Is Patagonia Profitable?

Is Patagonia Profitable?

Is Patagonia profitable? Yvon Chouinard, the Patagonia founder, recently said: “As for Patagonia, the brand has an estimated value of $3 billion. It sells more than $1 billion in outdoor clothing and gear and brings in $100 million in revenue a year.” Yet, the founder once said profitability was never the goal. From this amount, it’s safe to say that Patagonia is profitable. Since its inception, the company has prioritized the planet and people and has given back to the community before becoming a popular firm. 

In 2002, Yvon co-launched a global program where 1% of each member’s yearly sales would be donated to non-profit environmental firms. Patagonia has made over $74 million in cash donations and convinced other brands to follow suit. The company’s commitment to saving the planet has been instrumental to its success for decades. 

In 2016, the company donated 100%of its Black Friday sales, amounting to $10 million, to help save the environment. Patagonia’s annual sales amount to over $1 billion, and with its massive following, the company is enjoying the rewards of adopting a purpose-driven concept since it was established. 

Timeline of Patagonia Financial Growth and Funding

1973-1983: The company previously known as Chouinard Equipment adopted the name Patagonia in 1973. The company specializing in outdoor clothing apparel launched its inaugural store close to Chouinard’s blacksmith shop. The store located at Santa Clara in Ventura was unequaled. 

The Patagonia name was critical in differentiating Chouinard Equipment’s mountaineering-specific products from clothing lines. This way, Patagonia carved a niche as a brand offering products for everybody involved in outdoor activities. Yvon was inspired to use Patagonia from his visits to the region. In 1975, Patagonia introduced its logo featuring an outline of Mount Fitz Roy, a mountain in the Patagonia region between Chile and Argentina.

The design was done in collaboration between Jocelyn Slack, a freelance artist, and Yvon Chouinard. Currently, the logo is used on various Patagonia products, like some Fitz Roy 

Patagonia t-shirts are made from pure organic cotton. The pile fleece jacket launched in 1977 would fast become the brand’s signature look, inspiring other items like the better sweater jacket the company launched later. In 1980, Patagonia released various insulating base layers made from polypropylene. After extensive research and experiments, the outdoor community adopted the base layer instead of the cotton-made options, which absorb and retain moisture, resulting in a chilling feeling during cold weather. 

During the same year, Patagonia started educating its customers about layering clothing. Patagonia and Chouinard Equipment were incorporated within Great Pacific Iron Works in 1981. At the same time, the Patagonia brand introduced colorful garment designs for outdoor use. Patagonia’s iconic baggies shorts made from water-resistant nylon fabric were introduced in 1984. Many customers loved the shorts, mainly because they could be used in various outdoor activities.

Further, they were lightweight yet strong. Besides developing new products, Patagonia became the inaugural company to offer on-site childcare for its employees in the US in 1983. This approach was critical in facilitating new parents’ return to work and boosting staff retention. Patagonia is committed to offering childcare and paid sick days and time off as part of treating staff fairly. 

1984-1994: Patagonia opened an on-site cafeteria where employees were served healthy organic meals as the firm’s ethos of caring for its employees, customers, and the planet. The company also replaced private offices with open-plan working, creating a collaboration and communication culture among its employees. In the same year, polypropylene base layer sales. However, the material was not manageable regarding stain removal, order retention, and poor moisture-wicking ability. 

In 1985, Yvon abandoned the fabric for polyester, putting the entire underwear range at risk. Solid customers would later leave polypropylene for Capilene, which was better performing. Despite the considerable risk, sales boomed. Patagonia donated 10% of the company’s profits to environmental groups. The concept evolved as the company decided to commit either 10% of its profit or 1% of total sales, whichever would be higher.

The idea has been in practice ever since. Patagonia’s inaugural climbing shirt, a blend of Hawaiian-inspired designs interwoven with portraits of climbing gear, was launched in 1987. In 1988 Patagonia’s inaugural national environment campaign was launched, and the company also debuted its H2NO waterproof storm jacket. The company has improved its technology over the years to reduce environmental effects while improving performance. 

Chouinard Equipment filed for bankruptcy in 1989 after losing various safety-related lawsuits. Patagonia is one of the founding members of the Conservation Alliance, a firm that’s committed to safeguarding outdoor spaces by leveraging the power of communities and brands. Patagonia’s quality team started reviewing manufacturing partners based on the quality of products manufactured and conditions for the factory employees.

The company introduced a policy to only work with factories they could visit and inspect the working conditions in 1990. 

Sales growth came to a halt in 1991 following a recession. Patagonia laid off around 20% of the workforce, dumped inventory, and cut various costs to settle debts. So dire was the situation that the company nearly closed down. Still, the company withheld its core responsibility principles and implemented a contractor relationship evaluation strategy. This would ensure all manufacturing partners met the performance criteria for treating employees fairly, environmental impact, and quality. 

Patagonia created the first fleece fabric from recycled bottles in 1993, the first in the clothing industry to reduce environmental impact. The company opted for 100% organic cotton by 1996 after realizing that pesticides used in cotton production were harmful to the environment. Patagonia established a new distribution center in Reno, accomplishing up to 60% energy use reduction after adopting radiant heating and solar-tracking skylights. 

2002-2016: Patagonia employed a social responsibility manager in 2002 to manage possible social compliance matters in its supply chain. It also adopted training policies for employees to ensure their decisions and actions didn’t negatively affect their colleagues in terms of pressure to meet deadlines and working hours. 

Yvon Chouinard partnered with Craig Matthews to create  1% for the Planet, encouraging members to forfeit 1% of their gross sales to support environmental work and awareness. Patagonia introduced new seaming methods for hard and soft shell jackets in 2005. Yvon also wrote the book “Let my people go surfing: the education of a reluctant businessman.” The book describes Patagonia brand’s working culture while explaining the benefits businesses can reap from providing an excellent work-life balance for their employees. 

