Please welcome Andrew Burns, Vice President of Investor Relations and Strategic Planning.
All right. Thank you. Good morning, everyone. Today, you'll be hearing from a number of leaders across our brand portfolio. We ask that you hold your questions related to the presentation until the Q&A session at the end of the prepared remarks. The webcast portion of the event concludes at the end of the Q&A session, and then we'll be hosting some booth tours and an innovation lab tour for those attending in person. Please take a moment to review the slides shown here. During today's event, we'll be making a number of forward-looking statements that are subject to risks and uncertainties. Actual results could differ materi ally from the statements made today. Additional information regarding the factors that could influence our results can be found in our Form 10-Q filing with the SEC. We will also reference free cash flow, which is a non-GAAP measure.
A reconciliation of this financial measure is provided at the back of this presentation. Now for the fun stuff. Enjoy the show.
Good morning. Appreciate you being here. I'd like to welcome everyone to Portland and those that made the trip here, as well as everyone listening on the webcast. I've been here at Columbia since 1949. This is our 24th year of being a public company. Why are we doing our first ever Investor Day now in 2022? Since going public in 1998, we've delivered over 1,100% total shareholder return, outpacing the S&P 500. We've achieved this through continuous innovation and a lot of hard work by outstanding people. We've grown four amazing brands, but we've never really given you a deep dive into our strategy, something that goes way beyond the limited format of a quarterly call.
Today, we'll give you a more thorough understanding of the company's heritage, our product innovations, and the strategies that fuel our success. As I look at the collective strength of our brands, products, and talent, I'm confident that the strategies we have are working. We have tremendous long-term growth opportunities ahead. All of you follow this market closely, so it's not a surprise that the market opportunity is massive. Worldwide, the outdoor apparel and footwear market is estimated to be about $40 billion. The pandemic increased interest in outdoor activities globally, and we're well positioned to capitalize on this trend. The outdoor industry sits within the active category, which is over $160 billion. Over the last two decades, you've seen growing interest in the health and wellness category, and as a result, activewear has exploded in popularity. From workplace attire to social activities, the world is becoming less formal. All this fuels growth in the active category.
Ultimately, we compete in the global apparel and footwear industry, which is about a $1.5 trillion market. We have four amazing brands in our portfolio. Together, they help us cover the marketplace like no one else. The Columbia brand's differentiated innovation, its value proposition, and outdoor heritage uniquely position the brand to capitalize on the popularity of outdoor activities. SOREL, emerging as the next footwear force with year-round function-first fashion footwear. We expect SOREL to be our fastest-growing brand over the next three years, and you'll hear a lot more about that later. Mountain Hardwear's authentic top-of-the-mountain products are engineered to protect elite alpinists in some of the harshest environments imaginable. When you're 20,000 ft up a mountain, your gear has to work. It matters.
prAna, which is undergoing a brand refresh and is committed to sustainability, we've positioned the brand to strengthen its long-standing position in yoga and to capitalize on the next wave of growth in climbing. Today you're gonna hear directly from the people who will lead the charge. Each brand's gonna share their unique product and growth strategies that will fuel our profitable growth ambitions. As part of Investor Day, I'd like to share our tuned strategic priorities. We're not changing how we create shareholder value, but we take this opportunity to better align our stated strategic priorities with how we approach the business every day. We are a growth company. Our overriding strategic priority is to accelerate profitable growth. The foundation of this growth is creating iconic products that are differentiated, functional, and innovative.
From the first fishing vest our founder, Gert, sewed more than 60 years ago, to the first Interchange jacket to hit the market, we've pioneered new products to solve problems since our company's founding. To drive brand engagement and sales growth, we remain committed to investing in demand creation. From 2017 to our expected 2022 spend, we will have increased our demand creation investment by over 70%. We've been able to make these investments while continuing to improve our operating margin. Our company culture is built on relentless improvement. We strive to enhance consumer experiences, and in this vein, we're investing across our technology platforms and supply chain to enhance our capabilities. We're also focused on ensuring that our products' physical presence reflects the quality we design into them wherever consumers choose to shop. We call this Amplify Marketplace Excellence.
We'll lead with digital while continuing to invest across our channels and geographies. This company was founded as a wholesale company. That's our heritage and will remain the priority for the company. People are the foundation of our success. They've powered us through the unprecedented challenges of the pandemic, and we've emerged in an even stronger position. We pride ourselves in a company culture that empowers talent through a diverse and inclusive workforce. Our company culture and our success are driven by our core values. Compete to win. Relentless improvement. Remember Gert's quote, "It's perfect. Now make it better." A culture of honesty, respect, and trust, and most importantly, doing the right thing. During today's presentation, we'll hear, you'll hear about each brand's efforts to do the right thing as it relates to environmental and social causes.
We established our corporate responsibility program in 2001, and it remains an important part of our culture and responsible business practices. Across our brand portfolio, we use environmentally preferred attributes and materials to reduce the impact the company's products have on our planet. As an example, we've committed to a 30% reduction in our Scope 3 manufacturing emissions by 2030 compared to a 2019 baseline. For the Columbia brand, sustainability is a key focus of our in-house innovation efforts. We've developed products like OutDry Extreme, our proprietary waterproof, breathable membrane, which has no added PFAS. We also support organizations like Conservation International, Planet Water, Ocean Conservancy, and the HERproject, among others. We strive to do the right thing, not just for our company, but also for our consumers, our customers, employees, and the communities we serve.
Today we're gonna share our plan, growth plans through 2025. We're confident in our strategies and the ability to unlock this 9%-11% annual net sales growth over the next three years. With operating margin expansion. Personally, my own growth ambitions for the company are much higher. My focus will be to accelerate growth above and beyond this financial plan. We're projecting broad-based growth across all of our brands, channels, categories, and regions. We see meaningful growth opportunities across our business with growth led by footwear, international, and the digital businesses. We know that near-term operating environment has uncertainty. Growth will never be perfectly linear, but our confidence in our long-term growth opportunity does not waver. Since our IPO in 1998, we've generated a 9% net sales growth CAGR, and we look to improve this into the future.
2025 is by no means the end of our growth potential. We approach every year with the ambition to grow net sales double digits with steady operating margin improvement over time. In summation, welcome to Portland and to our first Investor Day. We're glad you made the trip. We have a terrific growth story beginning with our largest brand, Columbia. Thank you.
Good morning, everyone. I'm Joe Boyle. I'm the President of the Columbia brand here at Columbia Sportswear. I've worn a lot of hats at this company over the years. Actually, I created the hat that I'm wearing right now. This is one part of our growth story. We sold 4.8 million of these hats last year, but we're gonna come back to that.
You know, I've officially started working here in 2005, but I've literally worked here since I was a little kid. I've seen this brand up close and personal. I've worked in the warehouse. I've worked in the sales department. I've worked in planning, merchandising, international markets, marketing, to name a few of the divisions. I can tell you, the power of this brand is real. The growth opportunity in front of us is substantial and has never been bigger. We've never been better positioned to take full potential of this opportunity. Our mission here at Columbia is to unlock the outdoors for everyone. Now, that's a powerful statement. Our brand is not just about serving outdoor consumers. It's about enabling everyone to enjoy the outdoors.
As you saw, our vision is to serve everyone, and that fuels our ambition to be the number one outdoor brand in the world. Today, we're going to tell you about our potential, our products, our marketing, our strategies that will enable us to realize that vision. Mission and vision statements can sometimes be a little vague, so let me get a bit more concrete for everyone. We believe realizing our mission and vision will add an additional $700 million to our top line by 2025.
You heard Tim say this, and I'll say it again. It all starts with product. We create amazing products that solve problems for consumers each and every day. A little later on this morning, you're going to hear from Dean Rurak and Haskell Beckham. They're going to walk you through our product lines, our innovations in detail. I want to share with you how I think about our products, the products that will enable our growth for the next three years. This morning, I'd like to tell you about three components that I focus on every day around our brand. First, let's talk about the brand itself. Let me tell you about a big, powerful brand moment that I've experienced myself here at Columbia. Let's rewind to 2014. Our annual Columbia brand revenues were $1.8 billion. We had a category that was underperforming. Hats.
We sold close to 100,000 ball caps annually. Ball caps and accessories in general were an undersized category of business, particularly ripe for opportunity to grow. When you think about it, the most expensive advertising on an athlete, particularly professional golfers, is on the forehead. We've got athletes wearing our brand for free on their foreheads. Take Steele Chambers here. He's a linebacker for The Ohio State University. He could have chose to wear whatever he wanted to wear during the Rose Bowl interview that he gave earlier this year. What did he wear? He wore a Columbia hat. He just wore it. I've worked here for a while, and I've spent years focused directly on our consumers and what we could provide them in the headwear category.
Back in 2014, a lot of people could never foresee Steele giving an interview at the Rose Bowl wearing that hat. Some of those people worked here at Columbia. They thought our logo on the product was too big. They thought no one would ever wear that on their forehead. This initial prototype right here from 2014 sold 100,000 units. Not bad, but not exactly a blockbuster. We kept at it. We continued to innovate around what consumers wanted. After a couple of years, we broke through. By 2021, we sold over 4.8 million units of these hats annually from around 100,000 to over 4.8 million units. Really focused on what consumers wanted. Really amazing. That's just one example.
It shows you the power of the brand with our consumers. This is now one of our single largest categories by unit volume in the entire company. When you get products right, people want to wear your brand. They take pride in it the same way we do every day here at Columbia. Dean is gonna tell you about our products, and Pri Shumate is going to tell you about how we build deep connections with our consumers a little later this morning. I'm gonna let you in on a little secret about how we operate here at Columbia. Sometimes our success isn't an actual product, but an idea, an innovation. We launched Omni-Heat over a decade ago, and it has been one of our most successful innovations, if not the most successful innovation for the company. It works incredibly well.
Consumers instinctively know something is different when they look at the silver dots on the lining. During the height of the pandemic, when many companies were cutting R&D budgets and costs, we leaned in hard. We knew we had something here, so we kept at it. Our new Omni-Heat Infinity was born out of relentless approach. "It's perfect. Now make it better," as Gert used to say to me every day in the office. We didn't know when we started Omni-Heat that we created innovation that would go out of this world. Literally out of this world. Haskell will tell you more about that a little later. To me, there's nothing more exciting than seeing our technology on a lander when the SpaceX rocket blasts off into outer space. Now, of course, developing great products and establishing a trusted brand is only part of our equation.
Eventually, you have to get people to buy your products. Let's talk about consumers. This is the second component that I think about every day here at Columbia. Specifically, we have to understand where our consumers are going. We have to pay attention to where they will be and who they will be in the future. The United States Census Bureau estimates that by 2045, America will be a majority minority country, and that population is growing. Why might you ask, is that important? Well, what it means is for us, there's a huge opportunity in our biggest market here in the United States. Because demographics are changing, we need to position ourselves to serve the younger and more diverse consumer of the future. They're going to be right here, right in front of us.
We are already embracing this change and essentially moving our business to where the opportunity is. We've been a trusted brand for over 80 years because we've done the right thing. We've listened to the people who buy our products, people who've been a key part of maintaining that trust, not only here in the United States, but around the world. And if we get these first two components right around our brand and our consumer, the third component, our business, will be well-positioned for massive growth. Let's talk about our business to round things out. A bit later this morning, Tim Sheerin is going to walk you through our marketplace strategy. He's going to share a lot of the details on our current channel strategy and how we go about growing our brand around the world.
Executing a global marketplace strategy is extraordinarily complicated, but our philosophy is shockingly simple. We wanna be accessible. We want the Columbia brand to be everywhere consumers shop, and we want our products to look great no matter where they are found. One thing that I've learned working here for a while is that it's not a complicated business when you think about what we do. Sure, you need a lot of talented people, a global supply chain, a ton of technology to harness the growth. Our formula for success is incredibly simple. Solve problems for consumers and provide the highest value possible. Build trust and deep connections with them, and then make sure your products are accessible to them. Honestly, as I've watched our company grow over the decades, I've realized that we do each of these things very well.
Now, we're confident in our approach, but we will always remain humble. Like a lot of companies, we get product feedback from consumers every day. Most of it's fantastic. But right next to my desk, I have a physical pair of framed pants. In 2017, an envelope arrived at our distribution center from somewhere in Europe. No return address. Inside was some choice feedback from a customer about a pair of our pants. Let me read you the first quote. "Well done, genius." I think he was being a little sarcastic. Second quote, "Why change something that is perfect? I don't care if your stupid designers have nothing to do." Here you can see he's upset that we changed the width of the pant leg.
Lastly, he wrote, "Thanks, idiot." Now, sure we have positive letters all the time, but the reason this hangs right next to me in my office is that we always want to be a humble brand. That reminds me every day that we shouldn't get too full of ourselves. Here at Columbia, we're always serving consumers. That's a snapshot of how I think about the Columbia brand, our consumers, and our business. This is how we're going to unlock the outdoors for everyone and be the number one outdoor brand in the world. That's how we're gonna add $700 million to our top line by 2025. Let's get into the details. First up, Pri is going to tell you about how we're going to future-proof our brand and make sure we're right there for all of our consumers.
With that, Pri, take it away.
Fantastic. Hi, everyone. My name is Pri Shumate, and I have the honor of being Columbia's Chief Marketing Officer. I've been in the role for a little under six months, and I'm really excited to share with you today what I've learned and what we're planning. Last year, Forbes voted us the most trusted brand in America. We have one of the highest awareness scores in the industry, and yet we think we're just scratching the surface. You've heard Tim talking about our addressable market. It's big, and it's growing, including both the outdoor and activewear categories. We are one of the largest outdoor brands in the world. We're not only competing with our competitors, we're competing against our potential.
