Columbia Sportswear Company (
COLM) fell significantly short of fourth-quarter earnings estimates on February 1 and provided pessimistic guidance due to cautious retail customers and broader economic uncertainty.
The historic outdoor clothing company faces near-term setbacks and a rapidly fading earnings outlook, prompting it to roll out a “multi-year profit improvement program,” including planned corporate layoffs.
A Brief Look at COLM
Founded in the late 1930s, Columbia remains at the forefront of outdoor clothing, apparel, and footwear. The Portland, Oregon-headquartered firm currently owns multiple outdoor-focused brands, including Sorel and Mountain Hardwear. The company also owns prAna, part of a group of brands attempting to compete against Lululemon (LULU).
The diversification and portfolio expansion has helped Columbia. Still, its namesake brand is the largest revenue contributor, bringing in around 80% to 85% of total sales in most quarters.
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Columbia competes against The North Face (VFC), Patagonia, and others. The company has boosted its direct-to-consumer business, with that key segment accounting for around 60% of sales during the recently reported fourth quarter.
Recent Performance & Outlook
Columbia’s fiscal 2021 and 2022 sales soared following an 18% drop in 2020. The company’s fiscal 2023 revenue then climbed by around 0.7%, with fourth-quarter sales down 9% YoY. The company’s adjusted quarterly earnings sank as well, missing our EPS estimate by 7%.
Columbia cited a “difficult U.S. marketplace and a warm winter” for some of its fourth-quarter woes. Looking ahead, the outdoor apparel maker expects “2024 to be a challenging year.” CEO Tim Boyle noted in prepared Q4 remarks that “retailers are placing orders cautiously, and economic and geopolitical uncertainty remains high.”
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Columbia’s fiscal 2024 sales are projected to dip by 2.6% YoY to $3.40 billion. The company’s adjusted earnings are then expected to drop 9% YoY, with a 45% decline expected in the first quarter of 2024, based on current Zacks estimates.
COLM’s earnings outlook is still getting worse, with its most accurate/most recent estimates coming in solidly below its already beaten-down earnings outlook.
Columbia’s
downward earnings revisions help it earn a Zacks Rank #5 (Strong Sell) right now. The recent earnings negativity also extends a decline that started in early 2022.
Bottom Line
Columbia stock is down 17% in the last five years to lag the Zacks Consumer Discretionary sector’s 13% decline and the S&P 500’s 83% surge. COLM is trading below its long-term 200-week and 50-week moving averages and 7% above its average Zacks price target.
Columbia is attempting to “mitigate erosion in profitability and to improve the efficiency of our operations” by rolling out a “multi-year profit improvement program targeting $125 to $150 million in annual savings by 2026.” Investors might, therefore, want to keep COLM on their watchlists while avoiding the stock in the near term.
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