It has been about a month since the last earnings report for Columbia Sportswear (COLM). Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Columbia Sportswear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Columbia Sportswear Q4 Earnings Lag Estimates, Sales Grow 3% Y/Y
Columbia Sportswear Company reported fourth-quarter 2024 results, wherein both top and bottom lines increased year over year. Sales beat the Zacks Consensus Estimate. The company experienced a return to sales growth and anticipates continued expansion in 2025 across most brands and regions. COLM has made significant strides in inventory reduction, cost savings through its Profit Improvement Program and shareholder returns via buybacks and dividends. The company is advancing its ACCELERATE Growth Strategy with implementation expected in the coming seasons.
The company reported earnings of $1.80 per share, missing the Zacks Consensus Estimate of $1.92. However, the bottom line increased 16% from $1.55 reported in the prior year period.
The company generated net sales of $1,096.6 million, which exceeded the Zacks Consensus Estimate of $1,092 million. The metric also rose 3% from the year-ago period, fueled by higher wholesale net sales and direct-to-consumer expansion. Net sales rose 3% at constant currency.
The gross margin increased 50 bps to 51.1%, mainly indicating growth from lower inventory clearance activity, somewhat offset by unfavorable foreign exchange hedging rates. We predicted gross margin increase of 90 bps. SG&A expenses were up 6% to $430.6 million from $404.8 million reported in the year-ago quarter. As a percentage of sales, the same increased 110 bps to 39.3%. The most significant changes in SG&A expenses were increased DTC and incentive compensation costs, somewhat offset by reduced supply-chain costs. We forecasted an increase of 5.9% in SG&A expenses. Columbia Sportswear reported an operating profit of $137.3 million, up 21% from the year-ago quarter. Operating margin increased 180 bps to 12.5%.
COLM’s Sales by Channels & Regional Segments
In the United States, net sales decline 1% to $682.3 million, which beat our estimate of $664.4 million. Net sales surged 24% to $161.6 million in Europe, Middle East and Africa, surpassing our estimate of $157.4 million. Latin America and Asia Pacific net sales grew 7% to $187.6 million, missed our estimate of $195.3 million. In Canada, net sales remained flat at $65.2 million, aligning closely with our estimate of $65 million. During the quarter, DTC sales inched up 1% year over year to $636.7 million. Our model expected total DTC sales of $657.6 million for the quarter. Wholesale channel sales went up 7% to $459.9 million, which beat our estimate of $424.5 million.
COLM’s Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category inched up 6% to $868.8 million, which beat our estimate of $836.8 million. Footwear's net sales fell 4% to $227.8 million, which missed our estimate of $245.2 million. SOREL and prAna brands registered sales decline of 16% and 2%, respectively. Sales for Columbia and Mountain Hardwear brands increased 6% and 5%, respectively.
Other Financial Updates of COLM
The company ended the quarter with cash and cash equivalents of $531.9 million, short-term investments of $283.6 million and shareholders’ equity of almost $1,780 million. The company had no debt on its balance sheet as of Dec. 31, 2024. Inventories fell 7% to $690.5 million as of the same date. For 12 months ended Dec. 31, 2024, Columbia Sportswear’s cash provided by operating activities was $491 million and capital expenditures were $59.8 million. For 2025, COLM expects an operating cash flow of at least $250 million. Capital expenditures are envisioned to be in the band of $60-$80 million.
The company bought back 3,962,540 shares of common stock for $317.8 million in 12 months ended Dec. 31, 2024. As of Dec. 31, 2024, $627.6 million was available under its share-repurchase authorization. Management announced a quarterly cash dividend of 30 cents per share, which is payable on March 21, 2025, to its shareholders of record as of March 10.
What to Expect From COLM Ahead
For 2025, Columbia Sportswear expects net sales to increase 1-3% in the $3.40-$3.47 billion band, up from $3.37 billion recorded in 2024. The company anticipates modest growth, with Columbia brand expansion, a rebound for prAna and continued momentum at Mountain Hardwear. However, SOREL is expected to remain down in the spring, with efforts to revitalize the brand becoming more apparent in the fall. Management expects the gross margin to expand 80 bps to 51%, up from 50.2% seen in 2024. As a percentage of net sales, SG&A expenses are anticipated to be in the range of 43.4-44.1%, up from 42.9% reported in 2024. For 2025, the operating margin is still expected to be in the range of 7.7-8.3%. In 2024, COLM reported an operating margin of 8%. It envisions EPS to be in the range of $3.80-$4.15 compared to $3.82 reported in 2024.
For the first half of 2025, COLM forecasts net sales to grow 1-3% to $1,352-$1,378 million, up from $1,340 million in the same period last year. The company expects an operating margin of 1.5-2.2% compared with 1.6% in the first half of 2024. EPS is anticipated between 43-56 cents compared with 51 cents in the year-ago period. For the first quarter of 2025, COLM anticipates net sales to decline 1-3% in the range of $749-$764 million compared with $770 million last year. The company expects an operating margin of 5.4-6% compared with 5.8% in the first quarter of 2024. EPS is expected to be between 62-70 cents, a decline from 71 cents in the prior year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Columbia Sportswear has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Columbia Sportswear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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