Trust, in our case, stemming from what we believe are the most innovative, most dependable, and highest value outdoor products on the planet is no longer enough when it comes to how consumers make decisions. Gen Z, who will be 30 in five years, by the way, is likely to be one of the most impactful generations ever. For them, everything matters. The quality of your product, of course, but also who runs your company, who works at your company, what you do for the planet, who you partner with, collaborate with, and don't partner or collaborate with, and of course, the type of experiences that you offer consumers beyond product. While they are just one portion of the consumers that we serve today, their influence is substantial, and consumers are changing all over the world.
We've done a great job over the years elevating our product and innovation, and clearly, it's earned us an enviable position in the marketplace. For example, we have earned a very, very loyal base of consumers who absolutely love our product. The Columbia Greater Rewards program is just one example of that. Greater Rewards members represented over 60% of our U.S. e-com business in 2021. They spend more and purchase more frequently than non-members. Most importantly, our enrollment is growing. We also have people sending Tim letters all the time, letting him know how much they love the product and how they're grateful for their function and durability. Recently, Kevin Olmstead, right behind me here, a well-known Mississippi angler, told a story in a podcast of how a Columbia PFG shirt saved his life.
He explained that he was fishing in the Mississippi Sound and fell off his boat in really rough conditions. He had a Columbia PFG long-sleeve shirt on, and according to him, he was able to trap some air in the sleeves. He survived for over 9.5 hours holding on to this Columbia PFG shirt, which ended up becoming a talisman of sorts for him. Of course, the shirt didn't save his life. We know that, but we really love it that he thinks that it did. Here's Kevin in his new boat wearing the new Columbia shirt that we sent him. It's on the back of this position of strength in the marketplace and consumer loyalty that we've started the work around future-proofing the brand.
The rest of my time with you, I will spend sharing how we intend to do that, and thus edge closer to our potential. I'm gonna talk about three things. One, our consumers and how we plan to connect more deeply with them. This is where we'll spend the bulk of our time. Two, the fact that we're going to market by activity and how we think that that's gonna change the game for us. Three, how we plan to invest further in meeting consumers where they are and inviting them to come with us. Let's start where we should, with the people that buy into our brand. Look, every brand wants the same thing, right? They wanna keep their current consumers and they wanna bring new ones into the fold.
Not every brand has our history, our innovation, our trust, and a growing set of capabilities to connect with people like we do. In many ways, and for many people, we're gonna keep doing what we're doing. In the spirit of Mobil , we're just gonna keep doing it better. We're gonna work hard to make current consumers feel like a bigger part of the Columbia brand. We're gonna give them more, and we're confident that they're gonna give us more in return. Our membership efforts will grow and expand the lifetime value of the people that we already have in our universe. Let's focus the time now on how we're gonna bring more people into the fold because that's where the majority of our growth is gonna come from.
Our goal is to continue to connect with our brand to a younger and more diverse group of consumers. To Joe's point, the world is changing, and minorities are quickly becoming the majority. The good news is, we're already present in their lives. Remember that Forbes magazine article I mentioned in the beginning about how we were the most trusted number one brand in America? If you dug into their methodology, one of the reasons why we rose to the top was because a broad demographic and a diverse group of people chose to review and rate the Columbia brand. Other outdoor brands that you would expect to show up on a values-based survey didn't fare as well. That's because they did not reach the threshold of reviews by people of color in order to be considered.
Now, as a brand, we value and express things that are growing in importance today. Things like resilience, positivity, inclusion, family, fun, conservation, and of course, a very, very deep belief in the power of the outdoors. Now, these ideas have been a part of our DNA from the very beginning, and today they're being celebrated by more and more people. This is Tim Boyle right behind me, in case you didn't recognize him. This is when Tim was the chief marketing officer, among many other things, and our exclusive marketing activity was taking buyers out on the river to have a good time. When we look out in the world today, consider who we are, where we're going, we see a bigger place for what we stand for and for this brand. We're doubling down.
We are doubling down on who we are and how we unlock the outdoors for everyone. By connecting with consumers on a much more emotional level, we believe that we will also unlock the growth of the brand. How are we gonna do that? We're gonna celebrate our product, romancing our approach to innovation, not just the final result. As Joe mentioned to you, our approach to innovation has been simple, right? Problem, solution. What most people don't see is the amount of work that we do in order to put those quality innovations out in the market at democratic prices so that more people can enjoy the outdoors. The Bugaboo Interchange Jacket, introduced in 1986, was a great example of how we think about design and the highest value that we can offer consumers.
Dean will tell you more about the product, but why not a three-in-one jacket that is both incredibly functional and incredibly versatile? OutDry Extreme, our waterproof technology without PFAS, is another example. It was voted by Outside Magazine as one of the most significant outdoor tools ever invented, along with the Swiss Army knife and the sports bra. Through our innovation lab, we can create new innovations like OutDry and bring them to market at more reasonable prices because it is our own innovation. As you can see, there's a lot to be celebrated in our product, and that's gonna continue to be an important focus for us. We will also celebrate our people, employees, athletes, ambassadors, who represent the values of our brand as well as those of many of the consumers that we want to attract.
As we know, technologies can certainly change an industry, and so can people. One of the most enduring things that people know, repeat, and celebrate about the Columbia brand is the fact that we were led by a woman for so long. We're gonna continue to celebrate the stories of the people that are connected to this brand in a way that shares our values and gives more people new ways into it. This will include partners that we already have, like Bubba Wallace, who you saw in the previous slides, Luke Combs, Alex Ferreira , Wesley Locke, Cassie Sharpe, all current ambassadors that we will do a lot more with in the coming years.
Of course, we will also celebrate places, sharing our love for the outdoors, what we're doing to conserve them, and the freedom and joy that the outdoors brings to so many across generations and all around the world. Now, I'm gonna pause here because that's a lot for a first point, a lot to take in. The truth is, I came here a little less than six months ago because I really believe in this brand. As I've dug deep, I really found a pot of gold, a marketer's dream. Innovative product, authentic outdoor stories, human values. Celebrating our product, our people, and our places is really about celebrating this brand and how we connect with people. Okay. I just told you how we're gonna connect further with younger and diverse consumers by simply being ourselves, right?
By doubling down on who we are, what we do best, and what we stand for. Now I wanna get a bit more tactical. The second way in which we're gonna future-proof the brand is going to market by consumer activity. Instead of yelling out, "Hey, everyone, here's our innovation," we're gonna say, "Hey, anglers. Hey, hikers. Hey, people that love snow. This is who we are. This is what we believe in. This is the product that we make, and here's what's in it for you." We're gonna respect the nuances of each group, and in that way, further reveal also to them the different dimensions of our brand. Beyond awareness of and trust in, we want to inspire affinity and love. This community-focused, more vertical approach is going to help us do that.
As I mentioned earlier, though, a lot of what we do will remain the same. For example, we're gonna continue to own certain consumer benefits across all the activities that we act in. We're gonna own sun protection across hiking and fishing. We're gonna own waterproof and breathable across every activity. Since footwear is a growth accelerator for us, we're gonna own traction across hiking, fishing, and snow. Just imagine a vertical activity-based go-to-market offense that's supported by brand-wide innovations and stories that go across each one of those activities. Now, from a growth perspective, this helps us to create better balance for the business. It will create more opportunities for the brand to shine 365 days a year in more activities and with more and more people.
Greater balance is gonna help us to achieve the growth targets that we're setting for ourselves now and into the future. Okay, we've talked about consumer connection and how we will go to market. The third and last priority that I want to share with you today is how we will deliver an elevated brand experience. Anytime and wherever our consumers come in contact with us, especially at the purchase and post-purchase moments, we have to give them something to believe in. Without getting in the way of commerce, we need to ensure that we're romancing, educating, and really helping consumers to understand both our product and our brand. The goal is to not only have them click through or visit once, but click again and click often. As we know, a lot of the product and brand research starts on digital and on commerce platforms.
For example, 66% of purchases in the U.S. today begin at Amazon.com. We're gonna focus on creative brand experiences that put our brand on the top of the list when people are considering what to buy and from whom. As an example, we have a great digital product called the Tough Mother Outdoor Guide. It provides product recommendations, tips to get outside, places to visit. We wanna expand that and make it a central part of how consumers connect with us. Our goal is to add value to their lives and also make things simpler. Of course, keep them engaged post-purchase. We're really well-positioned to be the brand that's like that non-judgmental, trusted friend. Instead of laughing at you because you don't know where the trail is, they actually take you with them and tell you what to pack.
We're gonna use that filter as we create these brand experiences that meet consumers where they're at and then takes them further, but without intimidating them. Digital being a growth accelerator for us means that we will definitely focus on membership and digital brand experiences first. Given our strong marketplace presence, we're gonna ensure that many of our brand experience concepts can extend into stores, including to our wholesale partners, where a lot of the Columbia magic happens. This is it. These are the three priorities that we have for future-proofing this brand. One, bringing new consumers, younger and more diverse into the fold by creating more emotional connections with them. Two, going to market by activity. This is gonna help us build community and create new ways for people and more ways for people to come into the brand.
Lastly, investing in brand experiences that meet consumers where they're at. Driving consideration, driving conversion, and of course, bringing them back to us. Now, you could argue that many brands want the same thing, right? The good news for us is we have a competitive advantage. We already have a strong position of trust with consumers. We have in-house innovations that help us deliver great, high-value products through a wide network of channels. We have 84 years of history, inspirational history and stories that we can draw from, but most importantly, take into the future. The way I see it, we're already building for the future, but the time for us is truly now. Thank you. Now, I'd like to introduce you to Dean Rurak, Chief Product Officer and the first person I see every single day when I come into the office.
Thanks, Pri. It's great celebrating the brand. I've been doing it for just over 25 years now. Now let's talk about product. Product is king. That's what Tim always says. Every day is a great day to talk about product here at Columbia. As Joe said, in product, we are hyper-focused on solving problems for consumers. Solving problems drives every single product we make. It's in our heritage. It goes back to our founders. From the first fishing vest that Gert created to our very first Interchange jacket. It was originally created for hunting. We called it the Omni-Quad Parka. It solved for the changing temperatures throughout a day's hunting. That original concept evolved into a whole family of products. First, the Interchange concept, which turned into the Bugaboo, which is now an iconic style.
In fact, interestingly enough, Interchange has become one of our most popular product categories in China, but not just for skiing. The consumer loves it because of its versatility. Which just goes to show when you solve problems for consumers, they trust you. That is when you know you've built an iconic product. What products are we talking about? Glad you asked. Our apparel and footwear products are focused in five key areas. As you heard from Pri, we'll go to market by activity. I'm gonna talk about the first four and then come back to the fifth one at the end. Hike, trail run, snow, fishing and hunting. Let's start with hike. This is where we've got you covered, literally from head to toe. Think of the stuff you're dealing with out on the trail. There's the sun.
You need to stay cool when you're getting hot. We have our Silver Ridge franchises and our Zero Rules families to solve for that. Then there's the rain. You need to stay dry when it's raining 'cause we still go out on the trail when it's raining, and we know a lot about rain in the Pacific Northwest. We've got an entire portfolio of rain jackets for you. Footwear. It's the foundation of hiking. We have franchises that have become iconic, like the Newton Ridge. The consumer loves it because of its super high value. We're developing new products like the Facet. It's got great comfort, it's got great traction, and it's really for a younger generation of consumers. There's even more coming in the future. Moving on to trail run. This is a segment of the industry that has grown dramatically.
As you can imagine, trail run is a footwear-led category for us. We use Montrail as a sub-brand to define the category. It's the original trail running brand, and that gives us authenticity when we engage with the consumer. It's an award-winning premium product. Our Trinity AG style was recognized by Runner's World. Next up, snow. In this category, you have to keep your consumers warm. We have technology that's intuitive to the consumer. You've heard about it, Omni-Heat. Because nothing is worse than cutting your activity short because someone in the family has cold hands, cold feet, or just really cold to the bone. Now, I grew up in Canada, and I know all about that. We launched Omni-Heat Reflective over 10 years ago, and now we have Omni-Heat Infinity. We were really channeling Gert's make-it-better philosophy, and we put the team to work.
We found a way to make it warmer, and it's even gold now. Let's talk about the activity that is probably the closest to Tim's heart and definitely his passion, fishing and hunting. Now, you've probably heard us talk a lot about our performance fishing gear, PFG for short. We're extremely proud of where we're positioned in the marketplace. We started out kind of figuring out how do we keep anglers cool in the water? So, for example, we designed venting right into our shirts, and now we also keep them protected on the water with some protection in our products. Plus, we can keep them cool too. We even studied the vibrations of the boat and traction on a boat deck to come up with the best shoes to fish in.
Basically, we're solving the problems of being in the elements and allowing the anglers to enjoy the entire day trying to land the big fish like this. That's what we do in all our products. In all of these activities, we're problem-solvers. We keep consumers warm, dry, cool, protected. One of the reasons our products will continue to be the best problem-solvers is our innovation. We have an entire toolbox of technologies to solve for problems for consumers in apparel and in footwear. Let me introduce you to the guy who can give you way more detail around innovation than I can. He's a graduate of Auburn. He got his PhD from MIT. He was a professor at Georgia Tech, and now he runs our innovation department here at Columbia. Please welcome Haskell Beckham.
