As Columbia Sportswear turns 75, Tim Boyle takes aim at warming weather, Europe, growth challenges and increasing competition as he pushes the potential of a $2 billion iconic Oregon company.
Columbia Sportswear CEO Tim Boyle and his dog, Rocky, duck hunting on Sauvie Island. Watching Rocky "work" and the "modest amount of skill" it takes to shoot a moving target are among the pleasures Boyle takes in duck hunting.
// Photo by Anthony Pidgeon
On an uncharacteristically gorgeous November morning, the skies are blue, the sun is shining and Tim Boyle, president and CEO of Columbia Sportswear, is not at all happy. “If it were nasty, crummy, blowy, rainy, we’d see a lot more ducks flying around,” says Boyle, sticking his camouflaged head out of a duck blind. An avid duck hunter, Boyle likes to head out to Sauvie Island, sometimes waking at dawn before heading to the office, where the CEO is known for distributing the spoils to his staff.
But on this particular day, 63-year-old Boyle has yet to take a shot, even after decamping for an hour on swampy waters. On clear days, apparently, mallards prefer to hang out on the lake rather than fly around looking for cover.
The specter of clear and balmy skies has been a problem for Boyle on and off the hunting grounds. Columbia depends on sales of cold-weather products for about two-thirds of its revenue, so mild winters in 2011-12 depressed profits by 4.5% during the third quarter of last year; sales dropped about 4%. But if Boyle’s ill-fated duck-hunting outing is a metaphor for Columbia circa 2013, there’s more at stake than the weather. A sluggish global economy is also putting a damper on business, especially in the Europe, Middle East and Africa region, where sales during the third quarter of last year were down 40%.
There are internal pressures as well. The company’s profits are below industry averages, and its stock growth has underperformed compared to its peers in the past 18 months.
Columbia, which employs 4,000 people worldwide and grossed $1.7 billion in 2011, enjoys broad geographic distribution, excellent sourcing and widespread product appeal, says Boyle. “But we need to grow,” he says. “Frankly, we need to grow much faster.”
At the dawn of its 75th anniversary, Columbia’s captain is trying to right his ship and then go full-steam ahead. In 1971 Boyle left the University of Oregon to help his mother, the indomitable Gert Boyle, run Columbia after his father and second-generation owner, Neal Boyle, died unexpectedly of a heart attack. Forty years later, he’s proud of helping transform a family-owned business started by his immigrant grandfather into a company that has become a leader in an increasingly crowded global marketplace.
“But there’s a company down the street that has basically the same business model,” says Boyle, alluding dryly to Nike. “They design in Portland, market globally and source globally. They do $25 billion and we do $2 billion. We’re nowhere near our potential.”
To help reach that potential, Boyle and his team are launching new initiatives, debuting new warm-weather technologies and expanding geographically. These projects do more than shine a light on company tactics; they also underscore the unique character of an iconic Oregon company and its CEO, a man whose rumpled hair and understated speaking style makes him seem less a captain of industry than, well, a Columbia Sportswear outlet shopper — or, for that matter, a duck hunter. That contrast is an accurate reflection of Columbia, an outdoor apparel company that often feels more like a small family-owned business than a multinational corporation.
“We’re humble, not the kind of company that thinks it has everything figured out,” says Woody Blackford, Columbia’s vice president of global innovation. Boyle himself “is incredibly modest,” says Blackford. “He’s not the sort to overhype.” But if Boyle walks softly, he also carries a big stick. “Tim has a fixation on all aspects of the business,” observes Blackford. “For him it’s somewhat of a sport. Every season is a competition where it’s fun to win and sucks to lose.”
Modest yet aspirational, local but global, a purveyor of traditional hunting gear as well as high-tech outdoor fashion — Columbia is defined by the tension between its Pacific Northwest brand legacy and the desire to innovate in a rapidly changing international marketplace. Today internal pressures to grow the business are increasing, as are external pressures bearing down on that growth. Against that backdrop, Columbia emerges as a company trying to resolve those tensions, and to figure out which to exploit and which to overcome.
"We’ve been very conservative, some say too conservative.” It’s a rainy Tuesday morning and Boyle is in a conference room in the company’s Washington County headquarters, explaining what might be Columbia’s central duality: its tendency to proceed cautiously on the finance end while taking more risks on the product-development side. The path forward, he suggests, is about recalibrating that balance.
