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Columbia Sportswear (COLM) Reports Q2 Loss, Hurt by Low Demand
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Columbia Sportswear Company (COLM - Free Report) posted second-quarter 2024 results, with the top and the bottom line deteriorating year over year. The quarterly loss was narrower than the Zacks Consensus Estimate, but net sales missed the consensus mark.
The company has been facing a tough U.S. market, marked by sluggish consumer demand and cautious retailers. However, internationally, the company is seeing strong product demand in most global markets, including China and its Europe-direct business. Management reaffirmed its top- and bottom-line view for 2024.
The company’s fall 2024 order book indicates a sequential increase in wholesale sales, with the possibility of overall sales returning to growth by the fourth quarter. For this fall, the company is introducing a range of innovations, including Omni-Heat Infinity, Omni-Max footwear and the latest addition, Omni-Heat Arctic.
Columbia Sportswear Company Price, Consensus and EPS Surprise
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted a quarterly loss of 20 cents per share. This contrasts with earnings of 14 cents reported in the year-ago quarter. The loss was narrower than the Zacks Consensus Estimate of a loss of 31 cents.
Net sales declined 8% to $570.2 million and missed the consensus mark of $573 million. Net sales declined 7% at constant currency or cc. The sales decline resulted from reduced wholesale net sales (in the United States). This stemmed from retailer cautiousness, a tough competitive landscape and sluggish overall consumer demand.
The gross margin contracted 270 basis points (bps) to 47.9%. The contraction in gross margin mainly results from initiatives aimed at boosting demand and reducing inventory in the U.S., along with adjustments in sales provisions. Lower inbound freight costs partially mitigated this effect.
SG&A expenses were down to $302.7 million from $312.5 million reported in the year-ago quarter. As a percentage of sales, the same increased 280 bps to 53.1%. The most significant changes in SG&A expenses are largely due to reduced supply chain and variable demand creation costs, though this was partially countered by increased direct-to-consumer (DTC) expenses.
Columbia Sportswear reported an operating loss of $23.8 million against operating income of $6.2 million reported in the year-ago quarter.
Channels & Regional Segments
In the United States, net sales fell 15% to $340.2 million. Net sales increased 3% to $103.9 million in Europe, Middle East and Africa (EMEA). Latin America and Asia Pacific (LAAP) net sales rose 7% to $99.5 million. In Canada, net sales fell 4% to $26.6 million.
During the quarter, DTC sales remained flat year over year at $291.8 million. Wholesale channel sales went down by 15% to $278.4 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category dropped 5% to $464 million, while the same for Footwear fell 20% to $106.2 million.
Columbia, SOREL and prAna brands registered a sales decline of 5%, 44% and 21%, respectively. Sales for the Mountain Hardwear brand increased 2%.
Image Source: Zacks Investment Research
Other Financial Updates
The Zacks Rank #3 (Hold) company ended the quarter with cash, cash equivalents of $341.8 million, short-term investments of $369.3 million and shareholders’ equity of almost $1,824 million. The company had no debt on its balance sheet as of Jun 30, 2024.
For the six months ended Jun 30, 2024, Columbia Sportswear’s cash provided by operating activities was $108.9 million, and capital expenditures were $27.8 million.
For 2024, COLM expects an operating cash flow of at least $350 million. Capital expenditures are envisioned in the band of $60-$80 million.
The company repurchased 1,414,437 shares for $110.7 million during the six months ended Jun 30, 2024. On Jun 30, Columbia Sportswear had $234.6 million available under its share buyback authorization. Management announced a quarterly cash dividend of 30 cents per share, which is payable on Aug 29, 2024, to shareholders of record as of Aug 15.
Guidance
The company is cautious regarding challenges in the outdoor industry and U.S. consumer trends, as well as geopolitical conflicts, supply chain disruptions, and upcoming elections in major markets. These factors could impact consumer demand and operations. Management continues to monitor disruptions in the Red Sea closely.
For 2024, Columbia Sportswear expects net sales to decline 4-2% to the $3.35-$3.42 billion band. The company expects foreign currency translation to lower net sales growth by nearly 70 bps in 2024.