Thanks, Dean. I'd like to begin by addressing the really large spaceship in the room. This is a full-scale mock-up of a lunar lander that's scheduled to go to the moon sometime in the next 12 months. It will be the United States' first return to the lunar surface in 50 years. See that large Columbia logo there? It's not just the logo. That's our Omni-Heat technology. Gold dots on a fabric. Those gold dots reflect heat. We use that tech in our jackets, which allows us to create warmth at lower weight. Lower weight conserves energy. Important whether we're talking about launching a spaceship to the moon or hiking your body up Mount Hood in the winter. With temperatures ranging from -250 to +250 degrees Fahrenheit, space is a harsh environment. Our Omni-Heat Infinity has been tested and shown to be durable at even these extreme temperatures.
This partnership and this lunar mission is really a full circle event for Columbia and our Omni-Heat technology. 12 years ago, inspired by the reflective insulations used by NASA, Columbia launched apparel and footwear with Omni-Heat Reflective into the marketplace. You see these silver dots? Massively successful for us. We sold billions of dollars of Omni-Heat products since it was launched. Innovation is at our core. You heard Tim talk about the importance of innovation, including in that Columbia Origins video. You also heard a little from Joe, Pri, and Dean about innovation in our products, how they are merchandised and marketed. Innovation happens at Columbia up, down, and across the organization. Our team is responsible for what we call platform technologies, represented by the badges you see on this slide. These are components, stuff like functional fabrics, fabric constructions, midsole cushioning foams, and outsole rubber compounds.
They're in all kinds of Columbia products. For example, you've seen how Omni-Heat Infinity is used in jackets, but we also use it in footwear, base layers, and hats. Omni-Shade Broad Spectrum is used in all sorts of shirts for sun protection. These platforms give our designers and product engineers a toolkit they can use to create apparel, footwear, and equipment that is truly differentiated in the marketplace. Our platform technologies are like the ingredients for our products. They're like our Intel Inside, and they're a huge part of our growth story. In 2021, 70% of our total revenue came from products that contain at least one of our branded technologies and innovations you see represented on this slide by these badges. Let me say that again.
In 2021, 70% of our total revenue came from products that contain at least one of the branded technologies and innovations you see represented on this slide by these badges. Innovation can be tough to see, right? Everyone claims they're innovative, but how do you really know? There are three key attributes I'd like to emphasize about our innovations. Number one, our innovations are visible. Omni-Heat Reflective and Omni-Heat Infinity are obviously visible technologies, so they provide cues to consumers that something different is present. They may have seen insulation on spaceships or emergency thermal blankets on marathon runners after races. We count on their intuition kicking in that these visibly different technologies will work to keep them warmer. Omni-Heat Reflective was our first truly visible technology, and its success led to deliberate efforts to make innovations visible whenever we can.
Number two, our innovations have won a ton of awards and received a ton of press. They've even been used as benchmarks or tested by places like Stanford University and the Swiss Federal Laboratories. Number three, our innovations are ours. We have 240 patent families that protect our innovations and the products created from them. This patent collection is international in scope and over double the size of the patent portfolios of our two largest competitors in the all-important U.S. market. Now, you heard Dean talk about our focus on problem-solving in four major categories. Our innovation toolkit is filled by efforts in these four categories, warm, dry, cool, and protected. Layered across each category is attention to sustainability and more sustainable materials. For example, we integrate recycled and plant-based materials into products where and when it makes sense.
We have created footwear and jackets using fabrics prepared from recycled plastic bottles. We've made cushioning foams from plants such as sugarcane and outsoles from natural and recycled rubber. I could go on and on, but sustainability is not just something that the innovation team works on. It's bigger than that. Sustainability aligns with our core values. Let me show you what I mean. Wow. You heard Tim. This is our home. We have a responsibility to take care of it. I already gave you some examples of how we're developing some more sustainable products across all of these categories. Now let's dig a little deeper, and along the way, I'll give you a specific example of an innovation that won lots of awards for being more sustainable. First up is warm.
We already talked about Omni-Heat Reflective and Omni-Heat Infinity, but we have created many other versions of the Omni-Heat technology, a whole platform of them. The next Omni-Heat, Omni-Heat Helix, is hitting the market now. Inspired by insulation used in the construction industry, Omni-Heat Helix consists of pods of foam applied to a fabric. This foam is closed cell, which has higher insulation value than fabrics. So by adding these pods to the fabric, we've created another version of lightweight warmth. The fabrics take on a three-dimensional texture, which also increases its insulation value. It's visual innovation that works. Dry. It's not hard to keep people dry. After all, raincoats have been around for millennia. You could wear a plastic bag, but even though a plastic garbage bag will keep the rain from getting in, you'll still get wet. Wet from your own sweat.
The human body, which is on average about 60% water, constantly emits moisture, and that moisture needs to go somewhere. In the 1970s, a new material was introduced into outdoor apparel that kept the rain out, but also allowed your body's perspiration to escape. It's called a membrane. The original membranes were very thin and fragile, so they were laminated to fabrics for protection to create the standard industry construction for a waterproof yet breathable jacket, membrane on the inside. Since the membrane is on the inside, that outside fabric has to be made waterproof. Chemicals must be added to that outside fabric to do that. For nearly 50 years, the rest of the industry played follow the leader in adopting the membrane inside construction. The innovation team at Columbia blazed a new path.
We recognized that if we could make a membrane tough enough, we could make a rain jacket with a membrane on the outside where it belongs. OutDry Extreme was launched in rain jackets in 2016 and was immediately recognized for its advanced performance. Because the membrane is tough enough to be on the outside, no chemicals need to be added to make the jacket waterproof. By using recycled trims and fabrics, the OutDry Extreme ECO jacket was then launched and has won more awards than any product we have ever created. Pri Shumate already mentioned that Outside Magazine named our OutDry Extreme ECO jacket one of the 40 most significant tools ever designed. She even gave a couple of examples of some of her favorite additional tools that made that list.
What she didn't tell you is about one of my favorite tools that also made the list, is duct tape. That jacket made the list primarily because it doesn't need added chemicals to be waterproof. Outside also called it out for its performance, saying it was the most breathable rain jacket they'd tested. This past spring, we launched our most breathable OutDry Extreme jacket we've ever made, and we continue to push this patented proprietary technology forward. Next up is cool. Most humans live in parts of the Earth that are hot. No matter which part of the planet you live on, it's simply getting hotter. Clothes that keep you cool are important and will continue to be so. We've been working on these solutions for over 10 years and currently have a platform of innovative cooling technologies that beat the heat out of all competitors.
Now, the coolest solution would be to wear nothing at all. But of course, that won't work for everyone. The body's natural response to heat is to sweat, because when that sweat evaporates, it extracts heat from the skin. Our Omni-Freeze Zero technology is used in absorbent print on the skin side of the fabric so that when sweat evaporates from this print, because it's next to skin, it cools. Now that's the skin side of the fabric. What about the outside of the fabric? Can we reduce heat buildup from the sun? Our original attempt at doing this was to simply turn Omni-Heat inside out. The idea was that the silver dots would act like mirrors and reflect the sun. We weren't sure that consumers would be okay with looking like disco balls, but more importantly, it didn't really work.
It didn't work because metals don't easily emit or release heat. It's why we cover hot food with aluminum foil to keep the heat in. Sunlight is reflected and heat is released from white sand beaches and concrete sidewalks. Sidewalks and sand are ceramics. Next we tried white ceramic dots, and this worked. This visible innovation is called Sun Deflector because that's what it does. Which brings me to protected. In addition to heating, exposure to the sun can cause skin damage and can ultimately lead to skin cancer. According to the FDA, skin damage is cumulative. Think about that for a second. Now, I grew up in the South and spent most of my childhood outside. I got sunburned a lot. I remember the sting followed by the peeling skin. I didn't know the damage was a lifelong thing.
At Columbia, we have a broad range of sun protective apparel in our line built from a platform of sun protection technologies, all of which carry the Skin Cancer Foundation seal of recommendation. Last year, we conducted a study with the researchers at the Oregon Health & Science University here in Portland, one of the largest teaching hospitals on the West Coast and home of the Knight Cancer Institute. This study compared our sun protective apparel to commercial sunscreens. In all cases, our apparel provided superior protection. Now we've got to convince our consumers to wear our sun protective apparel more often. We're doing that by providing them with garments that are vented and made from fabrics that are engineered to be as thin, as breathable, and as comfortable as possible while still blocking the damaging rays from the sun.
By adding our cooling technologies and innovations to these garments, such as Omni-Freeze and Sun Deflector I just discussed, we're offering clothing solutions that protect and cool. Just as our research with the Oregon Health & Science University led to new innovations for sun protective apparel, our work on that lunar lander is leading to deeper insights and new ideas for future innovations. Using that insight, our platform innovation team has built a new fabric construction and created what may be one of the warmest jackets on a per weight basis that Columbia has ever made. Before long, we should be able to announce the next generation of our Omni-Heat powered technology coming out in fall 2023. It's one more illustration of how our innovations are contributing to our growth story. Innovation can seem like an abstract concept.
Everyone claims to be innovative, and everyone talks about the importance of innovation. We have 240 patents that protect our products and innovation. Innovation that's visible and intuitive for our consumers, innovation that wins awards, and innovation that, along with our branded technologies, enabled products responsible for 70% of our total revenue last year. Thank you for your attention. Now I'm gonna turn it back over to Dean.
Thanks, Haskell. Okay. Come on. Wow. 240 patents? It's a lot of innovation. That's amazing to me even sometimes when I think about that. All aimed at helping our consumers do what they wanna do. When they do it, helping them stay warm, dry, cool, and protected so they can do it more or they can do it longer. The really cool thing about our products here at Columbia is we might solve a problem for one thing, like staying cool, and consumers love that, it's great. They show us all the different ways they adopt it into their everyday lives. For example, we make a vented shirt for fishing, and that shirt shows up everywhere. In the Southeast, it literally shows up everywhere. We call it boat to bar. Same concept, though.
We solve a problem, hot in Florida or Dubai, cold in Minnesota or Quebec, wet in Portland or London. We solve problems for our consumers anywhere they live in the world and whatever they're doing. That brings me to our fifth focus area. Remember I told you we were gonna talk about four and come back to the fifth one at the end? This is it. Everyday outdoor. This category, we are unapologetically style led. This is where we're gonna push the boundaries of design. We're gonna elevate our fabrics, our silhouettes, and the ultimate comfort for the consumer. It allows us the opportunity to reach new consumers and expand market share. As Pri mentioned, we're the most trusted outdoor brand. Because the truth is, when you get it right, everyone just wants to wear your brand. Now, you heard I start every day in the office with Pri.
Now I'd like to introduce you to the person that I finish every day with, Tim Sheerin.
Good morning. I'm Tim Sheerin, and I am the Senior Vice President of Wholesale. I am excited I get to speak with you this morning around our marketplace strategy around the world.
You've heard Joe talk about how we are a growth company, and it's our intent to grow the Columbia brand by over $700 million over the next three years. You've heard Pri talk about how we'll future-proof our brand, and you've heard Dean and Haskell talk about the iconic and innovative product that we're creating. I'm gonna go deeper on two aspects of our marketplace plan. First, I'll talk through how we'll unlock the marketplace to capture that growth. We'll take a quick tour around the world. We'll touch each of our five regions to highlight where we'll drive that growth. Let's get started. The key for us is to unlock the marketplace of our future. To do that, we know we have to be digitally led.
We need to continue to elevate the consumer's experience with the Columbia brand, and we have to be accessible. Our superpower in the marketplace is that we are an accessible brand, a democratic brand that delivers tremendous value to the consumer. The first time I ever met with Tim Boyle, he used three words with me to describe the Columbia brand. Humble, accessible, democratic. We talked about those three words, and it really helped me understand the way the consumer thinks about Columbia. Maybe the most interesting of the three words to me was democratic. We all know brands out there that want to be the most premium, and many of them are shifting to a direct business model. At Columbia, we want our brand, we want our product, and we want our distribution to be more democratic.
Yes, you're gonna hear from me about our DTC business, and it is super important. We are also focusing deeply on our relationships with our strategic partners. Partners like Academy Sports + Outdoors in the U.S., INTERSPORT in Europe, Sport Chek in Canada. Retail partners that make great connections to a broad consumer base, and we believe those partners will be able to grow those consumer connections for years to come. That is a perfect example of what we mean by being democratic and accessible. As we work to unlock the marketplace of our future, we're gonna drive three key strategies. First, we'll lead with Columbia.com. Second, we're gonna double down on our strategic partners. Third, we'll work to elevate the consumer shopping experience across the marketplace, both DTC and wholesale. The actual buying experience between the consumer and our Columbia product.
Let me speak to each of the three priorities. We always start with Columbia.com. We have a remarkable business today on Columbia.com, over $375 million around the world in 12 different countries. Joe talked about the 4.8 million hats that we sell. Over 400,000 of those are sold on Columbia.com alone. We know that this business will continue to grow as the consumer continues to evolve their shopping behavior in the digital direction. The critical reason why this is priority one is actually everything you heard from Pri earlier today. As we future-proof our brand, the first place the consumer experiences our brand is Columbia.com. It's the face of the brand. It's our storytelling, our celebration, it's our product, it's our innovation. That's where we focus our messaging and our content.
Just like any e-commerce site in the industry, we know that a large portion of consumers bounce from Columbia.com without making a purchase. But we don't want them to leave empty-handed. We want them to leave with an amazing Columbia brand experience, so that they'll continue to purchase our product in the months and years ahead. For the consumers who do buy on Columbia.com, the engine for powering our growth is our membership experience. The Columbia Greater Rewards program or CGR is where members receive a differentiated experience. Over 60% of our Columbia.com sales today comes from CGR members. We're investing in both the systems and the experiences that continue to delight our members. Assortment, experience, content. Our CGR members come back to us time and time again. We'll look to add to the membership roster, and we'll deepen our relationship with those members.
