REI says its sales soared to $2.2 billion, up 9.9 percent from 2013 — the biggest annual increase since 2010, when the Kent-based retailer and its customers were bouncing back from the recession.
A gaggle of new REI members, as well as high demand for outdoor classes and trips, helped the nation’s largest specialty outdoor retailer chalk up a record year in 2014.
REI says it sold $2.2 billion worth of trips, kayaks, fleece and other accouterments of an active lifestyle — up 9.9 percent from 2013. It’s the biggest jump in annual revenue since 2010, when the Kent-based retailer and its customers were bouncing back from the recession.
The announcement caps the first full year at REI for CEO Jerry Stritzke, who joined the company from luxury-handbag maker Coach in late 2013. “We aim for steady growth so that we can invest in the outdoors,” he said in a statement.
REI, which is the largest consumer cooperative in the U.S., is also refunding a record amount of cash to its active members: some $168 million, including an unspecified amount in rebates for holders of the REI Visa card. That’s 6.7 percent more than last year.
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The results, compared to the prior year, underscore the co-op’s resilience in the midst of the sluggish retail environment that, following the Great Recession, still haunts many large store chains.
It’s all the more unusual, given that the company is a rare cooperative operating in a dog-eat-dog sector where competitors fiercely squabble over razor-thin profits.
The opening of seven new stores — ranging from Fairbanks, Alaska, to Knoxville, Tenn., and Southlake, Texas — was a big driver for the growth in revenue.
But the most important metric of any retailer’s success in drumming up business is comparable sales — that is, sales from stores open for more than a year. In 2014 it was a healthy 4.2 percent, compared to 2.9 percent last year, and a healthy pace compared to many other retailers.
For example, Wal-Mart saw comparable sales in its U.S. stores rise just half a percentage point in the same period. A more direct competitor to REI, Dick’s Sporting Goods, saw same-store sales rise 2.4 percent in its fiscal 2014, which ended in January.
Those so-called “comp” numbers include online sales. But chief financial officer Eric Artz said growth was mainly driven by in-store traffic and reflects how REI has managed to reverse a negative trend that had hobbled it for a few years.
Customer traffic turned positive in 2014 thanks to investments in the store experience and the highlighting of departments such as fitness and outdoor electronics, Artz said.
“We’ve gone back to who we were,” Artz said in an interview.
REI’s outdoorsy gospel also spread more quickly than ever before, with 945,000 new members joining the co-op. That brings the number of active members (those who’ve spent money there in the past 12 months) to 5.5 million, a nice bump after two years when the membership rolls stayed flat at around 5 million.
REI also saw booming business at REI Adventures, its travel division, which grew by 19.4 percent. The REI Outdoor School, which offers classes and day outings, grew 28 percent.
In the fall REI introduced a new brand, dubbed “REI Co-op,” featuring down jackets and vests.
REI says the new brand sold $1 million in less than 20 days, and an expanded collection with be launched later this year.
Despite the success of its franchise, REI still grapples with a challenge that has confounded many retailers: how to be successful in the exploding world of online retail.
For REI, the problem comes down to somehow translating into the point-and-click world the qualities that keep people coming to its brick-and-mortar stores — attractions such as climbing walls, as well as classes and outdoorsy salespeople.
In 2014 the growth of the company’s digital business was “not explosive,” Artz said.
REI is working on a new website to simplify the menus for merchandise and more efficiently impart the information customers are looking for, said Artz. It’s likely to launch in the second half of this year.
REI is also pitching two candidates to its 13-member board of directors: Christine Day, the former CEO of active-gear retailer lululemon, and Matt Compton, former CEO of ShopIgniter, a Portland ad technology company.
If approved by members, Day would replace Gerry Lopez, who chose not to seek re-election to the board. Compton currently serves as a director appointed by the board, but a recent change in rules determined that now all seats except Stritzke’s were to be elected.
REI is plowing some of its 2014 profits back into the communities it serves: It said it would invest $5.7 million in nonprofit partnerships to expand access to the outdoors.