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Nov 25, 2024 |
Columbia Sportswear Company (NASDAQ: COLM)$88.07 USD ( As of 11/25/24 ) |
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Data Overview
| 52 Week High-Low | $86.98 - $74.21 |
|---|---|
| 20 Day Average Volume | 566,764 |
| Beta | 0.92 |
| Market Cap | 4.77 B |
| Dividend / Div Yld | $1.20 / 1.44% |
| Industry | Textile - Apparel |
| Industry Rank | 68 / 250 (Top 27%) |
| Current Ratio | 3.22 |
| Debt/Capital | 0.00% |
| Net Margin | 6.42% |
| Price/Book (P/B) | 2.67 |
| Price/Cash Flow (P/CF) | 12.72 |
| Earnings Yield | 4.64% |
| Debt/Equity | 0.00 |
| Value Score |  |
|---|---|
| P/E (F1) | 21.55 |
| P/E (F1) Rel to Industry | -4.75 |
| PEG Ratio | 3.52 |
| P/S (F1) | 1.43 |
| P/S (TTM) | 1.43 |
| P/CFO | 12.72 |
| P/CFO Rel to Industry | 0.38 |
| EV/EBITDA Annual | 9.71 |
| Growth Score |  |
|---|---|
| Proj. EPS Growth (F1/F0) | -11.75% |
| Hist. EPS Growth (Q0/Q-1) | 12.63% |
| Qtr CFO Growth | -1,120.74 |
| 2 Yr CFO Growth | 86.08 |
| Return on Equity (ROE) | 12.48% |
| (NI - CFO) / Total Assets | -0.71 |
| Asset Turnover | 1.19 |
| Momentum Score |  |
|---|---|
| 1 week Volume change | 0.62% |
| 1 week Price Cng Rel to Industry | -0.16% |
| (F1) EPS Est 1 week change | 0.26% |
| (F1) EPS Est 4 week change | 1.95% |
| (F1) EPS Est 12 week change | 0.62% |
| (Q1) EPS Est 1 week change | -2.11% |
Summary
Shares of Columbia Sportswear have outperformed the industry in the past year on the back of a solid surprise history and sturdy performance of the company’s European wholesale and U.S. direct-to-consumer businesses. In fact, the company’s top- and bottom-line results in the third quarter of 2017 were primarily driven by improved sales in all international regions. Incidentally, the company is on track with Project CONNECT initiative to drive revenues, capture efficiencies, improve marketing processes and lower SG&A costs. Further as part of the company’s marketing initiatives, it has developed several shop-in-shops and enhanced the number of brand presentations in key partner store locations. However, the company has been facing challenges in the U.S. region, especially on its wholesale front. Moreover, the company remains prone to headwinds such as volatility in the prices of several raw materials and currency fluctuations.
Elements of the Zacks Rank
Agreement Estimate Revisions (60 days)
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100% Q1 (Current Qtr)Revisions: 3 Up: 0 Down: 3 |
100% Q2 (Next Qtr)Revisions: 1 Up: 1 Down: 0 |
67% F1 (Current Year)Revisions: 3 Up: 2 Down: 1 |
100% F2 (Next Year)Revisions: 3 Up: 0 Down: 3 |
Magnitude Consensus Estimate Trend (60 days)
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Upside Zacks Consensus Estimate vs. Most Accurate Estimate
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Surprise Reported Earnings History
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Average 4 Qtr Surprise |
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The data on the front page and all the charts in the report represent market data as of 11/25/24, while the report's text is as of 01/10/2018
Overview
Headquartered in Portland, OR, Columbia Sportswear Company engages in the sourcing, marketing and distribution of outdoor and active lifestyle apparel, footwear, accessories and equipment in the U.S. and internationally. The company offers products under four well-established brands – Columbia, Sorel, Mountain Hardwear and prAna.
Columbia reports its operating results under twomajor segments:- Apparel, accessories and equipment segment (78.5% of FY16 Sales): This segment designs, develops, markets and distributes apparel, accessories and equipment for men and women under its Columbia, Sorel, Mountain Hardwear and prAna brands, and for youth under the Columbia and Mountain Hardwear brand.