Our second critical marketplace priority is to strengthen our relationships with our most critical strategic partners. Our top 50 strategic partners represent 75% of our wholesale business today. We believe by 2025, we'll be expanding that percentage. Partners like Dick's Sporting Goods in the U.S., Mark's in Canada, digital partners like Zalando and Zappos. They each have a unique and powerful role in their respective marketplaces for us. We'll work with these strategic partners to provide more custom products, more differentiated assortments, to provide richer content and storytelling, and to be more responsive in our supply chain. Beyond our top strategic partners, we're also going to drive a very focused offensive with our important specialty partners. Outdoor and fishing specialty partners such as Eagle Eye Outfitters in Alabama, an incredible experience for every consumer that walks through the door.
Street specialty partners like Kith and Madhappy. All of these specialty partners help authenticate our product, and they help future-proof our brand. We will continue to build deep and focused relationships on this front. Our third marketplace priority is elevating the Columbia shopping experience. At Columbia, that shopping experience always starts with innovative and iconic product. We know we need to elevate our content, our storytelling, our presentation. We create our content with an eye for columbia.com, but the backbone of our business is with our strategic partners. We'll take that content, we'll collaborate with our partners, and help elevate the Columbia shopping experience within their stores and on their websites.
I haven't talked yet about Columbia stores, but they are also a very important component of the consumer's engagement with our brand, and elevating the Columbia shopping experience is critical to make the fleet even more productive. We have a two-pronged retail strategy with our Columbia stores. In the U.S., Canada and Europe, our focus is on Columbia factory outlet stores. We have a well-developed fleet of 160 doors across these markets, and we'll continue to increase productivity and add new doors in under-penetrated markets such as the U.K. Over in Asia and in our distributor markets, our retail focus is full-priced Columbia stores. We have over 700 doors in these markets that do an amazing job at representing the brand and reaching the outdoor consumer. You've heard our three key marketplace strategies. That's the how.
How we'll unlock the marketplace of our future. We'll lead with columbia.com, we'll double down with our strategic partners, and we'll work to elevate the Columbia shopping experience across the marketplace. Now let's go on a quick world tour, and we'll talk about where that growth will be driven. As we look at our five regions, we have over 28,000 points of distribution around the world. In some markets, we have a clear number one position today. In others, we're rapidly capturing share as we climb our way to the top of the ladder. It's all about potential, our potential, and that potential creates a huge opportunity for growth. I'm gonna start with the great white North, Canada. Why? Well, Canada is actually arguably where we have our strongest brand position.
We've been the number one trusted sportswear brand in Canada for seven years in a row. We have the number one position in outerwear across the market with a 23% share. We have amazing partners such as Sport Chek, Sports Experts, and Mark's. Yet, we still have tremendous opportunity for growth. We have the momentum to drive outpaced growth both in footwear and everyday outdoor apparel to help us achieve double-digit growth in Canada over the next three years. In Europe, we're still relatively small, but we are extremely well positioned for accelerated growth. We just captured the number two market share position in outdoor footwear in France. That momentum is only the beginning. Our strategic partnerships start with Intersport and Decathlon. They extend to key digital retailers such as Zalando and ASOS, and we're building the foundation for future growth with JD Sports.
The key in Europe is focus and consistency. Our brand focus is to build awareness and affinity. Our business focus is to deepen our strategic relationships with our strategic partners. Our geographic focus is France, Germany, and the U.K. It adds up to a plan that will deliver mid-teen growth over the next three years. In Asia, we run the three big markets directly, China, Japan, and Korea. We have a long history in each of these markets. It's less about building brand awareness, and it's more about deepening our connection and affinity with the consumer. We have meaningful growth opportunities in all three of the markets, but let me focus on China. The last six, 12, 24 months, things have been complicated in China. All brands, hugely complicated.
The great news is that over the last two years in China, the consumer in China has discovered the outdoors. There is a whole wave of outdoor experience seekers in China, and we are positioning the Columbia brand to be their trusted guide as they journey into the outdoors. We've used the disruption in the marketplace to focus on the foundation for the future. To start, we've built an amazing team to drive the business forward. That team is hyper-focused on increasing productivity. That's the productivity of our Columbia stores and shops, and it's driving digital productivity through Tmall and JD. We're also finding new lanes of growth. We opened our Columbia store on TikTok in May of this year. Four months later, in August, at their 8-18 event, our Columbia PFG campaign had over 2 million views.
We've turned those views into revenue as we've been able to achieve multiple million renminbi days with TikTok. China's another market where we will drive mid-teens growth over the next three years. Fourth up, our international distributor regions. We call it IDR. Columbia partners with 26 distributors covering over 70 countries. Our partners operate over 300 branded stores, and that number will grow meaningfully in the next three years. Whether it be Dubai, Turkey, Chile, Mexico or Israel, our partners have positioned our Columbia stores in the right environment with the right product to be able to connect deeply with the outdoor consumer. Let's finish up with the U.S. It is our most important market, our most complex, our most developed. It's where we have the most heritage, and it's where the consumer trusts us.
As Pri shared with you earlier, this is the market where last year we were ranked the number one most trusted brand. As you think about Columbia in the U.S., I want you to leave today with two words top of mind, and the first one might surprise you. It's balance. Let me walk you through what I mean. If you go to the Midwest and you ask the consumer about Columbia Sportswear, they're gonna show you their cold weather boots and their cold weather outerwear. When you come to the West and you come to Seattle and Portland, they're gonna talk to you about our rain jackets and hiking boots. In the East, you can't get them to stop talking about Columbia fleece. We're an outdoor brand that competes in very seasonal businesses, but we have created remarkable balance.
Men's and women's, wholesale and DTC, physical and digital, apparel and footwear. That balance is unique. It is a unique strength. It leads me to the second word I want you to walk away with today, which is opportunity. We have so much opportunity for growth in the next three, five, even ten years. We'll drive that growth in the U.S. with the strategy that I've just laid out for you. We'll start with columbia.com, with our storytelling, deep connection to our members. We'll drive growth through our strategic partners. The wholesale business is our DNA, so we'll double down with our most important partners. We'll collaborate on product, we'll drive differentiated assortments, and we'll work to elevate the consumer shopping experience. Great omni-channel partners like Bass Pro and Kohl's, digital leaders like Amazon, and new partners such as Tractor Supply.
In a very uncertain retail environment, our partners, our customers are asking us to partner with them even more deeply, and that's our intent. To stay committed to mutual growth and partnership. We are a humble, accessible, and democratic brand, and those tenets have resulted in the consumer in the U.S. giving us their trust. It's allowed us to build a balanced business with tremendous opportunities for growth. It's a super strong business in the winter season when the weather is cold. That's when you expect outdoor and outerwear brands to be strong. We haven't even talked, however, about the rest of the year when the sun is out. That's when Columbia Performance Fishing Gear takes center stage all over the South. Our consumer goes fishing with their PFG gear head to toe, and then they head to the bar and wear Columbia PFG.
They go to football games, and they wear Columbia PFG. In SEC country, they live their life in our brand. To clarify for all of you out there today, when I say SEC, that does not mean the Securities and Exchange Commission. It means football country. Florida to Texas, Georgia to Missouri. We have a unique, unfair advantage when the sun is out. There it is. PFG, footwear, strategic partners, the Gen Z consumer, columbia.com. These are just a few of the building blocks for our U.S. business that will drive growth in the years to come. It's about balance, and it's about opportunity. Okay. Now you've seen both the how we'll drive growth for the Columbia brand and where we'll drive growth across the marketplace.
With that, I'll invite Joe Boyle back up to the stage and pass it over to him to bring it home for the Columbia brand.
Thanks, Tim. You just got a lot of detail from our amazing Columbia brand team. In all that detail, what Pri, Dean, and Tim told you is our strategy. It's these three things that you can see here. Inspire the next generation of outdoor enthusiasts, create iconic products, and unlock the marketplace of the future. Haskell told you about our innovation, and Pri went through our consumer and marketing strategies. We're ready to connect with the younger, more diverse consumers in everything from fishing to skiing and hiking. Every part of the outdoors. You heard Dean talk about our product obsession all the way from Gert's fishing vest to our Omni-Heat jackets. That's how you accelerate growth. You innovate, you make the next icon. The next Bugaboo jacket or the next Newton Ridge boot. We sell millions of them.
Let me give you a bit more detail on our three-year growth plan. We're targeting a 7%-9% CAGR through 2025. Achieving this growth rate will lift our net sales by over $700 million by 2025. That's a big number. That's a great number. Make no mistake, I wake up every day thinking about how we can grow faster and accelerate profitable growth. You heard our strategy on how we plan to drive this growth. Let's translate that into actual numbers. As you can see behind me, by product, apparel will be the largest dollar contributor to growth, but footwear will be our fastest growth category. By channel, wholesale will be the largest dollar contributor to growth, but columbia.com will be our fastest-growing channel.
Split by region, the U.S. will be the largest dollar contributor to growth, but our fastest growth will be in the international markets. That's a lot of different ways to cut the numbers, but you could see the theme that is emerging. In our most mature categories, channels, and region, we still see impressive growth opportunities. We are nowhere near our full potential, even in the businesses that we've successfully grown over the last 80 years. For the next three years, three things will accelerate our growth. Footwear, columbia.com, and international. This morning, you've heard a lot about our products, our marketing, and our distribution. There is a lot to it. When you get it right, the growth potential is profound.
The program will begin in two minutes. Ladies and gentlemen, please take your seats. Our presentation is about to resume.
Welcome back. I'm Monica Mirro, the President of prAna, and it's great to see you today. What you're gonna see over the next hour are three emerging brands, prAna, Mountain Hardwear, and SOREL. What you're gonna hear is a story of progressive growth as we move through each brand. Let's dive in. prAna is a 30-year-old brand founded in Southern California by a yogi and a climber. Frankly, we've been ahead of our time. We were athleisure before athleisure was cool. We were sustainable before everyone decided it mattered, and we've been focused on wellness before it became a buzzword during the pandemic. The most important thing you all need to know today about prAna is that we are refreshing and priming this brand for growth. We're sharpening our focus on our product segments that we call our fields of play, trail, wall, studio, and water.
We're doing it because our consumers are leading us there. Let me tell you a little bit about those consumers and the market that they are creating, and how we're gonna maximize this opportunity. At prAna, we serve active people. If you walked into a yoga studio or you looked up at a climbing wall, you'd see everything from our pants that let you extend to that next foothold or our sports bras that allow you to ease into your downward dog pose. We're functional, versatile, stylish, and sustainable, and frankly, very popular. We know our consumers exceptionally well. They're young, and they're very diverse in their interests and their experiences. They're adventuresome, and they care about the planet, and they are flipping the script on what healthy means and how to attain it.
Not wanting to just look good, but to also feel good mentally, physically, and emotionally. We call this active wellness. This is what drives us. Our mission at prAna is to inspire your pursuit of wellness to create a healthier body, mind, and planet. Let me introduce you to the people who are creating this active wellness market. We call them our young-spirited adventurers. Four out of five prioritize physical wellness over fitness, and nine out of ten believe a healthy mind is necessary for physical wellness. They are ready to spend. Our young-spirited adventurers are under 30 years old, and they sit between Gen Z and millennials. Half have an income greater than $100,000, and shopping for them often starts on digital and social platforms. Our brand is in a perfect position to serve them.
Let me tell you a little bit more about this. At prAna's core, we are an active and an outdoor brand. This gives us a unique and very differentiated industry position. There is no other brand that has such an authentic foothold in both spaces. It is our sweet spot. It is our authenticity, and there are tailwinds behind both markets. Yoga is exploding in popularity, and climbing is hitting its next wave of growth. That means our sweet spot is just getting bigger. That leads us to our core growth strategy, how we are gonna refresh and prime prAna for growth. We're focused on three strategic pillars, and they are make great product, build the brand, and develop balanced omni-channel distribution. Let me walk you through each of these. We will build great product starting with consumer-led design.
Function always comes first, because when you're on the wall or in the water, it just has to work. In this market, style and sustainability are simply expected. Make no mistake about it, at prAna, we are a product company. Our DNA is found in activity, and we serve active consumers. We look forward to showing you our fields of play in our breakout sessions this afternoon, trail, wall, studio, and water. Because we know our consumers hike, they climb, they surf, they paddleboard, they do yoga, barre, and Pilates, just to name a few. Two of our favorite products to watch out for later are Stretch Zion, which is our most famous bottom platform, and the greatest climbing pant to hit the wall in a generation. Number two is Becksa, which is our famous yoga fabric platform and a cult favorite.
This boasts of a flattering stretch rib made with recycled materials, and it takes you from the mat to brunch with your friends. I mentioned climbing and yoga because this is where our refreshed brand is going to lead. I wanna drill into why we're leading with climb and yoga, because it is important. As I mentioned in the beginning, prAna was born out of a passion for yoga and climbing. These two activities are true to our heritage and lead our consumers into active wellness. Yoga has grown from a niche concept to 55 million people practicing every week. Climbing, on the other hand, is at a different stage. It's exploded into the mainstream and has a cool factor, much like surfing is to the outdoors, and the numbers bear that out. Much like the fitness studios of the past decade, climbing gyms are experiencing incredible growth.
More than $4 billion in real estate development in the past three years. An incredible 20% increase in participation in the last two years, and 25% growth in climbing-related product purchases. The climbing apparel is ripe for a market maker. prAna is positioned to be the brand to define that look, performance, and lifestyle of this new and very energized climbing world. We can drive both market growth and share in the process. This is prAna's focus. This is what will prime the pump for increasing both the amount and quality of our revenue. That is the product experience. On the brand side, we know our consumers seek a healthy body, mind, and planet, and we make deep emotional connections with them through powerful storytelling for the things that matter to them.
