Columbia Sportswear Company Business Information, Profile, and History

Company Perspectives:

Columbia Sportswear Company is a global leader in the design, sourcing, marketing and distribution of active outdoor apparel and footwear. As one of the largest outerwear manufacturers in the world and the leading seller of skiwear in the United States, the company has developed an international reputation for quality, performance, functionality and value. Outdoor Active Authentic American Value.

History of Columbia Sportswear Company

One of the largest outerwear manufacturer in the world, Columbia Sportswear Company designs, manufactures, and markets outdoor apparel and footwear, distributing its merchandise to more than 10,000 retailers in North America, South America, Europe, Asia, and Australia-New Zealand. It is the leading skiwear manufacturer in the United States and also sells lines of snowboard apparel, hunting and fishing clothing, casual sportswear, and accessories such as mittens, hats, scarves, sunglasses, and ski goggles. Columbia's rise to the top began during the 1980s, when Gertrude Boyle and her son, Tim, orchestrated the remarkable growth of their family-owned business nearly 50 years after the company began doing business as Columbia Hat Company. With mother and son at the helm, Columbia's sales grew quickly after the company entered the skiwear market in 1986 with its trademarked Interchange System of layered outerwear. The company made a reputation for itself in part through an eye-catching advertising campaign featuring the chairwoman as hard-driven 'Mother Boyle.' The company is a global supplier of high-quality outerwear, with distribution in over 30 countries. The company operates a few of its own retail outlets, with stores in Portland, Oregon, Nagoya, Japan, and in Sydney, Australia. Columbia also sells discounted goods through its own outlet stores, with eight in the United States. The company went public in 1998. About two-thirds of the stock remains in the hands of the Boyle family.

1930s Origins

The Lanfrom family escaped from Nazi-controlled Germany before the start of World War II, resettling in Portland, Oregon, in 1937. The following year, the family, headed by Paul Lanfrom, purchased a small hat distributorship named Rosenfeld Hat Company and renamed it Columbia Hat Company. Such were the origins of Columbia Sportswear, a small, unknown hat company tucked away in a corner of the United States, one that half a century later would hold sway as a national leader in the sportswear market. Aside from the company's headquarters location in Portland, however, few vestiges of Columbia Sportswear's past remained by the 1990s. The transition from a small, locally oriented hat distributorship into a corporation with a global reach took decades to complete, but it began early, starting a few short years after Paul Lanfrom took control of the company.

The first of the many changes that shaped Columbia Hat Company into Columbia Sportswear occurred when Paul Lanfrom encountered problems with his vendors. The solution, as Lanfrom perceived it, was to begin manufacturing his products on his own. Though the move into manufacturing represented a signal milestone in Columbia Sportswear's development, it did not ignite the prolific growth that would later characterize the company. Rather, the company maintained a minor presence in the Portland area, operating as a small manufacturing concern capable of supporting Paul Lanfrom, his wife Marie, and their daughters in their new life in America.

A decade after Paul Lanfrom acquired Rosenfeld Hat Company, his daughter, Gertrude, married Neal Boyle, who subsequently joined the family business. Neal Boyle's ascendancy to control over the family business occurred in 1963 when Paul Lanfrom died and Boyle became president. By the time Boyle took charge, Columbia had begun to carve a niche for itself in the hunting and fishing apparel market, thanks in large part to his wife's contributions. Three years before her father died, Gertrude Boyle designed and made a fishing vest jacket on her home sewing machine that paved the way for the company's future. The bolero-style vest, which was outfitted with numerous pockets, was revolutionary in concept and moved the company headlong into the market for fishing and hunting apparel. Neal Boyle expanded his company's presence into this market once he took control. His era as company president, however, was unexpectedly brief. In 1970, at age 47, Neal Boyle died of a heart attack, leaving Columbia in the hands of his wife, Gertrude Boyle.