Management expects the gross margin to expand 40-60 bps to 50-50.2%. The company had expected the metric to expand 80-120 bps to 50.4-50.8%. As a percentage of net sales, SG&A expenses are anticipated in the range of 42.4-43%, up from the 40.6% reported in 2023. Earlier, the metric was anticipated to be in the range of 43-43.4%.
For the full-year 2024, the operating income is expected in the band of $256-$288 million compared with $259-$291 million expected earlier. The operating margin is expected in the range of 7.7-8.4% compared with 7.7-8.5% anticipated earlier. In 2023, COLM reported an operating margin of 8.9%.
Management still envisions earnings per share (EPS) in the range of $3.65-$4.05 in 2024. Columbia Sportswear expects foreign currency translation to lower the EPS by nearly 7 cents.
For third-quarter 2024, COLM anticipates a net sales decline of 3-6% to the $927-$959 range. The company expects to deliver an operating income of $94-$107 million in the quarter. Management expects delivering EPS of $1.27-$1.43 per share in the third quarter, suggesting a decline from earnings of $1.70 per share reported in the year-ago period.
Shares of COLM have declined 2.4% in the past three months compared with the industry’s drop of 12.7%.
G-III Apparel Group has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 sales indicates an increase of 3.3% from the year-ago period’s reported level.
Hanesbrands designs, manufactures, sources and sells apparel essentials. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for HBI’s 2024 earnings indicates significant growth from the 2023 reported figures. HBI has a trailing four-quarter average earnings surprise of 10.2%.
PVH Corp, a renowned apparel company, presently carries a Zacks Rank #2 (Buy). PVH has a trailing four-quarter earnings surprise of 10.1%, on average.
The Zacks Consensus Estimate for PVH Corp.’s current financial-year earnings suggests growth of 5.2% from the year-ago reported number.
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Columbia Sportswear (COLM) Reports Q2 Loss, Hurt by Low Demand
Columbia Sportswear Company (COLM - Free Report) posted second-quarter 2024 results, with the top and the bottom line deteriorating year over year. The quarterly loss was narrower than the Zacks Consensus Estimate, but net sales missed the consensus mark.
The company has been facing a tough U.S. market, marked by sluggish consumer demand and cautious retailers. However, internationally, the company is seeing strong product demand in most global markets, including China and its Europe-direct business. Management reaffirmed its top- and bottom-line view for 2024.
The company’s fall 2024 order book indicates a sequential increase in wholesale sales, with the possibility of overall sales returning to growth by the fourth quarter. For this fall, the company is introducing a range of innovations, including Omni-Heat Infinity, Omni-Max footwear and the latest addition, Omni-Heat Arctic.
Columbia Sportswear Company Price, Consensus and EPS Surprise
Columbia Sportswear Company price-consensus-eps-surprise-chart | Columbia Sportswear Company Quote
Quarter in Detail
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted a quarterly loss of 20 cents per share. This contrasts with earnings of 14 cents reported in the year-ago quarter. The loss was narrower than the Zacks Consensus Estimate of a loss of 31 cents.
Net sales declined 8% to $570.2 million and missed the consensus mark of $573 million. Net sales declined 7% at constant currency or cc. The sales decline resulted from reduced wholesale net sales (in the United States). This stemmed from retailer cautiousness, a tough competitive landscape and sluggish overall consumer demand.
The gross margin contracted 270 basis points (bps) to 47.9%. The contraction in gross margin mainly results from initiatives aimed at boosting demand and reducing inventory in the U.S., along with adjustments in sales provisions. Lower inbound freight costs partially mitigated this effect.
SG&A expenses were down to $302.7 million from $312.5 million reported in the year-ago quarter. As a percentage of sales, the same increased 280 bps to 53.1%. The most significant changes in SG&A expenses are largely due to reduced supply chain and variable demand creation costs, though this was partially countered by increased direct-to-consumer (DTC) expenses.
Columbia Sportswear reported an operating loss of $23.8 million against operating income of $6.2 million reported in the year-ago quarter.