Stories surrounding the activities they love, the communities that they play in, and the places they travel. You'll see this connection come to life early next year when prAna sponsors the HBO Max reality series. It's called The Climb. It'll be hosted by Jason Momoa. I'm gonna say that again, Jason Momoa, and our two brand ambassadors, Chris Sharma and Meagan Martin. In the show, the world's best amateur climbers are outfitted by prAna, will compete for a grand prize, including a year-long global climbing tour sponsored by our brand. We'll make great products, we'll continue to build the brand, and we'll focus even more tightly on the consumer experience and the channels that they shop in. I'm gonna start with the channels first and then we're gonna wrap up talking about sustainability, because sustainability is what drives our high level of brand affinity. Back to channels.
We wanna provide easy access to the products our consumers love. Where they wanna buy them, when they wanna buy them, and how they want to buy them. Digital is, of course, the place to start because we know that is where our consumer starts. At the beginning of that is prAna.com. Write that down, prAna.com, where nearly 40% of our business resides, and we're very proud. We'll then extend that same experience to our wholesale business, where our customers also want to find us, including our specialty stores who love to curate our brand and delight their customers. Our national accounts, which serve consumer needs in an omnichannel environment. In short, as we refresh the brand, we'll relentlessly develop experiences that drive balanced omnichannel opportunities to deliver our revenue. Okay, I promised to talk about sustainability and prAna's leadership in this space.
Since the day our founders delivered clothing in upcycled fruit boxes, sustainability has been part of our heritage, and I wanna highlight just one of those efforts today. I'm gonna tell you a story that starts at our prAna store in Boulder, Colorado. Let me move over here so you can see this beautiful store on the corner of Pearl Street and Broadway, and you could not ask for a better location. Back in 2010, the store manager sent a photo of the plastic collected from just one daily shipment with a simple question: "What do you want me to do with this?" That sparked our quest to reinvent the way we packaged and shipped our clothing. Since then, we've created a way to roll our products and tie them with a recyclable raffia, and we introduced glassine bags for products that were unable to be rolled.
This has resulted in a big reduction of plastic and paper waste. As of 2021, all of our new products are shipped in plastic-free packaging from our direct-to-consumer channels. We've prevented the use of more than 23 million single-use plastic bags to date, and we couldn't be more proud. Because at the end of the day, that is who we are, that is what our consumers expect of us, and that is why they love our brand. Wrapping up, I wanna stress that active wellness is an incredible opportunity for prAna. That our young-spirited adventurers are looking for what we have to offer. By making great products, building the brand, and balancing our omnichannel distribution, we are priming prAna for growth. Thank you. It is now my pleasure to introduce the President of Mountain Hardwear, Troy Sicotte.
Thank you so much, Monica. Good morning, everybody. I see some good pastries out there and looks tasty. I'm thrilled to be with you here this morning to talk about authenticity. When I use that word authenticity, I'm actually talking about Mountain Hardwear. I wanna share where we're going, but more importantly, how we're gonna get there. First, for those of you that don't know about Mountain Hardwear, we are a performance apparel equipment company, laser-focused on the mountain, the mountain being our playground. No matter where you play or what you do, we wanna give you the best possible experience on the mountain. We engineer every single product with that as our credo. Whether you're mountaineering or snowboarding, camping or rock climbing, fast packing or skiing.
At Mountain Hardwear, we make gear that works, because out here, it matters. It matters here as well. It matters here, and just about everywhere in between. We're obsessed with keeping you out there as long as you want to be out there, hopefully with a big smile on your face. How do we do it? What sets Mountain Hardwear apart? What's our secret sauce? It comes down to three things. It's our pure mountain sport focus, our culture, and most importantly, our consumers, our fans. When you combine that with our go-to-market strategy, you're gonna get a 9%-11% growth CAGR over the next three years through 2025. I'd like to spend the next few minutes talking about the ingredients that make up our secret sauce. First, it's about that focus.
You can tell we're obsessed with the mountain, and we approach every single element of our business through five mountain sport segments, and it begins with mountaineering to get you to Earth's highest peaks, alive and well. Climbing, training in the gym to prepare you for ascents out on big walls and big rock. Ski and snowboard, from the mountain resorts to the gnarliest backcountry. Trail, from the Pacific Crest Trail to just about every national park. Our newest segment we're calling camp, which is the center point of all outdoor pursuits. Each one of these mountain sports is a consumer segment that we will maximize. No matter where you are on the mountain, we've got you. That means no matter what you're doing, our products again are gonna give you that best experience possible.
As other brands in our sector chase fashion, streetwear, even luxury, we're staying true to our core, the mountain. That'll be our focus. The second ingredient that sets apart our secret or makes up our secret sauce is our culture. It's our people. See, it's our founders here back in Berkeley. We were born in 1993 in Berkeley and are still based near there. Berkeley, it's the neighborhood that literally forged the modern outdoor industry. What does this mean? We're still able to attract top outdoor industry talent for part of our team here. These people, we're gear junkies. We even call ourselves the humans of Hardwear because we live our brand. We are the consumer. What does that look like day in and day out? Well, we're not only the makers, we're really the most critical testers out there.
We obsess over every choice of thread, every seam, every zipper, every pocket, and we're also the biggest boundary pushers. This is our team, part of our team, a cross-functional team that went to Everest Base Camp. They trekked there. A small team had a summit bid. At every opportunity, we're getting out there, ideating, testing, measuring. The guy on the right is our finance, head of finance, for example, right? It's important. He knows what matters. You know, for example, we've been working on this camp segment I mentioned earlier, and before we launched it, the product team with prototypes wanted to really test the concepts around camp. They sent an email out to the entire company, saying, "Hey, we're going camping. Come out. Who wants to come try it out?" It was great.
A ton of people responded and wanted to participate over a long weekend. Folks in sales, folks in marketing, warranty team, and even our building manager went out. You know, we were out there with the product team verifying, testing the legitimacy of this new camp gear and clothing, which means we're empowering our people to solve or even anticipate what more we can do. As you can see, we're having a lot of fun doing it, and that makes the product just that much better. Because, you know, we're out there, and we know what matters, and we want our products to last, right? We want them to last, and we want them to work. Lasting for a long time is important, and that's another focus within our company's durability because durability is fundamental to our take on sustainability. Less things in landfills.
For example, we still have our own in-house warranty team. We're one of the last holdouts to own our own warranty production team. This team, there's Wendy down there in the bottom, provides invaluable feedback as things are coming in that break, a zipper that doesn't work. That's invaluable feedback to our product engine, whether that garment or piece of equipment is two years old or 30 years old. Which also means we have to design for repairability, because if it's not repairable, it goes without saying. You know, we have a lifetime warranty, and we deliver on it. In addition, our fans also know we're choosing really responsible materials. We're mindful of our packaging, and we're lucky to be part of an organization that sources responsibly.
All of this gives our customers, our fans an amazing experience because they know they can trust us. Finally, the third ingredient to our secret sauce, our customers. You know, I don't like that word. I call them our fans. We have fans that have been with us since the beginning, almost 30 years, and we're attracting a whole new generation that's falling in love with Mountain Hardwear. They're younger, they're more diverse. They're men and women. We're actually attracting men and women both equally, something that's super unique amongst peers in our space. They're all over social media. You see, we may not yet be the best-known outdoor brand, but customers that know us, they just don't like us, they love us. An example, a little side note that's funny here.
Near our office, there's a cafe, a deli, and they actually have a Mountain Hardwear sandwich on the menu. I'm not kidding. You can't make this up. This is from last Tuesday. Apparently, the special sauce on this Mountain Hardwear sandwich is sriracha mayo. But that's the brand loyalty. That's the type of brand loyalty I'm talking about. And those fans that are making Mountain Hardwear sandwiches, it comes down to product. They love our product. I wanna walk you through some of our fan favorites in product. Over the past few decades, this company has developed some iconic products that are now considered industry icons. These are the styles that are often copied. Probably the most popular is the Ghost Whisperer.
This is 1,000 fill power, super light jacket that uses this super thin ripstop fabric that we helped invent. Super packable, only 6 ounces, so you can always have that jacket with you. Life survival gear, the Trango tent, just about in every base camp across the world on the highest peaks. This is gonna protect you from, you know, frigid winds and monsoon-powered blizzards. To something a little cozier, our Polartec High Loft jacket, the original bio-mimicking furry fleece. This keeps you warm in dynamic conditions and super cozy. As we've worked hard over the last four or five years on the brand, we have new innovations that have become modern franchises, like our Dynama series of women's bottoms. These use a lightweight, durable fabric that flatters and performs.
To our Crater Lake series of UPF tops, these keep you performing out there longer, protecting you from the UV rays without the use of chemicals. These two examples alone in sportswear show our power in sportswear, helping build a strong year-round business. Again, something that's very rare amongst our industry peers. Finally, Stretchdown. This is a down jacket that reinvented the way to make a puffy. It uses a stitch-less 3D woven baffle, and this new way of making a puffy allows the entire jacket to stretch without the use of those stitches that protect the down. It's one of our newer innovations that has now already become an icon. Remember that newest camp that mountain sports segment I mentioned called Camp? I wanna use Camp as an example of how we approach every single mountain sports segment.
You see, camping, the center point of all outdoor activities, is an opportunity for us to improve that experience through great innovative product. Each one of these 10 boxes is part of that journey. We aim to solve problems we ourselves encountered when planning epic trips, from packing and prepping to the road trip. Those are parts you don't really think about innovation to solve problems, but how do you pack your duffels in the back of your van or your trunk? How do they stack up and work with each other? How do they work with your tents? To unpacking and setting up at camp, to then taking a break, going out on your adventure, to coming back to camp to cook, clean, and then my favorite part, chilling out in front of the campfire with a frosty beer in hand.
A fun fact, we have a new camp parka that you'll be able to see later today in back that has a built-in beer koozie. That's innovation, right? That's consumer-led. They didn't wanna have to have a separate beer koozie. But you know, after that, you sleep and you cozy up. You wake up the next morning after luxuriating in comfort, and you eventually pack up to go home. From the tents, bags and duffels you use to the clothes you're wearing in between activities, Camp product is utilitarian, it's technical, while being softer and cozier. Again, this Camp segment is important to us because we believe the campground is the gateway to the mountain. We approach every single one of our mountain sports segments with this insane attention to the experience.
What does this all mean? How will we do it? There are three areas of concentration that will feed our 9%-11% growth. Number one, it's about innovation. We're gonna deliver a relentless flow of compelling product from supercharging icons like the Ghost Whisperer that's been with us a couple decades, to inventing new ways to make things like the Stretchdown collection, to scaling our sportswear business and our women's business, or inventing new ways to construct a tent. We will bring a steady stream of compelling product to market. Number two, it's about awareness. It's about those fans. We will become more popular, beginning with those who matter most, and it is those fans that matter most. They will shout from the mountaintop about Mountain Hardwear.
It's about consumer activations, showing up where they are, and leveraging our partnerships with our athletes, our ambassadors, and our mountain guide partners. We have a massive social media following, larger than most of our core competitors. We hit 700,000 followers this week, in fact. We're gonna work harder to unlock that to greater gains. Number three, and how will we get their attention? Again, it's that consistency, utilizing that framework around our mountain sports segments. We're showing up in the right places where the consumers are reading and watching. A good example of this is Montrail, you'll see the Strava logo. We launched a campaign on Strava this last spring in celebration of our new Kor AirShell super lightweight do-everything jacket.
This campaign, our first ever, brought 135,000 new fans in just a few weeks. It blew us away. That's powerful. Number three, it's access. We're growing our footprint in the marketplace methodically, in the right place, with the right product to fuel substantial sustainable growth. It begins with mountainhardwear.com, our most important representation of the brand. We need that to be confident. Of course, it's a great place to shop. We have amazing ways to shop by look, by experience, by trip, but it's also a place to learn, such as how to pack your pack or how to take care of your tents. It's also a place to get inspired, leveraging all those community partnerships we have with athletes, ambassadors, and partners. Lastly, it's about access, where our consumers can be able to see us here.
Specialty brick-and-mortar is the backbone of our industry. It's the backbone to being authentic in the outdoor industry. The good news here is, just like our fans, specialty brick-and-mortar loves Mountain Hardwear. Then we move to wholesale.com, digital-forward e-tailers. We are lucky we're partnering with the best e-tailers on the planet, from Amazon.com all the way to Backcountry. Finally, national retailers. We all know for a brand like Mountain Hardwear, REI is table stakes, and we have a solid relationship with them. To attract newer, younger fans, more diverse fans, Dick's Sporting Goods is gonna open up the brand to newer, younger consumers, and we're already in 100 doors for this fall. As you can see, there's so much potential for this brand. I'm excited for all of you to witness Mountain Hardwear growing to new heights.
Next year, we'll celebrate our thirtieth year. I'm happy to say we've only just begun. Thank you.
Well, good morning. I'm Mark Nenow from the SOREL team. You are looking at a massive global consumer market, a global market that is hundreds and hundreds of billions of dollars. A large chunk of those billions are right here in the U.S. This is a market that is estimated to grow tens and tens of billions more by 2026. I would say, more importantly than the size and the dollars and the numbers, you are looking at some of the world's strongest consumer brands. These brands and their products resonate. They resonate, and they connect with the consumer in a deeply emotional and personal way. More than any other product space, I would say the brand connection here with the consumer is lovemark powerful. For the consumer, this product is a personal badge. This product is an individual cue.