1970s: Mother and Son Take Charge

At the time of Neal Boyle's death, Columbia was generating $650,000 a year in sales, but was teetering on the brink of insolvency. Although the company had made headway into the market for fishing and hunting apparel, profitability in this line of business had been a problem for years, leaving Gertrude Boyle in the unenviable position of inheriting a floundering business. To make matters worse, Neal Boyle had offered three family-owned homes and his life insurance policy as collateral for a Small Business Administration loan several months before his death, which exacerbated the financial pressures Gertrude Boyle inherited in 1970. Despite the bleak prospects Columbia faced and despite her lack of any managerial experience, Gertrude Boyle showed up at the company's headquarters the day after her husband's funeral ready to take charge, vowing to keep the three-decade-old family business running under her command.

In the months that followed Neal Boyle's death, Columbia's financial health went from bad to worse. Bankers were reluctant to provide credit, some stores refused to stock Columbia's merchandise, and others experienced delivery problems. By the end of Gertrude Boyle's first year of leadership, the situation was grave, prompting the mother of three to sit down and negotiate for the sale of the company her family had owned since she was a child. From across the table came an offer of $1,400, which Boyle flatly refused, reportedly telling Columbia's prospective buyer, 'For a lousy $1,400, I'll run the company into the ground myself.' Boyle nearly did.

Gertrude Boyle's son, Tim, who had been working part-time at the company, left his final semester at the University of Oregon to join Columbia full-time after his mother balked at what she perceived to be an insulting bid for her family's apparel manufacturing business. Two years later, mother and son could not point to anything positive. Columbia had a negative net worth of $300,000, and as Tim Boyle later remembered, both he and his mother were at fault. 'We really blew it,' the younger Boyle admitted to Sporting Goods Business 20 years later. 'You name it, we did it wrong. We went in and fired everyone. We just didn't know what in the world we were doing.'

Gradually, however, Columbia's anemic financial health began to improve under the determined control of Gertrude and Tim Boyle. The mother and son team were given credit after pledging Columbia's $200,000 manufacturing facility. Subsequently, they dramatically reduced the company's involvement in the wholesaling side of the apparel business, which had been stifling profits for years. Once this was done, the company was able to scrape by during the mid-1970s by targeting specialty catalog operators. In 1976, however, Tim Boyle made a decision about Columbia's future course that put an end to the years of merely striving to eke out an existence in the sportswear apparel market. Boyle resolved to concentrate on building a brand-label presence in Columbia's markets. From 1976 forward, marketing the Columbia label represented the number one priority and, as a consequence, nearly every available dollar was earmarked for advertising.

Columbia reached the $1 million mark in sales in 1978, as the company earned a reputation in specialized circles as a hunting and fishing apparel resource. The explosive growth that would catapult the company and the Columbia label toward global prominence was still several years away, but one of the key individuals for engendering such growth joined the Portland apparel manufacturer before the 1970s came to an end. In 1979, Don Santorufo began superintending all the purchasing of materials and the manufacturing of merchandise at Columbia's manufacturing facility in Portland and then quickly expanded production by contracting out work to several independent Pacific Northwest contractors. It was a definitive move that marked the gradual decline of production activities in Portland and set the stage for years of exponential sales growth. Within ten years, all production in Portland would come to an end.

Explosive 1980s Growth

Columbia's annual sales climbed robustly as production expanded, rising from the $1 million recorded in 1978 to $12 million by 1983, when Santorufo hired Korean nationals to oversee manufacturing overseas. The decision to manufacture overseas proved to be instrumental in Columbia's resolute rise during the 1980s because offshore production enabled the company to make its apparel items at a significantly lower price. 'What we did was lower the price of quality,' Boyle explained years later. 'There was no need for performance apparel to cost what most manufacturers were charging for it. We were able to source better-made goods off-shore and offer them to consumers at a reasonable price.' Santorufo's deal with the Koreans was pivotal, but equally important was the development of what Columbia designers christened the Interchange System. Introduced the year before Columbia began manufacturing overseas, the trademarked Interchange System consisted of a lightweight shell jacket and a warm liner that zipped together, giving the wearer three jackets for different weather conditions.

