worth of $860 million, but dropped off the list in 2005.) Boyle agrees with those, he says, who believe that money is less about accruing wealth and more about “keeping score.”
“I don’t do anything differently today based on whether the shares of the company are valued in a certain area. I consider this to be a spectacular investment for me,” said Boyle. “It’s a reflection on my abilities personally as a manager to have the company’s shares trade at a high value, so that’s my focus.”
Boyle says the positive sentiment is evidence of Columbia’s strong balance sheet, as well as its shift, over the past 18 to 24 months, away from top of the line products and towards a greater selection of mid-range, moderately priced products.
“We’ve really focused on getting our product selection in ‘good and better’ as opposed to the ‘best’ area, and our customers are responding well,” said Boyle.
And despite its cold weather gear reputation, Boyle points out that Columbia profits from being a company for all seasons.
“If you would ask most investors about our company, they’d say, ‘Those are the guys that make all that winter product,’” said Boyle.
Actually, it’s those situated in warmer climates who the ones driving new product demand, particularly for saltwater fishing gear, the kind of moderately-priced product Columbia is now emphasizing.
Analysts say it’s a testament to the company’s new direction that the mild winters didn’t do greater damage.
“Columbia’s stock has actually underperformed their peer group, but the group has done well, and a rising tide does lift all boats,” said Mitch Kummetz, senior research analyst at Robert W. Baird & Co.
“Speaking specifically to their business, it’s been a fairly challenging year,” said Kummetz. “The biggest thing is the weather. The fact that we’ve had two warm winters has led retailers to be cautious with how they plan inventory for those categories. What [Columbia] is experiencing right now reflects that cautiousness on the part of the retailers.”
Kummetz says that “normal” winter weather could spur demand among retailers who will find later in the season that they’ve under-ordered, a trend that would give Columbia a nice bump heading into 2014.
But fewer orders up front aren’t necessarily a bad thing. Sara Hasan, research analyst at McAdams Wright Ragen, says that smaller orders mean less inventory that has to be marked down throughout the season, leading to more items sold at full price.
Hasan attributes Columbia’s momentum over the past several years at least in part to a shift in the company’s emphasis on the customer, and a new focus on e-commerce, advertising, and back-end improvements to bolster the consumer experience. Previously, she says, the company was “working very closely to sell to their wholesale partners; they weren’t working as hard to create end-user demand.”
As for Boyle himself, the Columbia Wader Widgeon Parka is his preferred piece of company kit to sport while bird hunting before work or on the weekends on Sauvie Island, northwest of Portland and thirty minutes from his home. The outdoorsman also golfs when possible and skis, though not as much as he’d like, the best powder coinciding with Columbia’s busiest season.
But Boyle, 64, has no immediate plans to spend more time on the slopes. As for who might succeed him at Columbia’s helm, he says several current executives might one day claim his title, but no one should be measuring his office just yet.
“I like what I’m doing. My mom [Gert Boyle, chairman of the board], who’s been a big part of the company, still comes to work every day at 89,” said Boyle. He’s not suggesting he’ll do the same, but adds, “I like what I do, and I don’t have any plans to do something different.”
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