- Footwear segment (21.5% of FY16 Sales): The segment designs, develops, markets and distributes footwear products for men, women and youth under its Columbia and Sorel brands.
The country operates in four geographic regions: The United States, Canada, Latin America and Asia Pacific (LAAP), and Europe, Middle East and Africa (EMEA).
Reasons To Buy:
Columbia Sportswear has been gaining from the steady progress in its European wholesale and U.S. direct-to-consumer businesses. The company also remains on track with Project CONNECT initiative.
Sturdy Third-Quarter Results & Surprise History Pull Up Shares: Columbia Sportswear posted better-than-expected top- and bottom-line results in the third quarter of 2017 backed by solid sales growth in European wholesale and U.S. direct-to-consumer businesses. In fact, sales improved across all international regions. Earnings for the quarter were $1.25 per share, which surpassed the Zacks Consensus Estimate of $1.15 and improved 5.9% year over year. Notably, Columbia Sportswear's earnings have surpassed estimates for 19 straight quarters. Owing to such upsides the company’s shares have rallied 29.6% in the past year, compared with the industry’s gain of 11.5%.
Project CONNECT to Drive Growth: Columbia Sportswear started a new operating model assessment project, named Project CONNECT, in June, which focuses on connecting consumers, wholesale customers and international distributors with its manufacturing partners and with the employees around the globe. The project is expected to have a wide-spread impact across the company’s operations and includes a number of initiatives to enhance revenues, capture efficiencies, improve the marketing process and lower SG&A costs. The initiative is anticipated to benefit the company’s direct-to-consumer and wholesale channels.
Strong International Presence: Columbia has a solid international presence and sells its products in more than 100 countries. The widespread global reach provides the company a solid business foundation and enables it to seek new opportunities to enhance profitability. Although the company has significant potential in a variety of markets, we believe the largest opportunity lies in China - given the region’s strength in digital wholesale and e-commerce channels.
Brand Enhancing Initiatives: Columbia Sportswear undertakes brand-enhancing and unique marketing initiatives that further strengthen its presence in the apparel industry. In the past year, Columbia Sportswear’s brand team developed more than 150 shop-in-shops and enhanced the number of brand presentations in key partner store locations. The company’s prAna brand is also attracting an expanding base of female consumers, alongside of male consumers. Further the company expects continued growth from its SOREL brand through constant upgradation and effective management strategies.
Athletic/Outdoor, a Strong Sub-Segment in Apparel: Athletic and outdoor apparel sub-segment has been depicting growth due to higher demand of athletic wear as a result of increased athletic activities, more usage occasions, and increased crossover in apparel between fashion and function. Columbia Sportswear’s products are designed to be used for a wide variety of outdoor activities, such as skiing, snowboarding, hiking, climbing, mountaineering and camping, amongst many others. Traditionally apparels that were mainly used for athletic activities is now being worn more casually, such as, temperature-control base layer shirts. This trend also benefits the prAna products line, which despite being an athletic apparel line has become more accepted as a mainstream casual brand. Since customers have been purchasing more of these items, the company has increasingly added bright colors and fashion into its active wear products portfolio.
Reasons To Sell:
Stock Looks Overvalued: Considering price-to-earnings (P/E) ratio, Columbia Sportswear looks pretty overvalued when compared with the industry. The stock has a trailing 12-month P/E ratio of 25.88, higher than its median level of 21.36, and lower than the high level of 26.18 scaled in the past one year. On the contrary, the trailing 12-month P/E ratio for the industry is 21.73.
Softness in U.S. Wholesale Channels: During third-quarter 2017, sales from the United States slumped 6%, due to weakness on the wholesale front, partly offset by increased direct-to-consumer net sales. Of late, the company has been facing challenges in the U.S. region, especially on its wholesale front due to a tough consumer landscape. This has caused several of its customers to announce store closures and bankruptcies. Apart from this, timing shift of wholesale deliveries from September to October also hurt the regions performance during the third quarter.