Together, the decision to manufacture offshore and the development of the Interchange System provided two key ingredients for the success Columbia achieved during the late 1980s and into the 1990s. One other decisive move spurred the exponential growth to follow: in 1986 Columbia entered the skiwear market with a parka called the 'Bugaboo,' featuring the company's Interchange System of layered outerwear. The Bugaboo, which ranked as the greatest selling parka at its price point in the industry by the end of its debut year, put the company on the map, touching off prodigious growth that elevated Columbia into the elite of nationally recognized contenders. In the decade that followed the introduction of the Bugaboo, annual sales soared 1,600 percent as the Boyles inundated the skiwear market with their highly popular Interchange System products.

By 1989, after sales had swelled from $18 million the year before the Bugaboo entered the market to nearly $80 million two years later, Columbia's ski sales outstripped all other competitors in the United States. It was a remarkable rise underpinned by aggressive and creative advertising that transformed the Columbia name into a widely recognized apparel label. The Boyles set aside large sums of cash for advertising, spending twice as much as their nearest competitor, and starred in their own humorous advertisements. In the series of commercials, which debuted in 1983, Gertrude Boyle put her son, Tim, through a series of tests designed to illustrate the durability of Columbia's garments. The humorous advertising campaign featured Tim Boyle as the test dummy and Gertrude Boyle as 'One Tough Mother' and proved to be highly effective. By the beginning of the 1990s, Columbia had eclipsed the $100 million sales mark and the Boyles were mapping ambitious plans for the future.

In 1991, Tim Boyle announced his intention to reach $1 billion in sales by the year 2000, informing a reporter from Sporting Goods Business, 'I'm very serious about that figure. We have the management team in place and the product development to do it.' To achieve this formidable objective, Boyle expanded the company's product lines during the first half of the 1990s, adding several different lines of apparel and accessories that contributed significantly to the company's revenue volume. In 1993, a line of denim apparel was introduced, featuring jeans, vests, and shirts marketed under the 'Tough Mother' name. That same year, the company started a footwear division that manufactured the 'Bugaboot,' a rugged, outdoor shoe worn by Gertrude Boyle in advertisements featuring the tag line, 'My Mother Wears Combat Boots.' As the company moved into the mainstream of the apparel market with its line of denim wear, the awareness of the Columbia label grew significantly, aided by the perennially popular image of 'Mother Boyle,' by then in her 70s, in print and television advertisements.

1990s Diversification

In response to the growing, broad-based appeal of the Columbia label, sales surged ahead. Record sales were recorded in 1991 and again in 1992, when the one millionth Bugaboo parka was sold, making it the best-selling parka in ski apparel history. Following the introduction of Tough Mother denim wear and footwear in 1993, record sales were once again recorded, fueling confidence at the company's Portland headquarters that the strength of the Columbia label could indeed carry the outerwear manufacturer toward $1 billion in sales by the end of the decade. In 1994, when Columbia was named the official supplier to CBS Sports for the Winter Olympic Games in Lillehammer, Norway, the company entered the burgeoning market for snowboard apparel by introducing its Convert line of loose-fitting, insulated outerwear, which helped make 1994 a record year in sales.

By the mid-1990s, Columbia was growing by leaps and bounds, particularly overseas, where the company's revenue volume tripled between 1993 and 1995. At the end of 1995, President and Chief Executive Officer Tim Boyle made a move to steer Columbia in a new direction when he acquired retail space for the company's flagship store in Portland. The store opened the following year, showcasing the full range of Columbia apparel, footwear, and accessories. Next, Boyle sought to extend Columbia's retail presence overseas by opening a retail store in Seoul, South Korea, where 14 years earlier Santorufo had negotiated the first deal that inaugurated Columbia's offshore manufacturing.