A multibrand company, Columbia has acquired several apparel and footwear companies over the past 15 years: Mountain Hardwear, Sorel and Montrail. But unlike competitors such as the VF Corporation, Columbia doesn’t seek to grow through acquisition, Boyle says. Instead, the focus has been on strengthening existing brands through innovation. In particular, Columbia develops proprietary technologies, then makes those innovations apparent to the consumer through creative product design.
The company’s Omni-Heat thermal reflective technology, thousands of metallic dots that reflect the wearer’s own body heat, is a case in point. The technology is visible as a kind of space-age silver jacket lining and thus is a constant reminder of the Columbia presence. “It’s very difficult to distinguish among apparel brands,” says Boyle. “We have determined the greatest impact occurs when consumers can see the differentiators.”
But lately, Boyle admits, Columbia consumers may be getting a little blurry eyed. It’s a problem with a history that dates back to 2008, when Columbia executives, concerned the company was losing its edge, began rebranding it as a company of innovation. Under the leadership of Nike alum Michael McCormick, then Columbia’s executive vice president for global sales, the team created a new product innovation lab and started churning out the kind of flashy technologies Boyle was describing: Omni-Heat Reflective, Omni-Wind Block, Omni-Dry Ultrabreathable Waterproof and so on.
Before the rebranding, Columbia was considered reliable but slightly frumpy midmarket outdoor wear. Post rebranding, the company elevated fashion alongside high-tech functionality, and prices rose correspondingly, with an Omni-Heat electric jacket commanding up to $1,200.
The new-and-improved Columbia has racked up accolades from the outdoor industry; in 2011 Outside magazine awarded the company a Gear of the Year award. But some financial analysts have been more skeptical, arguing that the brand suffers from a kind of identity crisis: no longer midrange but yet to prove its mettle against established premium labels such as market leader The North Face.
“The question is what it really takes for Columbia to be an aspirational brand so that people want it and desire it — and not just in the United States and Canada,” says Chris Svezia, an analyst with Susquehanna Financial Group. Columbia has come up with innovative ideas in the past couple of years, Svezia acknowledges. “But they have not been able to leverage growth in the Omni platform to more consistent global growth and margin improvements.”
In its fall 2010 launch season, Omni-Heat generated $75 million in global sales and was expected to grow to $170 million in 2012. In 2011 the industry average earnings before interest and taxes was 13%. Columbia’s was 8.1%.
// Photo by Anthony Pidgeon
Boyle has heard the criticism, seen the numbers and is making adjustments accordingly. Today “elevating the brand” is the company mantra, he says. “But could we have better financial results if we took a slightly different approach? To the extent we think we can, we will be modifying our behavior.” In fact, last fall the company began tweaking its innovation strategy, aiming to roll out new products at a more sustainable pace.
The plan has lofty origins: Diffusion of Innovations, a widely acclaimed book based on a study of hybrid-corn adoption in the 1950s. The model shows how new ideas and technologies are diffused throughout the population. “There are the early adopters, the early and late majority, and then there are the laggards,” says Boyle, pulling out a chart summarizing the concept. “Laggards are the people who are going to get a phone call from the phone company saying we’re taking away your rotary now.”
Where is Boyle on the Diffusions of Innovation scale? A self-identified laggard, on account of his Twitter- and Facebook-free status. Boyle also owns a 7-year-old hunting jacket “not because we don’t continue to improve, but because I know where stuff is and it’s still working great.”
The Columbia plan is to spend more money on sales and marketing so consumers have more time to learn about and latch onto Omni technologies. “It’s all about timing, cadence,” says Boyle.
It’s also about getting the company’s entrepreneurial rhythm back. Between 2001-04, Columbia was producing profit margins in the 20% range, the kind of surplus that allowed the company to build a great balance sheet, Boyle says. The company has no debt and holds about $200 million in cash. “But you could argue,” he says, “that we didn’t take advantage of the opportunity, and should have plowed more money into marketing to forestall other competitors from coming into the marketplace.”
Boyle in the Columbia Sportswear employee store at ehadquarters just outside Beaverton. The company employs 4,000 people in the United States, Asia and Europe and has outlets in over 100 countries.
// Photo by Anthony Pidgeon
Columbia’s rebranding initiative and subsequent modifications tell a story about the company — a story about a company willing to try new things and make mistakes, with Nike lurking, omnipresent, in the background. But if the footwear behemoth looms large in the Columbia psyche, it’s not just because Nike veterans have left their imprint on the company or because Nike has far bigger coffers. There's a qualitative distinction, one that underscores the challenges facing Columbia, as well as the company’s ability to capitalize on a less corporate and more familial cast of characters to bolster its brand identity.