Rising Expenses Poses Concern: During the third quarter of 2017, the company’s operating income declined 0.5% due to higher selling, general and administrative (SG&A) expenses. We note that SG&A expenses increased 2.6% in the third quarter while it depicted a rise of 3.8% in each of the first and second quarters of 2017. Moreover, management stated in its outlook for 2017 that SG&A expenses are anticipated to rise 5.4% year on year, due to expenses worth $15 million concerning Project CONNECT as well as anticipated increased spending for global demand creation. While these efforts are in line with the company’s strategy to improve efficiency and performance, they carry the risk of pulling down profit.
Other Challenges Posing Considerable Risk: Columbia Sportswear mainly procures its products through contract manufacturers. The order commitments of the company with such contract manufacturers are not long term in nature, thus posing the risk of meeting production needs timely and adequately on the event of any lags from the manufacturers end. Further, the company is prone to volatility in the prices of several raw materials in the commodity market, such as oil, leather and cotton amongst others. Also, due to Columbia Sportswear’s significant exposure in the international markets, it remains prone to currency fluctuations.
Last Earnings Report
Quarter Ending 09/2024
| Report Date | Oct 30, 2024 |
|---|---|
| Sales Surprise | -1.56% |
| EPS Surprise | 14.71% |
| Quarterly EPS | 1.56 |
| Annual EPS (TTM) | 3.93 |
Columbia Sportswear Cuts View Despite Q3 Earnings Beat
Columbia Sportswear Company posted better-than-expected top- and bottom-line results for the third quarter of 2017. Results were mainly fueled by solid sales growth at the company’s European wholesale and U.S. direct-to-consumer businesses.
In fact, sales improved across all international regions. However, the company’s higher expense expectation for 2017 in relation with Project CONNECT led management to lower its earnings view for 2017.
Q2 Highlights
The company’s third-quarter earnings came in at $1.25 per share, which surpassed the Zacks Consensus Estimate of $1.15 and rose 5.9% year over year. Notably, the bottom line included a 3-cent impact related to the Project CONNECT operating model.
Quarterly net sales amounted $747.4 million, which surpassed the Zacks Consensus Estimate of $734.9 million and climbed marginally by 0.2% from the prior-year sales of $745.7 million. On a constant currency basis, sales dropped less than 1%.
In fact, the top line benefited from sales growth across its geographic regions mainly in the EMEA region, Canada and LAAP region. These were partially offset by decline in the U.S. wholesale arena.
Gross profit increased 1% to $349.1 million driven by higher revenues and lower cost of sales. Also, gross margin increased 30 basis points (bps) to 46.7%. Further, the company reported operating income of $122.9 million, 0.5% lower than the operating income reported in the year-ago quarter. This was accountable to higher selling, general and administrative (SG&A) expenses. Also, operating margin declined 20 bps to 16.4%.
Regional Segments
United States: Net sales declined 6% to $456 million owing to decline in wholesale net sales, which was partially compensated by growth in direct-to-consumer net sales.
Europe/Middle East/Africa (EMEA): Net sales jumped 20% (up 15% on a constant currency basis) to $87.5 million, backed by solid performance at its European business (direct-to-consumer and wholesale) and growth in sales to EMEA distributors.
Canada: Net sales grew 8% (up 4% on a constant currency basis) to $80.9 million.
Latin America/Asia Pacific (LAAP): Net sales increased 9% (down 11% on a constant currency basis) to $123.0 million, mainly due to sales in China, Korea and to the LAAP distributors. These were partially countered by sales decline in Japan.
Category and Brand Segments
The increase in net sales was also driven by the strong performance of its Global Columbia brand, which registered a growth of 2% to reach $598.3 million.
However, Global SOREL brand sales declined 7% to $81.7 million. Also, Global prAna net sales declined 3% and Global Mountain Hardwear brands net sales declined 4% to reach $36.8 million and $29.4 million, respectively.
While, net sales in the Global Apparel, Accessories and Equipment category increased 1% to $580 million, the same in Global Footwear declined 2% to $167.4 million.
