Columbia Sportswear incurred a $35.6 million non-cash impairment charge against its outdoor lifestyle brand Prana, in part because the brand has not performed as well as expected since it was acquired in 2014, Columbia executives said on an earnings call Thursday.
However, the company remains optimistic about the brand’s prospects.
“We’re very bullish on the Prana brand,” Columbia CEO Tim Boyle told analysts. “We have talked a lot about the reset going on in their product. We just believe it’s taking longer than we anticipated and wanted to make sure that we were prepared to give ourselves the time to turn that brand around.”
In Q4, Prana’s sales totaled $32.3 million, down 6% in constant currency. The sales decline was driven by softness in the wholesale business, which was impacted by late product deliveries and partially offset by DTC growth.
For the full year, Prana’s sales totaled $143.1 million, up 1% in constant currency.
Columbia executives are excited about Prana’s sponsorship of the reality series “The Climb” on HBO Max that is hosted by actor Jason Momoa and Prana ambassador Chris Sharma.
“We believe this series has a unique opportunity to raise awareness for Prana as we reestablish the brand’s roots in key activities like climbing,” Boyle said. “The Prana team remains focused on repositioning the brand in the marketplace to energize growth.”
In an investor presentation posted on the Columbia Sportswear website, Prana is being positioned as “an active wellness brand.”
The core strategy revolves around making great product, building the brand, and developing balanced omni-channel distribution.
Columbia acquired Prana for $190 million in 2014. In 2015, its first full year under Columbia, Prana’s revenue totaled $125 million, according to Columbia financial reports.