Channels & Regional Segments
In the United States, net sales fell 15% to $340.2 million. Net sales increased 3% to $103.9 million in Europe, Middle East and Africa (EMEA). Latin America and Asia Pacific (LAAP) net sales rose 7% to $99.5 million. In Canada, net sales fell 4% to $26.6 million.
During the quarter, DTC sales remained flat year over year at $291.8 million. Wholesale channel sales went down by 15% to $278.4 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category dropped 5% to $464 million, while the same for Footwear fell 20% to $106.2 million.
Columbia, SOREL and prAna brands registered a sales decline of 5%, 44% and 21%, respectively. Sales for the Mountain Hardwear brand increased 2%.
Image Source: Zacks Investment Research
Other Financial Updates
The Zacks Rank #3 (Hold) company ended the quarter with cash, cash equivalents of $341.8 million, short-term investments of $369.3 million and shareholders’ equity of almost $1,824 million. The company had no debt on its balance sheet as of Jun 30, 2024.
For the six months ended Jun 30, 2024, Columbia Sportswear’s cash provided by operating activities was $108.9 million, and capital expenditures were $27.8 million.
For 2024, COLM expects an operating cash flow of at least $350 million. Capital expenditures are envisioned in the band of $60-$80 million.
The company repurchased 1,414,437 shares for $110.7 million during the six months ended Jun 30, 2024. On Jun 30, Columbia Sportswear had $234.6 million available under its share buyback authorization. Management announced a quarterly cash dividend of 30 cents per share, which is payable on Aug 29, 2024, to shareholders of record as of Aug 15.
Guidance
The company is cautious regarding challenges in the outdoor industry and U.S. consumer trends, as well as geopolitical conflicts, supply chain disruptions, and upcoming elections in major markets. These factors could impact consumer demand and operations. Management continues to monitor disruptions in the Red Sea closely.
For 2024, Columbia Sportswear expects net sales to decline 4-2% to the $3.35-$3.42 billion band. The company expects foreign currency translation to lower net sales growth by nearly 70 bps in 2024.
Management expects the gross margin to expand 40-60 bps to 50-50.2%. The company had expected the metric to expand 80-120 bps to 50.4-50.8%. As a percentage of net sales, SG&A expenses are anticipated in the range of 42.4-43%, up from the 40.6% reported in 2023. Earlier, the metric was anticipated to be in the range of 43-43.4%.
For the full-year 2024, the operating income is expected in the band of $256-$288 million compared with $259-$291 million expected earlier. The operating margin is expected in the range of 7.7-8.4% compared with 7.7-8.5% anticipated earlier. In 2023, COLM reported an operating margin of 8.9%.
Management still envisions earnings per share (EPS) in the range of $3.65-$4.05 in 2024. Columbia Sportswear expects foreign currency translation to lower the EPS by nearly 7 cents.
For third-quarter 2024, COLM anticipates a net sales decline of 3-6% to the $927-$959 range. The company expects to deliver an operating income of $94-$107 million in the quarter. Management expects delivering EPS of $1.27-$1.43 per share in the third quarter, suggesting a decline from earnings of $1.70 per share reported in the year-ago period.
Shares of COLM have declined 2.4% in the past three months compared with the industry’s drop of 12.7%.
Take a Look at These Solid Picks
Some other top-ranked companies are G-III Apparel Group (GIII - Free Report) , Hanesbrands Inc. (HBI - Free Report) and PVH Corp. (PVH - Free Report) .
G-III Apparel Group sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
G-III Apparel Group has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 sales indicates an increase of 3.3% from the year-ago period’s reported level.
Hanesbrands designs, manufactures, sources and sells apparel essentials. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for HBI’s 2024 earnings indicates significant growth from the 2023 reported figures. HBI has a trailing four-quarter average earnings surprise of 10.2%.
PVH Corp, a renowned apparel company, presently carries a Zacks Rank #2 (Buy). PVH has a trailing four-quarter earnings surprise of 10.1%, on average.
The Zacks Consensus Estimate for PVH Corp.’s current financial-year earnings suggests growth of 5.2% from the year-ago reported number.