Other Financial Updates
Columbia Sportswear ended the quarter with cash and short-term investments of $430.3 million versus $219.7 million in the year-ago period. Further, consolidated inventories amounted $558.6 million, down 5% from the year-ago quarter. Total equity as of Sep 30, totaled 1,658.4 million.
No share repurchases were made during the third quarter. However, at the end of the first nine months of 2017, the company’s total share repurchases totaled 665,095 at an aggregate price of $35.5 million.
As of Sep 30, the company had shares worth approximately $137.9 million available for repurchase.
Management also announced a 6% hike in its quarterly cash dividend to 19 cents per share. This is payable on Nov 30 to shareholders on record as of Nov 16, 2017.
Updated Guidance
Columbia Sportswear updated its earnings outlook for 2017. Earnings per share for 2017 are now projected in the band of $2.60-$2.70 per share compared with the previous anticipation of $2.74-$2.84. The lowered view highlights the company’s expected rise in expenses in relation with Project CONNECT.
However, management continues to anticipate net sales to grow nearly 3% year over year, which includes positive impacts of lower than 1% from currency translations.
The company now envisions 2017 gross margins to rise nearly 20 bps, down from the previous guidance of 30 bps. Moreover, SG&A expenses are expected to rise 5.4% year on year, due to expenses worth $15 million concerning Project CONNECT as well as anticipated increased spending for global demand creation.
Additionally, operating income is anticipated in the range of $243-$252 million for 2017 while operating margin is estimated to be roughly 10.3
Recent News
ColumbiaSportswear Announces New Director of Investor Relations – Dec 20, 2017
Columbia Sportswear has appointed Christian Buss as the company’s new Director of Investor Relations. Buss will be reporting directly to Jim Swanson, the company’s Chief Financial Officer and Senior Vice President.
ColumbiaSportswear Announces Management Appointments – Dec 4, 2017
Columbia Sportswear has announced Melissa Dugan as the company’s Vice President and Chief Accounting Officer. The company has also appointed Jennifer Warner to the post of Vice President of Legal. As part of the company internal appointments, David Soriano has been appointed as the company’s Vice President of Footwear Manufacturing.
Industry Analysis(1)Zacks Industry Rank: NA
Top Peers
| Gildan Activewear, Inc. (GIL) |
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| G-III Apparel Group, LTD. (GIII) |
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| Crocs, Inc. (CROX) |
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| Guess?, Inc. (GES) |
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| Kontoor Brands, Inc. (KTB) |
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| Hugo Boss (BOSSY) |
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| Oxford Industries, Inc. (OXM) |
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| Savers Value Village, Inc. (SVV) |
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| Hanesbrands Inc. (HBI) |
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Industry Comparison Textile - Apparel | Position in Industry: 6 of 20 |
Industry Peers |
| COLM |
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| Market Cap | 4.77 B |
| # of Analysts | 4 |
| Dividend Yield | 1.44% |
| Value Score | |
| Cash/Price | 0.08 |
| EV/EBITDA | 9.71 |
| PEG Ratio | 3.52 |
| Price/Book (P/B) | 2.67 |
| Price/Cash Flow (P/CF) | 12.72 |
