REI doubles its annual profit, will begin mailing out refunds


This article was originally published by The Seattle Times.

By Amy Martinez
Seattle Times business reporter

REI told its merchandise buyers last year that what it needed more than ever were new, gee-whiz products to take people’s minds off the recession. So it doubled down on such items as stand-up paddle boards and slackline kits for backyard tests of balance.

seattle-times-2011311844 (CLIFF DESPEAUX / THE SEATTLE TIMES)
REI’s recession strategy in 2009, said Chief Executive Sally Jewell, was to “find things that would excite people and get them into the outdoors.”

“Maybe,” Chief Executive Sally Jewell offered, “someone doesn’t need to come in and buy yet another pair of black shoes or hiking boots.”

Kent-based REI also cut costs, carefully managed its inventories and avoided deep discounts.

It posted a 2009 profit of $29.8 million, more than double the $14.5 million in 2008, according to a preliminary report on the cooperative’s Web site. Annual sales edged up slightly to $1.46 billion from $1.43 billion the year before.

Based on those results, REI will begin distributing more than $80 million in rebates to 3.9 million active members this week.

The outdoor-gear and apparel retailer, which a year ago announced the elimination of about 60 full-time positions and an unspecified number of part-time, hourly-wage jobs, is returning to “more normal” profits after a rough 2008, Jewell said.

Sales at stores open at least a year, called same-store sales, declined 3.5 percent for 2009, better than the 5 percent drop REI expected.

In addition to slacklines and paddle boards, REI introduced or expanded its selection of helmet cameras, children’s beginner bikes and handlebar baskets.

The strategy, according to Jewell, was to “find things that would excite people and get them into the outdoors. Help them get through some of the blues we’re all experiencing because of the economy.”

For the fourth quarter, REI reported a 2 percent jump in same-store sales, compared with a 2.5 percent increase at Dick’s Sporting Goods and a 0.1 percent gain at Big 5 Sporting Goods.

Jewell described the holiday season as “good,” adding that customers “opened their wallets and didn’t worry as much when they shopped at REI if something was on sale.”

Still, amid widespread economic uncertainty, the outlook remains “tough,” she said, “and people are being careful” about their purchases.

Sitting down recently at REI’s 900-employee campus, Jewell discussed everything from first lady Michelle Obama’s fight against childhood obesity (“incredibly valuable,” as long as the need for outdoor play isn’t lost in all the talk about organized sports), to whether REI will open stores outside the U.S. (not anytime soon).

REI added five new stores last year and will expand this year to Bozeman, Mont.; Norwalk, Conn.; and Tucson, Ariz., bringing its nationwide total to 113.

Jewell said she would like to have more than three openings this year, but because many developers can’t get the financial backing to complete new projects, there isn’t the space. She noted that a planned store in Oxnard, Calif., which was to open last fall, is an unfinished hole in the ground.

With no debt on its books, REI is “a rock-solid tenant that any mall developer would love to have. The problem is they can’t get financing,” she said, suggesting that REI might develop property itself.

“We’re not anywhere near saturated. We have no stores in Florida, for example, and we have only one store — soon to be two — in the Greater New York metropolitan area.”

Jewell also credited a recessionary trend called the staycation — vacationing nearby, rather than flying off to some expensive destination — for boosting sales of camping gear.

The trend hasn’t been entirely positive, though. Asked what products are hard-hit by the recession, Jewell, after a few moments, offered up luggage.

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