The first Seoul store opened in 1997, with another 16 retail outlets slated for grand openings in Seoul by the end of 1997, giving Columbia a powerful new engine for sales growth as the late 1990s began and the company pursued its goal of $1 billion in sales by the decade's conclusion. Although not halfway toward its lofty sales objective by the late 1990s, the company was nevertheless performing admirably as it neared its 60th year of business. With Gertrude and Tim Boyle still at the helm, it was expected that Columbia would continue to flourish into its seventh decade of business.

Going Public: The Late 1990s and After

The company had been controlled by family since its inception in 1938. By the late 1990s, Gertrude Boyle was in her 70s, and Columbia had become a huge firm with distribution all over the world. In 1998, the company decided to sell a portion of its shares to the public, on the NASDAQ stock exchange. The initial public offering (IPO) was conceived as a way of compensating the Boyle family and chief operating officer Santorufo, and Columbia would not receive proceeds from the offering. Yet Wall Street was apparently anxious for a bite of the thriving company. The shares sold well above the starting price and brought the Columbia executives over $100 million. Though many fashion and apparel IPOs had not done as well as expected around the time Columbia went public, the company presented itself as a solid outdoor brand, and investors snapped it up. Its competitor, North Face Inc., had also had a successful IPO recently, and analysts seemed to think Columbia was in the same mold. In fact, Columbia continued to prosper over the next few years, building its tough and functional image by not bending to fashion. The company did try to expand its apparel lines into some more year-round products. Columbia began selling men's, women's, and children's socks in 1999, through a licensing agreement with the Tennessee firm Crescent Hosiery Mills. It also spent money on a new distribution center, investing $33 million in 1999. The company continued to expand in overseas markets, and made inroads in the department store market in the United States. It made an agreement with the midwestern regional department store Kohl's in 1999. Columbia also grew through expanding the number of in-store 'concept shops' it sold through. These were store-within-a-store areas that displayed a complete line of Columbia goods. Columbia had about 350 concept shops in 1998, and increased this by about 200 shops by 2000.

Columbia went briefly into the red in 1999 because of the expense of its new distribution center. However, by 2000, the company looked strong all around. Its international sales were on the way up, with sharp gains in Japan and Europe. Domestic sales too continued to climb, even though the retail market overall was not in good shape. The outerwear category was flat in general, yet Columbia posted sales growth of close to 30 percent for 2000. Net income went up around 70 percent for that year. The company seemed to do well by giving value--its prices were significantly lower than its competitors, such as North Face. And Columbia did not try to be fashionable. A writer for Forbes (December 25, 2000) noted that Columbia had 'barely tweaked its popular Bugaboo coat in 17 years.' By not trying to be trendy, Columbia reinforced its image of authenticity and practicality. An industry analyst who followed the company told WWD (Women's Wear Daily) in July 2000 that she believed 'they're like Nike was ten years ago. ... They have a technically advanced product line with something for everyone.' The company increased its footwear offerings by buying up the trademark rights to bankrupt Canadian boot maker Sorel in late 2000. It continued to concentrate on making inroads into year-round products, for instance signing a licensing agreement in 2001 to sell both sunglasses and ski goggles through a leading French eyewear manufacturer. With low debt, growing international and domestic sales, and a well-respected core brand, the company seemed in good shape to reach the financial goal Tim Boyle had set for it.

Principal Competitors: North Face, Inc.; The Timberland Co.; Lost Arrow Corporation.

Chronology

• Key Dates:

• 1938: Lanfrom family buys Rosenfeld Hat Company and renames it Columbia Hat Co.
• 1948: Lanfrom's daughter Gertrude marries Neal Boyle.
• 1960: Gertrude Boyle designs a multi-pocketed hunting/fishing vest for the company to manufacture.
• 1963: Neal Boyle becomes president of the company.
• 1970: Neal Boyle dies, and control of company goes to Gertrude and their son, Tim.
• 1976: After near bankruptcy, company refocuses on promoting the Columbia brand name of sportswear.
• 1978: Sales pass $1 million mark.
• 1983: Company moves its manufacturing overseas.
• 1989: Columbia becomes leading U.S. skiwear manufacturer.
• 1998: Company goes public.