Nike, says Boyle, “is supported by sports and marketed by utilizing powerful celebrity athletes to support the brand.” Columbia, by contrast, operates in the outdoor sector, where there is a noticeable dearth of celebrity hikers and fishermen. “The outdoor business,” Boyle says, “has to be driven by other motivators.”
To understand Columbia’s take on some of those motivators, start with the company’s hit 2011 satirical ad for Omni-Heat, in which Dutch stuntman Wim Hof roams the Arctic in nothing but shorts. “Wim Hof is clearly a nut,” says Boyle, who showed the clip during a recent appearance at a Salem Rotary Club meeting. “He’s the antispokesperson.”
With its fan culture and “Just Do It” messaging, that other apparel company down the street is an unabashed marketing machine. But Columbia is more ironic, with ads that poke fun at the image of the rugged outdoorsman while touting the endurance and technical aspects of the company’s products. That sardonic tone may be a reflection of Boyle, a man longtime friend John von Schlegell, among other friends and colleagues, describes as “really funny,” with a dry, understated sense of humor. But the Hof commercial is also a modern update on the company’s enormously successful “One Tough Mother” advertising campaign, which, in the 1980s and ’90s, transformed the Oregon label into an internationally recognized apparel company and made Gert Boyle the face of Columbia Sportswear for decades.
“Anybody who knows about the company knows about her,” says Boyle. “Few know about me, and that’s fine.”
At 88, Boyle senior is chair of the board; she, Tim and his sister and director, Sarah Bany (the proprietor of Moonstruck Chocolates), own 62% of Columbia stock. In 2011 Boyle’s total compensation was $1.9 million, including $859,000 in salary. He took a 50% pay cut for 2012 after the unseasonably warm weather shrank the company’s sales forecast, prompting the company to lay off about 80 employees. Following a cold winter in 2010, the company posted record earnings in 2011. Today Columbia’s stock is trading at about $52 a share, down from about $70 in May 2011.
Along with its self-referential advertising, Columbia’s family-controlled but publicly traded status is another one of the dualities running through the company. It’s a combination that makes Columbia a better company, Boyle says. Columbia has to abide by the transparency requirements of a public company yet also enjoys a close-knit, highly contributory board. Having a woman as the face of the company is also another “differentiator,” he says.
Gert Boyle still goes to work every day, chauffeured to and from the Mirabella retirement community in Portland’s South Waterfront neighborhood, where she has lived ever since she was the victim of a botched robbery and kidnapping attempt in 2010. “I’d like to see the company stabilize,” she says one morning from her office, which is just 100 yards from her son’s. “I’d like the weather to get really cold. And Europe … well, it’s just as the Irish say: the shits.”
Columbia Sportswear moved its headquarters from Portland to its current location near Beaverton in 2001.
// Photo by Sierra Breshears
Columbia’s mother-son team reinforces the brand as tough, funny and accessible, if not exactly aspirational. But when it comes to technological innovation, the company is increasingly geeky and very serious. For decades, much of Columbia’s innovation push has focused on keeping people warm. But this is the era of climate change, and as Columbia seeks to grow amid all sorts of global transformations, a company once focused on keeping people warm is now devoting more resources to keeping people cool.
Most of the world’s population lives in hot-weather environments, says Blackford. To tap that demographic, Columbia this spring is launching a breakthrough technology: Omni-Freeze Zero, a fabric that harnesses the power of sweat to make the wearer feel cooler.
Embedded with distinctive blue rings — that visibility thing again — the technology will debut in dozens of Columbia products, ranging from Columbia’s new Drainmaker watersport/running shoes to apparel and accessories. A similar technology, Cool.Q Zero, will be introduced in many products under the Mountain Hardwear brand.
The new polymer should help Columbia equalize sales of winter and summer products, says Blackford, adding that few competitors occupy the “cooling” space. “It’s one of our best opportunities to grow market share.”
Reed Anderson, an analyst with Northland Capital Markets, agrees. In a typical year, he says, Columbia gets more than 60% of sales and almost 100% of profits from its third and fourth quarters, which encompass the fall/winter selling season. “As Columbia’s warm-weather assortment continues to expand, the brand will become more relevant to its customers, both retailers and consumers alike,” says Anderson.