| P/E (F1) | 21.55 |
| Price/Sales (P/S) | 1.43 |
| Earnings Yield | 4.64% |
| Debt/Equity | 0.00 |
| Cash Flow ($/share) | 6.56 |
| Growth Score | |
| Hist. EPS Growth (3-5 yrs) | 12.63% |
| Proj. EPS Growth (F1/F0) | -11.75% |
| Curr. Cash Flow Growth | -12.90% |
| Hist. Cash Flow Growth (3-5 yrs) | 3.14% |
| Current Ratio | 3.22 |
| Debt/Capital | 0.00% |
| Net Margin | 6.42% |
| Return on Equity | 12.48% |
| Sales/Assets | 1.19 |
| Proj. Sales Growth (F1/F0) | -3.89% |
| Momentum Score | |
| Daily Price Chg | 3.07% |
| 1 Week Price Chg | -0.16% |
| 4 Week Price Chg | 11.04% |
| 12 Week Price Chg | 3.41% |
| 52 Week Price Chg | 10.67% |
| 20 Day Average Volume | 566,764 |
| (F1) EPS Est Wkly Chg | 0.26% |
| (F1) EPS Est Mthly Chg | 1.95% |
| (F1) EPS Est Qtrly Chg | 0.62% |
| (Q1) EPS Est Mthly Chg | -4.58% |
| X Industry | S&P 500 |
|---|---|
| 1.39 B | 37.75 B |
| 3 | 19 |
| 0.00% | 1.43% |
| - | - |
| 0.11 | 0.04 |
| 7.97 | 15.52 |
| 2.26 | 2.37 |
| 1.96 | 3.80 |
| 8.20 | 15.55 |
| 19.47 | 20.17 |
| 0.76 | 3.13 |
| 5.01% | 4.93% |
| 0.30 | 0.61 |
| 1.61 | 8.47 |
| - | - |
| 9.85% | 9.78% |
| 7.48% | 7.56% |
| -16.67% | 3.90% |
| 0.93% | 7.01% |
| 1.62 | 1.23 |
| 23.05% | 38.96% |
| 2.44% | 12.29% |
| 12.53% | 16.71% |
| 1.13 | 0.52 |
| 0.00% | 4.49% |
| - | - |
| 0.90% | 0.35% |
| 0.00% | 1.68% |
| 0.13% | 2.78% |
| 3.16% | 5.68% |
| 10.67% | 30.93% |
| 302,992 | 2,280,153 |
| 0.00% | 0.00% |
| 0.00% | 0.00% |
| 0.68% | 0.13% |
| 0.00% | -0.45% |
| GIL | GIII | CROX |
|---|---|---|
| 7.68 B | 1.32 B | 6.18 B |
| 3 | 1 | 6 |
| 1.65% | 0.00% | 0.00% |
|  | |
| 0.01 | 0.31 | 0.03 |
| 11.58 | 4.25 | 6.79 |
| 1.86 | NA | 1.07 |
| 4.91 | 0.90 | 3.58 |
| 14.78 | 6.34 | 8.04 |
| 16.76 | 7.51 | 8.20 |
| 2.38 | 0.43 | 1.52 |
| 5.96% | 13.32% | 12.19% |
| 0.81 | 0.27 | 0.82 |
| 3.37 | 4.75 | 13.20 |
| | |
| 61.90% | 17.41% | 60.64% |
| 15.66% | -0.74% | 7.48% |
| -17.92% | 30.51% | 11.63% |
| 0.82% | 3.56% | 53.08% |
| 2.31 | 2.92 | 1.43 |
| 44.76% | 21.02% | 45.18% |
| 13.06% | 6.04% | 20.50% |
| 26.88% | 12.81% | 49.70% |
| 0.88 | 1.15 | 0.86 |
| 1.49% | 3.29% | 3.23% |
| | |
| 0.71% | 3.05% | 4.19% |
| 3.19% | -0.73% | 8.49% |
| 3.66% | -1.60% | -20.69% |
| 9.20% | 13.75% | -27.43% |
| 38.80% | 6.51% | 12.15% |
| 821,878 | 338,777 | 2,155,658 |
| 0.00% | 0.00% | 0.00% |
| 1.54% | 0.00% | 0.19% |
| 1.80% | 10.47% | 0.73% |
| -1.23% | 0.00% | -17.69% |
Zacks Stock Rating System
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Zacks Recommendation
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Zacks Rank
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| Value Score |
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| Growth Score |
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| Momentum Score |
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| VGM Score |
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Zacks Style Score Education
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Disclosures
This report contains independent commentary to be used for informational purposes only. The analysts contributing to this report do not hold any shares of this stock. The analysts contributing to this report do not serve on the board of the company that issued this stock. The EPS and revenue forecasts are the Zacks Consensus estimates, unless otherwise indicated in the report’s first-page footnote. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. ZIR certifies that no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report.
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