The company reduced its factories in 2006 by 50% to boost transparency while ensuring its partners practice high standards in terms of employee treatment. The Footprint Chronicles, a system that allows customers to trace an item’s history from design to producing raw materials, manufacturing, and retail, was launched in 2007. 

In 2010, a meeting of leaders in the clothing industry, the environmental protection agency, and NGOs was convened in the US to institute the sustainable apparel coalition, intended to develop “an apparel industry that produces no unnecessary environmental harm and has a positive impact on the people and communities associated with its activities”. The company ran its “Don’t Buy This Jacket” ad in 2011 during Black Friday. 

It was meant to implore customers to avoid disposable fashion and stop buying items they don’t need. Patagonia also introduced an advanced system to expose human trafficking instances in the supply chain. The plan would also initiate a comprehensive audit of Patagonia’s raw material supply in production. In 2012 Patagonia became the premier company to achieve benefit corporation status, enabling it to remain mission-oriented as it expanded.

Further, Patagonia identified and started eliminating debt slavery habits affecting employees at the Taiwanese raw materials suppliers, adopting a strategy to ensure workers don’t pay to get employment. Patagonia established Tin Shed Ventures to assist in funding startup companies specializing in the environment. The company also partnered with Fair Trade USA to supplement employees’ wages involved in manufacturing the company’s Fair Trade Certified products. 

The Nano-Air jacket was released in 2014, proving the company’s dedication to refined and functional designs. The jacket is made from nylon fabric and FullRange insulation, making it breathable. Yvon released another book, “Simple fly-fishing,” the same year. It was among a limited edition kit that included a box of flies, a line and leader, a tenkara-style fishing rod, and a booklet to help users with the set-up process. 

The company also introduced to the market its Patagonia Provisions line to sell ethically and responsibly sourced food. In 2016, the company’s $10 million Black Friday sales went towards “grassroots organizations working in local communities to protect our air, water, and soil for future generations.”

2017-2022: Patagonia launched the “Worn War” website, allowing customers to return good-quality items in exchange for new item credits and encouraging them to repair instead of replace used products. In 2018 the company introduced  Patagonia Action Works, a digital platform for linking people with non-profit environmental firms and enabling them to engage in local activism. 

It also donated the $10 million it received in tax reliefs to environmental causes. Patagonia would launch the Micro Puff jacket. Patagonia recycled 10 million plastic bottles in 2019 to create the Black Hole bag range. Since introducing the Fair Trade program, the company has been named among the most transparent fashion brands. 70% of Patagonia’s products were made at Fair Trade-certified factories by then. 

Patagonia supported numerous groups campaigning to highlight various environmental challenges through its Grantees program. Patagonia temporarily closed its stores at the pandemic’s peak to protect its workers. In 2022 Yvon and his family announced they were giving away all of Patagonia’s profits to assist in fighting the climate crisis. 

Patagonia Financial Performance: Revenues, Expenses, and Profit

According to a company representative from Time Magazine, Patagonia’s sales have quadrupled in the last decade to hit more than $1 billion annually. In 2018, the company’s net sales were around $356 million, a 13% growth from the previous year. The company’s global net sales for the pandemic stricken 2020 were $234.4 million. It’s important to mention that this information is based on estimates, as only scanty financial information about the company is available to the public. 

Patagonia’s brand identity is closely related to its charitable donations. The company has donated 1% of its overall sales towards environmental protection and restoration. Further, a significant percentage of Patagonia’s funds is channeled towards creating environmentally friendly synthetic materials to reduce carbon footprint and waste. Patagonia’s revenue continues rising despite its numerous donations. 

Patagonia Revenue

Patagonia generated up to $209.1 million annually in 2021. Then, the company had approximately 1,000 employees, with the revenue per employee ratio being $209,090. The company generates roughly $572,849 daily and around $17.4 million monthly. 

Patagonia Expenses

Apart from wages and the general operational costs, Patagonia offers employees good quality on-site child care. Rose Marcario, former Patagonia’s CEO, said, “It’s true, there are financial costs to offering on-site child care, and they can be expensive if you offer high-quality programs or subsidize your employees’ tuition when on-site care is not available,” Marcario wrote in a Fast Company article adapted from Patagonia’s new book, Family Business: Innovative On-Site Child Care Since 1983.” Marcario also said: “Costs after revenues (tuition fees) for running Patagonia’s child development center are approximately $1 million. With a yearly tax deduction of $150,000 and a second deduction of 35% of costs (35% of $1 million = $350,000), that’s a total of $500,000 in costs recouped, or 50%.”

Patagonia Profit

Patagonia’s estimated profit is around $100 million annually. 

Potential for Profitability

Patagonia can leverage the numerous available opportunities to boost its profitability. For example, opening more stores worldwide will solidify its market presence, allowing it to reach and capture more customers. Currently, the company operates around the US and Canada, disregarding the high demand for outdoor apparel in other parts of the world. Patagonia should consider expanding globally to diversify its revenue streams. 

Digital shopping is fast becoming popular among shoppers. Patagonia can use e-Commerce channels to generate more revenue from online sales. While the company offers a wide range of products, there is room for improvement. Stretching its product line is one of the most effective ways the company can increase its revenue. 


Patagonia has been a successful company in the clothing industry and its efforts to save the environment. Its childcare program was a first in the U.S. and significantly improved the company’s reputation. Patagonia has been at the forefront of protecting the environment and helping fight climate change by donating the entire company’s profits for environmental-based matters. Patagonia can improve its profitability by diversifying its products and expanding globally. 



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