Targeting the cooling market is one way Columbia aims to boost revenues; expanding in the world’s largest potential geographic market is another. Columbia is already the largest outdoor brand in China, where the growing consumer demographic views the brand as “ultra-premium,” according to Boyle. This past fall the company signed a joint-venture agreement with Swire Resources, a distributor of Columbia products in China since 2004. Swire’s 2011 Columbia sales totaled approximately $123 million, and they are expected to achieve double-digit growth for 2012. The partnership will help bolster Columbia’s presence in the world’s most populous country, Boyle says. “China is our biggest opportunity.”
A Democrat who voted for Romney, Boyle did single out a potential limiting factor: the Obama administration’s recent trade cases against China. “Our business is very oriented toward trade, and Obama has put a lot of our business at risk,” he says. Those kinds of declarations spotlight Boyle’s occasionally controversial political persona as corporate executive who airs critiques of government officials and then takes action. In 2009 Boyle helped finance a Sam Adams recall campaign; four years earlier, he delivered a famous speech at the Portland Business Alliance lambasting city leaders for creating a hostile business environment.
“For those who agreed, there was a private moment of euphoria,” says Ryan Deckert, president of the Oregon Business Association. “But for the rest of the room, it was a big thud.” Boyle’s decision to cofound a higher-education PAC last year, a move aimed at supporting independent governance for state universities, springs from a similar sensibility, Deckert says. “He’s one of a few CEOs who throws deep and plants a flag.”
In business and in politics, Boyle can be pugnacious. But this is a complicated man. On the subject of Columbia’s sluggish sales in Europe, he is more self-effacing. “I’d love to blame 100% of our problems on the weather and the economy. But there are other factors.” The company needs to do a better job identifying the right mix of products for retailers and delivering services more efficiently, he says — tasks Boyle accomplished on a recent weeklong European tour. “It was a good trip,” he says, noting that Norwegian chain XXL wanted more accessories, which apparently sell at a much higher rate than in the U.S. “It’s much clearer what we need to be doing to get the business back in line.”
The trip yielded other benefits. “We always have to remind ourselves that the company is so much bigger than just Portland,” Boyle says. “We can get a little myopic.”
This is Boyle’s plan for Columbia’s 75th birthday: to get the company back in line. He’s got his hands full. Fifty percent of Columbia product sold in Russia is counterfeit; last year’s warm winter has created an inventory backlog; and on top of everything else, McCormick, the architect of the company’s rebranding strategy, resigned last summer citing undisclosed personal reasons. “It’s increased my workload,” says Boyle, adding that the company has not yet decided if and how to reorganize in the aftermath of McCormick’s departure.
That sounds a bit like the Columbia ship is adrift. But despite recent disappointing sales results, Boyle is careful to say, Columbia is doing a better job managing expenses today than in the past. “I’m often asked by investors how big the company can get,” says Boyle. “The answer is simple: There’s no top.” On the subject of Columbia’s below-average profits, he is more specific: “We should at least be average.”
It’s a modest-sounding goal. Then again, striking a midpoint is Columbia’s modus operandi, be it balancing the innovative and the conservative, warm weather with cool, or high fashion with functionality. It’s a strategy that has brought the company tremendous success and a few setbacks.
In the 21st century, of course, most multibrand, multigeography apparel companies have something for everyone. But Columbia seems to wear the complexities and contradictions of globalization on its sleeve, a quality that makes the company appear more accessible than its competitors. At the same time, Columbia’s balancing act is now at a tipping point, as the company moves more aggressively to embrace its innovation and marketing side, while absorbing, more quietly, its solid and traditional Pacific Northwest heritage.
It’s a corporate dynamic that will continue to be shaped not only by global forces but by internal developments as well. Boyle’s son Joe works for Columbia as a merchandising manager. (A daughter, Molly, works for Gap.) But Columbia is not a family-owned company, and Boyle will not be appointing a fourth-generation successor. Asked about that succession, Boyle says pragmatically, “We have a lot of great employees with significant stakes in the company who are quite capable.”
Columbia Sportswear without the Boyles would be a very different Columbia indeed: slicker, perhaps, less straightforward, less Oregonian. It’s impossible to know. One thing is clear: For better or for worse, the Columbia of today straddles several identities, a trait perhaps best embodied by Boyle himself, a man with a signature ability to navigate different worlds.