They wear this product as a social signal. This is the world of footwear. This is the marketplace of footwear. This is the business of footwear. This is about a footwear brand with unique and strong potential for long-term and differentiated growth. The next global footwear force, the SOREL brand. This is our brand vision that now has become a full-throated declaration. Whether you wanna measure that footwear force by your brand and how powerful it is, how much the consumer loves it, how much it resonates, how much the consumer covets it and wants to affiliate with it, or whether you wanna measure that footwear force by product and how much you're delivering world-class design, creativity, innovation, how much that product is disrupting the market and the competition, or you just wanna talk about sheer math and growth and revenue.
This is a footwear brand on its way to the $1 billion revenue mark. I believe it will pass through $1 billion well on its way to higher and higher. This brand's been on a journey. SOREL's been on a journey since it was acquired in 2000. That journey has taken on focused intention over the last eight years. It's a journey of essential true to its roots reinvention. It's anchored and informed by a brand with one of a kind DNA, and all with clear vision and big, big goals. The ethos and tenets of that journey are locked. We believe SOREL believes in the power and longevity of brand. Brand is what the consumer connects with. It's what the consumer covets. Brand is what dominates and repositions the competition.
Brand is what talks and walks and resonates clearly, loudly, strongly through all the clutter and all the noise. Brand matters, and powerful footwear brands, they matter powerfully. SOREL is one of those brands in the making. We believe in driving relentless product creation. The world doesn't need another shoe. It doesn't need another sandal. It doesn't need another boot or another sneaker. The consumer will fall in love with the next cool, innovative shoe design from a powerful footwear brand, and they will beat a path to your door. There's no product copy. There is no product follow in SOREL. SOREL product creates its way, creating what the next SOREL piece of footwear is that she hasn't even imagined yet. Our shoes, they have to be beautiful. They have to be inspired, and they have to be inspiring. They have to elicit desire.
They have to visually make the consumer want them. This, this is our footwear brand. We are focused in SOREL on footwear. We joke that SOREL only cares about the human condition. SOREL only cares about the consumer from the knees down. Three key words for the future of SOREL, rotation, and rotation. I know that's only one word, but this has been our rally cry. This has been our rally word. For more than winter. Much, much, much more than just winter. More than just winter boots, more than just worthy of wearing them when it snows. More than a 60-90-day volatile weather-dependent business. Rotation to every corner of her footwear closet, every corner of her footwear want and need. Our rotation strategy defines our high-fidelity product bandwidth.
From platform sandals to street boots, to wedges and heels, to flat sandals and to sneakers. Focused, addressable product markets, each ripe for innovation and cool function by fashion design, each with its own sizable footwear market segment and competitive set. SOREL has refined its product offense to these segments, sandals, heels and wedges, street boots, and winter. Winter apres, winter sport, winter light. Each of these segments has a focused CAGR over our next corporate planning cycle. The essence of our brand and the essence of our people is embedded in our values. Purposeful. There's nothing frivolous about this. SOREL is never off course. This brand has a clear idea of where exactly it's going. This brand has every reason to be audacious, cocky even. Never afraid, never hesitant. SOREL is confident, and we're relentless. We're never still, constantly in motion. It's going, it's going, it's going.
SOREL has an amazing future to unfold, and this brand is gonna go out and unfold it. We're creative. I mentioned earlier, never copy. SOREL is getting copied. This brand is unique in every way. This is what and this is who we are. These are the truths of this brand. Powerful, unstoppable. Unstoppable, powerful. We make powerful footwear for unstoppable individuals, for our unstoppable woman. This is our brand promise. This is our consumer proposition for her, to her. We know the challenge of getting there, and we intend to serve and be part of her journey every step of the way. We believe. We believe she is her most powerful tool, and the determination she finds within is an amazing, unstoppable force. SOREL is relentlessly, constantly, sleeplessly challenging the status quo. The status quo of creating and designing unexpected footwear.
Footwear that pushes the boundaries of function first fashion. We are in motion. We are in constant motion so she can continuously push herself forward. SOREL locks itself. It locks itself and lives at the distinct and definitive and differentiated intersection, the intersection of function and fashion. Function first fashion footwear. What makes this SOREL formula so powerful and so unique in our space? All of our creative horsepower, all of our consumer insight, all of our inspired design is driven through the lens of her, our SOREL woman, the center of everything we do. We know that she's unstoppable. We see it every time we meet her. You can't contain or measure the power of this woman. She is driven, large scale life goals live at her doorstep every day. She operates on her terms. She is getting it all done on her terms. She's independent.
She is fiercely independent. She sets, she carves her path. She owns her hustle, and she relies on herself. She leans on herself for her success. She is motivated from within. She is not driven by what others think. She is a truth seeker. Her BS meter is highly functional. She can smell fake people, and she can smell a fake footwear brand from a mile away. Authenticity matters to her, and she knows it's in short supply, especially these days. She is true, and she is real. She is living her life to the fullest, taking every opportunity that comes her way. She won't stand for brands, and she won't stand for footwear that holds her back. She doesn't buy SOREL's to stand around. She buys SOREL because she has places to go and she has things to do.
As you know, Footwear News is a key source magazine for our industry. Two years ago, they published an anniversary edition, The Greatest Shoes of All Time. Not the top sandals of the last decade, not the best boots for hiking, not the top trainers for going for a run. The 50 best shoes of all time. It's almost as interesting to see the brands that are not on this list as it is to see the brands that are. To name a few, Jordan is on this list. Dr. Martens is on the list. Balenciaga is on the list. Tory Burch's original ballet flat is on the list. Crocs and Gucci are on the list. Birkenstock, of course, Converse and Nike are on the list. Who else is on the list? SOREL. This brand is on the list.
The authenticity and functionality of the SOREL Caribou gains membership to this exclusive club, The Greatest Shoes of All Time. The SOREL brand, I would propose to you, the SOREL brand is authentic footwear royalty. A few years ago, we received a box in the office. In that box was this pair of boots, and in this pair of boots was this letter. "Dear SOREL Boot Company. Enclosed, you will find a pair of SOREL boots that I received for Christmas from my mother and father in 1974. Yes, they look like they're 37 years old. These boots have lived through winters in North Dakota, South Dakota, hunted snow geese in northern Saskatchewan, and ice fish for walleye on Minnesota lakes. They have hunted rabbits, ducks, pheasants, fox, partridge, and deer. They have snowmobiled, shoveled driveways, shoveled sidewalks and steps.
They have been in the mud on the Missouri River and through hundreds and hundreds of cornfields in North Dakota. If these boots could talk, what a story they would tell. I believe SOREL set out to create a boot which could be this versatile and could stand this kind of a test of time. For me, SOREL will always be synonymous with quality, durability, and utility. Thanks for the memories, John S., Fargo, North Dakota." Well, thank you, thank you, John S., for that awesome letter. SOREL. SOREL has an authentic function-first license that very, very few brands have. It's a license that was stamped and validated long, long ago.
Whether you're talking about Pac boots from the distant past like that letter, or you're talking about a version, a new version of our Caribou boot for women, or you're talking about our kick-ass street boot for fall 2023, or you're talking about any of the SOREL product in the booth behind you that you're gonna see later this afternoon. Utility and function were, and are, and always will be first, and always will be the product benchmark in SOREL. This is the SOREL license that drips with authenticity and anchors our unique position. This is not a formula or a story for going backwards. This is not a reason to get nostalgic about winter and refocus on that business. We are not. This is our license. This is our very sharp point. It's our wedge to drive SOREL's modern future. Function first, fashion footwear.
This is our space. We're gonna tell it, we're gonna sell it, we're gonna evangelize. SOREL will drive category leadership here, and we will reposition our competitors who very thinly, some of them very thinly claim this same promise. Function first fashion footwear. All through the lens, all through the lens of her. All through the lens of our SOREL woman. All dedicated, designed, created, colored, and materialized through the lens of her. SOREL has a higher bar to get over. SOREL has a higher calling to eclipse the functional demands of our consumer's day. Not the demands of a tennis court, not the demands of running around a track, but the underfoot demands of her urban and city field of play. The phrase function first. The phrase function first, it requires enormous shoe-to-foot knowledge.
How the 26 bones and the ridiculous number of joints in the human foot, how they work and how they move, and how they interact with a strapped or a laced or a slipped-on piece of footwear. SOREL Evate is our underfoot innovation and focus on ride and flex and cushioning and lightweight and traction. SOREL Immense is our overfoot attention to enhance breathability, foot motion, waterproofing, and keeping her feet warm. These two trademarked words embody SOREL's enormous footwear function-first know-how. Fashion and style and looking good and beautiful boots and wedges and sandals and sneakers that are amazing. Our footwear better rock fashion. It better rock style. It better be as cool as it can be and as desirable as it can be. It better turn heads, and it better be impossible to ignore. We've got the brand.
Columbia Sportswear Company has the brand, and it was born in the perfect space, the footwear space. This brand's year-round non-winter trajectory, it's set, and it's well on its way. We are laser-focused on our unstoppable women's footwear consumer. Beneath that umbrella, we continue to maintain and grow our men's business. We've got a product engine. We've got product engine horsepower to relentlessly disrupt the market and constantly surprise our consumer with innovative footwear. We've got an anchored, strong North American business now with untapped potential in Europe and the rest of the world. We've got this corporate enterprise anchor to leverage it all up and drive it. SOREL's 2022-2025 net sales CAGR is range planned at 20%-22%, even with everything going on now in the economy and the market.
A key waypoint on our revenue horizon is hitting the $1 billion revenue mark. This is a very exciting story. The next global footwear force, SOREL.
Wow. Well, now that's a tough act to follow. Not just the SOREL brand, but really all of our brands. Truly amazing. Hello, everyone, and good morning. I'm Jim Swanson, the CFO of Columbia Sportswear Company. I wanna thank you all for coming out, spend a little bit of time and listen to us about the company's strategies. As Tim mentioned this morning, this is the first time in our 24-year history as a public company in which we've hosted an investor day. A lot of you have asked me over the past few months, "Why now?" The answer is quite simple. It's confidence. It's confidence in the brand portfolio, the strength of our collective brand portfolio, our innovative product, as well as the marketing and the marketplace strategies.
We also wanted to go deeper with you than we can during our quarterly earnings calls, so you can see firsthand our strategies more clearly. The brand strategies that you've heard this morning are why we're so excited about our ambitious growth plans. With that said, you know, being part of the retail industry, we're not immune from the near-term economic uncertainty and headwinds, but we see enormous opportunity. As we look forward, not only do we see opportunity, we're poised to accelerate profitable growth. That growth is grounded on the strength of our consumer-focused, purpose-driven brands. Our brand portfolio was built to connect active people with their passions. These aren't ordinary brands. What you've heard this morning, they're authentic, they're innovative, and they're differentiated. Their uniqueness sets them apart in the marketplace.
As Tim mentioned in his opening, we're also benefiting from broader market tailwinds, like the popularity of outdoor activities, increased focus on health and wellness, and casualization megatrends. Powerful brands in growing market categories, that's a formula for growth. We also have a track record of delivering profitable growth. We've maintained a strong balance sheet, and we've always had a disciplined approach to capital allocation. This solid financial position has enabled us to invest in our strategic initiatives and return significant capital to shareholders. When you combine our brand portfolio, our growth strategies, and our historical financial performance, you can understand the confidence that we have in generating shareholder value.
As Kai Ryssdal says on Marketplace, "Let's do the numbers." Here's a quick snapshot of what I mean when I say we have a track record of delivering shareholder value. From our IPO in 1998 to 2021, we delivered a 9% compound annual growth rate in net sales. We've achieved 11% growth in diluted earnings per share and a 13% annualized total shareholder return. Over those 24 years as a public company, our net sales declined in only two periods, the financial crisis in 2008 and 2009, and during the recent COVID-19 pandemic. In both cases, we recovered quickly and resumed growth.
We're confident in our ability to navigate challenging environments, and it's clear to us that in both good and challenging times, our strategies and our democratic approach to the marketplace, they're working. Not only have we proven our ability to deliver profitable growth, we've outperformed the market. As you can see, since our IPO, we've delivered shareholder returns greater than the S&P Consumer Discretionary index and the S&P 500. Here's the bottom line. Given the confidence we have in our strategies and our ability to overcome near-term headwinds, we're targeting 9%-11% net sales growth compound annual growth rate over the next three years. That equates to $4.5 billion-$4.7 billion in revenue by 2025. We also believe in our ability to grow our operating profits even faster than net sales.
We're targeting operating margins to expand to approximately 14% of net sales and diluted earnings per share to grow 12%-15%, benefiting from both our operational performance and share purchases. How? Let me elaborate on the key drivers to growth, profitability, as well as our capital allocation strategy. First, I'll touch on the current environment. I briefly mentioned the tailwinds we see in our business, but I wanna go a bit deeper into the near-term conditions that create both uncertainty and opportunity. Just like everyone else, we're facing several near-term headwinds, external headwinds, including broad-based inflationary pressure, supply chain disruptions, COVID-19 impacts, an uncertain geopolitical environment, and tightening Fed policy. While we're not immune to these external pressures, but we've proven our ability to overcome challenging environments and emerge even stronger.
At this time, we're not prepared to provide a financial outlook specifically for fiscal 2023. What we can tell you is this: our wholesale orders for the spring 2023 season indicate that we're positioned to drive modest wholesale sales growth in comparison to spring 2022, which was a record season for us. We will provide a more complete outlook for 2023 during our year-end earnings call in February. In the meantime, we're focused on execution of the fall 2022 season and being ready to capitalize on consumer demand. Our plan to deliver 9%-11% sales growth over the next few years is fueled by broad-based sales growth. You've heard that this morning, with an emphasis on three key growth accelerators that I'm gonna share with you. First, footwear.
Mark outlined SOREL's function first fashion footwear strategy and how SOREL is poised to become a billion-dollar brand. The SOREL team has done a phenomenal job repositioning the brand, building iconic year-round footwear, and building brand heat and affinity with its target female consumer. Transitioning to the Columbia brand, you heard this morning from Joe and team, the growth prospects for Columbia footwear are also immense. The product line includes an incredible lineup of trail and franchise and hike franchises to drive growth. We see massive opportunities to grow this business within our key wholesale customers and see inroads to capitalize on the strength of Columbia brand apparel and PFG to drive that growth. Our second growth accelerator is international expansion. This remains a huge opportunity for us.
Our top priorities have been to continue driving momentum in Canada and Europe direct. Begin to drive more robust growth in China, a geography in which we've historically held a market-leading position. Finally, driving growth in digital commerce channels is a top priority, spanning both our wholesale customers as well as our own e-commerce business. As we break down our net sales into each reportable segment, you can see we have broad-based momentum across the portfolio and across geographies. Our growth doesn't overly rely on any one element of the business. Rather, it's fueled by a balanced and diversified strategy amplified by these three growth accelerators. Let's look at growth by brand. We see enormous opportunity to grow the Columbia brand and anticipate it contributing the greatest growth in absolute dollars. As Joe shared, over $700 million.
With distinctive innovation and a great value, Columbia is well-positioned to capitalize on outdoor and casual-casualization trends with its broad reach and appeal. SOREL. SOREL is expected to be our fastest-growing brand on a percent basis, in the low 20% range. We're confident that SOREL will be a billion-dollar footwear brand, and that we'll be well on our way to that milestone by 2025. Mountain Hardwear. Mountain Hardwear has made tremendous strides. We're excited about the direction of the brand with its laser focus on performance apparel and gear for every part of the mountain. We project Mountain Hardwear net sales of 9%-11% over the course of the next few years. As you heard from Monica, prAna's in the midst of a brand refresh, which we believe positions the brand for long-term growth.
The potential for prAna is substantial as the brand strengthens its position in yoga and the climbing categories and focuses on active wellness. In looking at mix, you can see Columbia remains the largest piece of the pie, while the growth from SOREL is a standout, becoming a much greater proportion of the portfolio by 2025. By product category, footwear is a clear growth accelerator for us, and Tim has long communicated the importance and potential of the footwear product category. You've heard from SOREL and you've heard from Columbia here today. While their growth stories are different, the common thread is the solid foundation that each brand has developed. For SOREL, it's about brand heat, iconic product and consumer affinity.
For Columbia, it's the evolution of our trail and hike product categories, combined with the ingredients that have contributed to Columbia Brand Apparel success, high-quality product with innovative differentiation at a fair price. While footwear is a clear accelerator, brand strengths from the likes of PFG, as well as the product innovation that Haskell reviewed with us early this morning, provide ample fuel for Columbia Apparel to drive growth. This will result in footwear sales mix growing from our anticipated 24% of total sales in 2022 to 29% of total sales by 2025. We believe that footwear is in its early innings of growth and will continue to invest in this part of our business. Looking at growth by geography, again, we're relatively balanced. Within our geographies, we anticipate the fastest-growing markets to be Canada, Europe direct, and our China business.
Over the past several years, our Europe direct business in particular has delivered phenomenal performance. Since 2015, Europe direct net sales have increased at a double-digit percent, and our profits have improved substantially. Even with near-term uncertainty, our European business is well set to continue driving meaningful growth. In China remains one of our largest geographic opportunities and a clear top priority for the Columbia brand team. Our China team has been hyper-focused on improving in-store productivity, enhancing the product assortment, developing digital capabilities, and strengthening strategic partnerships to drive growth. Now, unfortunately, you know, China's COVID policies have created near-term and complexity and headwinds for our business, much like others in the industry. We've made steady progress stabilizing the underlying business and positioning it for growth. Canada.
Canada is a market in which the Columbia and SOREL brands possess high brand awareness and trust with the consumer. We see continued opportunity to expand in this healthy market. Our balanced approach and strategic focus on international markets, with that, we expect international sales mix to increase two percentage points over this period. At the same time, our U.S. business is our most mature market for all of our brands, and we continue to see opportunity to capitalize on consumer trends as well as our ability to capture market share in our home market. Finally, moving to growth, sales growth by channel. First, wholesale, which includes our international distributor business. We have great partners worldwide with long-standing relationships, and we believe we can continue to grow our wholesale business in the 9%-11% range.
For the Columbia brand, we value the breadth of distribution, and we intend to maintain it. Similar to our D2C business, we anticipate wholesale dot-com will outpace wholesale brick-and-mortar sales growth. To that end, we are implementing digital capabilities, and we're enhancing our operations to better serve the online channels of our customers. On the D2C business. For more than a decade, our D2C business has steadily grown as a percentage of the mix. In 2021, our D2C business reached 47% of total net sales, encompassing both brick-and-mortar and our e-commerce channels. Looking ahead, we plan to continue investment, prioritizing investment in the digital channel while prudently opening new outlet and branded stores in viable markets. Our D2C e-commerce business will be driven by the brand strategies that we've heard earlier today, further aided by ongoing digital investments.
As consumer preferences shifted during the pandemic, our D2C.com penetration grew from 11% of total sales in 2019 to 18% in 2021. We believe this trend will continue and expect our D2C.com business to grow faster than the company as a whole. Finally, the D2C brick-and-mortar also remains an important part of our growth strategy, and we anticipate a balanced focus on improving store productivity and expanding our store fleet. In terms of new store development, we expect to add new stores on pace with our historic investment levels. From a channel sales mix perspective, we're maintaining our balanced distribution approach to distribution. Given consumer demands and the investments we're making, we anticipate D2C.com penetration will grow to 20% of total net sales.
As you've consistently heard from our brands this morning, we'll remain agile and intend to serve our consumers when and where they engage with our brands. Moving to operating margin. Our outlook generates approximately 160 basis points of operating margin expansion over the next three years, resulting in approximately 14% operating margin by 2025, compared to the 12.4% midpoint of our 2022 financial outlook. Key drivers of operating margin expansion include our ability to expand operating margin and leverage our SG&A cost structure. In the past, you may have heard us talk about Project CONNECT. This is a transformation initiative that we conducted just a few years ago. Through that process, we implemented several actions to achieve operating margin expansion. Things like value engineering product, improving style productivity, enhancing marketing effectiveness, and implementing efficiencies in our SG&A cost structure.
These and other levers implemented as a part of the initiative were designed to withstand time. These practices, with our focus on relentless improvement throughout the company, continue to this day. Looking specifically at gross margin, the current economic backdrop poses some level of uncertainty. Inflationary pressures continue to persist and foreign currencies are at multiyear lows. The marketplace also has its challenges, including higher inventory and increasing promotional levels. While the duration of economic turbulence is unknown, our focus is to mitigate these headwinds to the extent possible through pricing power and our disciplined execution. Thinking about gross margin longer term, our teams are focused on creating exceptional product for the consumer and maximizing gross margin potential.
We believe our ability to expand gross margin over time through value engineering, strategic sourcing, inventory management, product innovation that we've heard about this morning, and the pricing power of our brands. Specific to SG&A, we believe we can leverage our SG&A cost structure while also investing in our strategic priorities and growth drivers. We expect to achieve SG&A leverage by driving top-line momentum over our fixed SG&A cost structure, executing operational efficiencies, and maintaining the same discipline that we've been known for years. Through the combination of gross margin expansion and SG&A leverage, we expect to be in a position to deliver the operating margin of approximately 14% by 2025. Strategic investments. As we look forward, we expect strategic investments to be focused on connecting with consumers, enhancing their experience, and elevating the service levels to the consumer and also to our wholesale customers.
These investments are organized in four major areas that we see, demand creation, digital capabilities, supply chain, and growth-focused investment. Demand creation remains a top strategic priority. Over the course of the past several years, our demand creation investment has increased from 5% to approximately 6%, and we plan to continue to increase the rate of that spend with an emphasis on the growth accelerators that I covered here this morning, a full funnel approach to marketing with a digital-first mindset. Second, there's no question that digital capabilities are even more essential to success in a post-COVID world. Prior to the pandemic, we invested in two system platforms, consumer-first and experience-first. These platforms contributed to an improved consumer experience and to the growth and profitability of our North America and our European direct consumer businesses.
We see continued opportunity to invest and transform our digital capabilities. Specifically, we're continuing to enhance the online consumer experience. We're investing in data and analytics capabilities to better anticipate and serve our consumers' needs. We strive to build brand affinity through enhanced communications and improvements to our loyalty programs. More broadly, we're investing in digital capabilities across the business to be more agile and adaptive. Supply chain. When it comes to supply chain capabilities, our focus is to improve the consumer experience and be a stronger partner for our wholesale customers. We're investing in people, systems, and processes to improve supply and demand planning and to improve and drive inventory efficiency. We're focusing on adapting our supply chain to shifts in our business model, including the increased penetration of e-commerce sales.
We're also expanding supply chain capacities with strategic partners throughout the network to provide increased flexibility as our business grows and adapts. Finally, we're investing in new growth opportunities across the portfolio and selectively opening new D2C stores. These four areas of strategic investment align back to our strategic priorities and underpin our growth plan. Let's turn to capital allocation. We remain committed to the capital allocation priorities that we've communicated for the past several years. First, we believe our greatest opportunity to drive shareholder value is to continue reinvesting into the business to drive long-term profitable growth. We'll continue to return excess capital to shareholders, targeting at least 40% of free cash flow, and we'll opportunistically consider M&A. Over the past five years, we've generated over $1.2 billion in free cash flow and returned 74% of that to shareholders.
That's $920 million, well above our 40% target. For 2023 to 2025, we expect to generate more than $1 billion in free cash flow. In terms of total shareholder returns, we're setting a 13%-17% TSR target over the next three years, which is balanced between net sales growth, gross margin expansion, and our capital allocation strategy. Please keep in mind, this does not assume M&A, and also does not assume P/E multiple expansion nor return of capital exceeding our 40% threshold. As I said at the start, this is the first time in our company's history that we've shared a multi-year growth outlook. We've never been more confident than we are today in the collective strength of our brands, our products, our teams, and our go-to-market strategies.
We're poised to drive profitable growth and shareholder returns over the next several years. Thank you.
Thanks, Jim. I like those numbers. Okay, I think we're ready to start the Q&A. I'd like to invite Tim and Joe back on stage. I'd also like to introduce Craig Zanon, Senior Vice President, Emerging Brands, come on stage. Welcome. Craig is gonna field any questions related to prAna, Mountain Hardwear, and SOREL. Welcome. So only people in the room will be able to ask questions. We have a few mics circulating around. Please raise your hand, wait for the mic. When it's your turn, please state your name and firm so people on the webcast know who is asking the question. Please limit yourself to one question related to this presentation and a follow-up. Let's begin.
It's Bob Drbul from Guggenheim. I can't do one question. I'm sorry. It's gonna happen.
We know.
All right. The first one that I have is for Tim. Is there any thought to bring the beard back?
You know, it looked so good on the screen up there. I think maybe for Christmas, because it'll definitely be a different color.
All right. A second question for Joe. I love the hats, and this wasn't a prop. I liked your prop earlier. When you look at the Columbia brand and you think about, you know, the $700 million, is there one product or a category, or is there anything that when you look at the next few years specifically, that you think will be, you know, a huge dollar driver in that $700 million? I have one more.
Yeah. Thanks, Bob. I think, you know, set aside what I might personally think. The presentation today was really focused on the product category and our balance, right? When you look at, you know, what we make from footwear to outerwear to apparel and PFG to the hat you're wearing, we have such a balanced portfolio that I think, you know, it's really the opportunity in front of us with the consumers to drive across our portfolio of products that we make.
Mm-hmm.
Got it. I guess the last question is, Tim, you go back to the video for a second. There was a lot of old commercials, you know, with you and Gert, and I'm just curious on the marketing side, next couple of years, is there any opportunity for a Tim and Joe commercial that we might see?
Yeah. Well, you know, in today's environment, that might be considered child abuse. Over here.
Laurent Vasilescu from BNP Paribas. Thank you very much for such a thoughtful presentation today. One question is on SOREL, that 20%-22% growth, I think last year did about $320 million. Can you kinda give us the shape of the curve of, like, how much was wholesale versus DTC, and how do you think about that growth going forward?
There you go. Craig.
Yeah. Again, Craig. Yeah, it's actually the answer to your question is pretty balanced. We're very committed to the wholesale side with SOREL, but we also have a very robust dot-com business with SOREL too. It's actually very balanced.
Okay, great. Maybe a follow-up question for Jim on your presentation. To Bob's question, how do we think about marketing? You know, 6% last year. Last year you had a 14% operating margin. How do we bridge, like, the pieces here? Because you got gross margin probably having a headwind with footwear outgrowing apparel. Just maybe a little bit of guardrails, and how do we think about CapEx as a percentage of sales as we think about the free cash flow?
Yeah, on each of those. In the case of demand creation, what Tim's often shared, you know, as we see growth in the business from a top-line standpoint and our ability to expand product margin, it provides us a unique opportunity to continue to invest in the demand creation side of the business. That'll continue to be an emphasis. We've not, you know, communicated a specific target as it relates to what that would look like. But with growth and expansion of gross margin, certainly, you know, one of our top strategic priorities when you look at capital allocation is reinvesting back in the business. Demand creation would be one of the first areas that, you know, we commonly think about.
As it relates to capital expenditures, you know, I would expect our capital expenditures to align a bit more with where we've been pre-pandemic. If you look back to our pre-pandemic capital expenditure levels, they were in the $80 million-$100 million range. What we've contemplated and what we've shared here today would be in that ballpark.
Yeah. I would emphasize on the demand creation side, the percent of demand creation as a percent of sales varies by geography and by brand. As the various brands and parts of the business grow at different rates, that changes some of the mix. We know that it's important that brand creation is gonna be one of the critical components of our growth. You know, when we think about the business and the way our products perform, what we really need to make sure of is that we tell the story and tell it crisply, concisely, and loudly. We know we have to continue to focus on that investment.
Maybe in the back there either.
Thank you. Tracy Kogan at Citigroup. I had a question about footwear. First at SOREL, I was wondering if you could break down. I think you outlined those four categories within footwear. How big are each of those categories for the brand right now? And how much growth do you assume for each one in your overall 20%-22% CAGR? Just at the Columbia brand, how big in dollars is the footwear opportunity there?
I think I'll take the SOREL part of that first. You know, first of all, to answer your question, each one of those segments, those five segments that Mark went through are huge. They're huge. You all know this. I mean, each one of those segments is huge. SOREL's market share, excuse me, within each one of those is relatively minor. What we love about the SOREL story is it's first of all a unique position, you know, as Mark talked about. It's female-led, first of all. How many footwear brands in her closet are truly female-led across all those? Some are, some aren't. Two is that function first fashion kinda story that Mark told. That's real.
Again, when you think about a lot of what's in her closet right now, a lot of it is what we call, like, legacy product unicorns, I call them. They're products, and you know many of them, that is gonna be in every one of her closets. The way I bring that up is 'cause we're not pretending that's gonna go away. I'm talking about, you know, Air Force 1s of Nike. I'm talking about Birkenstock sandals. You know what I'm talking about. That's occupying her shelves or her closet. The other side, though, is she wants new, fresh product, and she wants new, fresh product, and that's where that function first fashion comes from.
It's giving her product and a relentless flow of new and fresh product 'cause other brands aren't necessarily able to do that because they're kind of bridled in because of their, the strength of the positions they have. It's difficult for them to stray out of that. That's what we love about the SOREL story, is just bringing that new function first fashion product in a relentless flow. What that means is we're gonna bring that story Mark told. It was as much about the areas that we're not gonna go into as we're going into, because we feel those are the most important ones. Those are the ones she's looking for from us, and we feel we have a really new, unique position by which to move in and, you know, basically grab more of her closet.
Maybe Joe on the Columbia footwear, and I know Tim has a point of view on footwear.
Sure, yeah. The way I look at it, you know, first of all, we love all the products and that we make, but particularly in footwear, the fact that they do wear out over time is a great attribute. For our product offering, you know, when we look at it, really broken down by three components. In cold weather, you know, big opportunity there. Then trail, we talked about, Dean talked about, significant opportunity in terms of how we look at that product category. Then the innovation that we have coming also in the footwear around water and PFG, and we think it's just a great opportunity for us, again, in a balanced nature to approach the marketplace.
Yeah, if you think about the history of the company's footwear business, for Columbia, it really started with winter footwear. Obviously SOREL from North Dakota, actually it's from Guelph, Ontario, but you know, it's winter footwear. We won't really be super successful the way we wanna be in footwear until we have a year-round product offering that has really compelling products. We're beginning there. Obviously, you'll see later today the sneakers that Marcus has developed and which just have incredible opportunity, as well as the white space that's offered by our PFG product to really expand into that for the Columbia brand.
In terms of rates of growth, you know, I think it was pretty clear with SOREL that we were talking a 20%+ growth rate. In the case of footwear, you know, it's above the overall corporate average. We are looking for double-digit growth from Columbia Footwear.
I'll add one more comment to this, just from even a Columbia and SOREL standpoint. Hopefully, one thing you capture today is the innovation horsepower of this company. It is significant. I haven't been here that long. Frankly, been here a year and a half now. Come from some places that have that. It's a horsepower generator. From a footwear standpoint, what a cross between Columbia and SOREL, because they both are, you know, what's function first fashion on the SOREL side, activity based on our Columbia side. We have a real opportunity to actually power up our innovation behind footwear too, and that's part of our intention to drive growth in both segments. Sorry, I interrupted, Bill. My bad.
Hi, good afternoon. Mauricio Serna from UBS. Thanks, again for the presentations and, you know, the opportunity for the deep dive into all the brands. I guess, first question from, you know, the sales CAGR target, you know, is quite strong. Just maybe given all the puts and takes by brand and what you're seeing, you know, in the current environment, how should we think about that growth, like, on a multi-year period? Like, you know, should it be more skewed toward, like, the middle years? Or how should we think about that, like, 2023, 2025 trajectory?
Yeah, you know, we haven't gotten into the specifics of that. You know, I gave some information as it relates to the spring season 'cause we do have spring wholesale bookings for spring 2023, which we're pleased with. You know, it does contemplate growth coming off of a record spring 2022. Getting into, you know, kind of further texture around the flow and cadence of revenue. You know, we'll be prepared to do that when we share a full year outlook in February. Certainly, we're mindful of the economic environment and the challenges that are out there, and that'll be among the things we consider. You know, until we get through the important fall, winter, and holiday selling season with the consumer and then begin to see our order book for fall 2023, it'd be premature to provide specific estimates.
Got it. Just one quick follow-up on the operating margin improvement opportunity. I mean, within the channels, where do you see the biggest opportunities to drive margin expansion, you know, considering wholesale, the brick-and-mortar stores that you operate and the DTC e-commerce business?
Yeah, that will be really driven by how successful we are in footwear. 'Cause if we can create some additional footwear powerhouse items, that will make sure that the footwear wholesale, the wholesale portion of the business grows much more rapidly. It's really gonna be dependent on how we do from a product development standpoint in footwear.
Mauricio, if you could just pass forward to Alex. Oh, you got the mic.
Sure. Where?
Hi, Alex Perry from Bank of America. Thanks for the presentation. Just wanted to ask a bit more about your wholesale strategy. Other competitors are increasingly moving to D2C. How do you think about capturing the margin benefits from doing so versus maybe capturing some of the share gains as others sort of de-emphasize the channel? You know, maybe off of that, many brands are consolidating to strategic partners. Are you doing the same? The 9%-11% wholesale growth, maybe just help us unpack that. Is that, you know, share gains at existing distribution or new distribution? Thanks.
Tim, maybe you could do the strategy, and then Jim can do the next margin.
Yeah. Certainly. Well, it's as I said earlier, the company's historically been a wholesale business, and that's where I believe the company's most profitable and can really operate at a very high level. We're really set up to be a wholesale business. As it relates to the expectation on DTC, there's no question that we can tell our best stories and we can tell a more compelling version of the company and the company's products in our own environments. Those come with significant costs that impact profitability as it relates to channel productivity. We wanna make sure that we've used our wholesale partners and help them be successful.
As it relates to breadth of wholesale partners, we always look at our grouping of wholesale partners with the lens of, okay, so who's gonna be around in a while, in maybe five years? Who do we want to invest in? How do we consider the relationships that senior company employees have with senior company employees at our retailers? If we have a problem, we can go with confidence and strength to our wholesale partner and say, "Hey, we got a problem," or, "How can we do better?" It's always been from that standpoint an important part of how our company has grown. Hopefully that answers your questions.
I think. I wanna emphasize that our company is built on wholesale relationships, and that's where we intend to grow our business as well.
Yeah. I think the only thing I would add to that is the margin profile of our business when you look at each of the respective channels. The wholesale channel has always been incredibly profitable, the most profitable channel, for the company. To the degree we can drive growth in there's very little variable costs, and there's a lot of opportunity to leverage over the fixed cost structure. It's an area where, you know, we remain committed to the strong relationships we have and what it can mean in terms of driving more dollars to the bottom line.
Yeah. Just I wanna make sure that I emphasize, today we believe we're selling to every customer that where we think we have an opportunity to be successful for both us and our customers. We don't expect to be changing that that mix. We would just like to sell every one of those key customers more.
That's really helpful. Maybe just a follow-up. Can you talk to us about how you think about pricing in the current environment, especially as you sort of try to maintain the democratic nature of the brand? I guess maybe some context historically, how much price you've taken, and then, you know, modest year-over-year sales growth in the first half of 2023, how much, you know, of embedded sort of price increases in there?
We've worked diligently really beginning with Project CONNECT to have an improved gross margin profile for the company. It really depends on how our products are accepted, the level of popularity of the products, in terms of us being able to hang on to those gross margins. Now, there are times when inventory levels are high or low and where we can be variable in terms of how we approach our gross margins. The key is for us to have a high gross margin to generate more marketing money, more demand creation, and higher operating margins. That's how we think about the structure of the business.
Yeah. When we set pricing for spring 2023, there are some additional increases in passing along inflationary costs in the form of the price. For spring 2022, as we've commented, we increased our price mid-single-digit % on average. We're continuing to see certain of the cost pressures come into the business, albeit ocean freight's become a little bit more of a tailwind as that begins to normalize to some level. There are additional price increases that have been built into how we think about spring 2023.
Okay. Jon?
Thank you. Jon Komp from Baird. Maybe a question for Joe first on the Columbia brand. When you think about adding the $700 million of sales that you've outlined, could you maybe just talk a little bit more about the biggest opportunities in terms of the new customers you see? And maybe within that, share a little more on the Columbia customer today, you know, the characteristics and how you see that evolving. Then just separately, one follow-up on marketing. Some of your other global peers spend 7%-8% or more of revenue. Is there any thought to just going all in and really, you know, accelerating the investment to support the growth that you see? Thank you.
Yeah. Thanks for the question. You know, when we look at really the consumers across our geographies, it's quite diverse channels and geographies in terms of where we do business. When we think about you know the growth, it's really like what we talked about today. It's positioning ourselves for the future growth. We think you know we've really begun to do that in our activities around the brand. You know, Pri shared the Forbes article in terms of if you look at that as a point of reference.
For me, really, it's about, you know, making sure we're there as the consumers evolve and we're the brand, you know, that wants to be there to meet them.
I'm guessing that footwear will probably lead the growth in the portion of $700 million, that highest component will likely be footwear. You know, one thing we don't talk much about, and there was some discussions here in the slides, is the power of the brand in markets outside of the typical markets that we talk about. That would include Israel, Chile, Turkey, just across the board in markets that are smaller, where we're almost untapped. We recognize that our competitors and some even in this town have marketing budgets that are in the low teens.
You know, we've talked about how we would structure our business, but we've never really taken the approach that we need to do a complete change of how we approach it. I think for us, for our company, it's better if we have a more balanced approach, move towards those numbers, to the extent that we think that it's important, and I believe it is, but in a more measured manner rather than taking a stab at it.
Yeah.
Hi there. It's Jim Duffy with Stifel. A couple of questions, directed to you, Joe, and maybe this builds on Jonathan's question some. But both you and Pri spoke about the importance of recruiting new consumers to the Columbia brand and the power of the loyalty program. Can you speak about the male-female split for the brand, how that's changed in recent years, and how you see that evolving in coming years? And then maybe elaborate some on some of the opportunities with the loyalty program.
Yeah, sure. Thanks for the question. We don't specifically get into the details around the composition of the loyalty program, but I will tell you back to today's presentation, you know, it's really about unlocking the outdoors for everyone, right? We think about consumers in terms of how to reach them across the channel spectrum. Like I mentioned earlier today, we wanna look great really in terms of a brand no matter where we show up. We think, you know, our democratic approach to the business in terms of how our brand shows up to consumers is that's really a strength that we look at in terms of our product and then how we market to the diverse consumers that we're trying to attract.
Hey, Jim, and maybe just one additional comment related to that. When I covered strategic investments, I talked about digital capability, and there's a lot of digital investments we're making across the business. Among those is looking at loyalty and enhancing our loyalty programs and amplifying the importance of membership with the consumer. The exact timing around when some of those investments will come into play, we're still kind of working through that. We see tremendous opportunity to better connect with the consumer and have those types of programs in place to retain and attract.
Great. If I may, Jim, one coming your way. You gave us a cumulative free cash flow objective. You spoke about strategic opportunities in supply chain, perhaps even reducing lead times. Anything to say about opportunities to, you know, kind of shrink the working capital usage in the business?
That'd certainly be a goal and objective, you know, and particularly as we look out at next year. You know, I would think that next year, given the inventory that we're carrying and we'd anticipate having exiting this year, that there's opportunity for us to get stronger inventory efficiency. You know, we'll be at or below two times inventory turns this year. You know, we should be far greater than that. There are efforts throughout the company with regard to thinking through inventory optimization strategies and how we can drive that to a better place. Absolutely, Jim, that will be an objective for us.
All right. Well, I think we're gonna wrap up the Q&A portion right now. Tim, would you like to say any closing remarks?
Yeah. Well, listen, first and foremost, thank you very much for coming and agreeing to spend some time with us to learn more about the business. This is really an opportunity, as Jim said, for us to exude our confidence in the future and for you to see what we do, which goes really much deeper than just an hour-long call every quarter to talk to you about what happened in the last three months. If you left with one overriding memo from today's meeting, it's that we're a product company. That's where we focus all of our time and how we can make product that helps answers people's questions and is differentiated. That's just what we do.
We need to tell the story about that much more frequently, louder, and with better intention. Demand creation is gonna be a big part of what we do, and we wanna make sure that we have, you know, high quartile profitability through all that. That's our goal. That's how we plan to run the business. Again, we really appreciate you taking the time to visit with us. You'll see some more stuff tonight or later today when you'll really see the stuff. At the end of the day, you'll see, you know, what we do and how we do it.
All right.
Again, much appreciated.
All right. Well, that ends the webcast portion of the event. Thank you for listening. We greatly appreciate your interest in our company. For those on the webcast, have a great day.