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Columbia Sportswear Tops Q3 Earnings, Sales; Ups FY View

Zacks Equity Research
Updated

Columbia Sportswear Inc. COLM reported better-than-expected earnings and sales growth during third-quarter  2015 on the back of robust performance by its Columbia and Sorel brands.

Columbia Sportswear’s third-quarter earnings per share of $1.28 comfortably beat the Zacks Consensus Estimate of $1.07 by 19.6%. Earnings also jumped 37.6% from the year-ago level.

The year-over-year improvement in profit was driven by higher sales in U.S. and Canada as well as strong performance of the Sorel and Columbia brands.

 

Revenues and Operating Profits

Quarterly revenues rose 14% to $767.6 million driven by double-digit growth of Columbia and Sorel brands and strong growth in North America and Europe-direct markets. The Sorel, Columbia and prAna brands contributed almost 26% of net sales in North America. Sales increased 18% on a constant currency basis. Sales also surpassed the Zacks Consensus Estimate by 4.72%

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Gross profit increased 16.2% to $356.5 million. Gross margin expanded 100 basis points (bps) to 46.4% driven by higher sales. Adjusted operating profit went up 35% year over year to $132.3 million. Operating margins increased 260 bps to 17.2%.  

Segment Details

Regional Segments

U.S.: Net sales jumped 26% backed by strong sales of Columbia and Sorel brands.

Canada: Net sales increased 16% (39% at constant dollar) led by Columbia and Sorel brands.

Latin America/ Asia Pacific: Net sales slipped 14% (5% at constant dollar) due to poor performance of Columbia brands in the Asian region.

Europe/Middle East/Africa (EMEA): Net sales decreased 14% (3% at constant dollar), as sales growth in the Europe-direct business was offset by decline in net sales to EMEA distributors, especially in Russia.

Product Segments

Apparel, Accessories & Equipment segment’s net sales increased 9% (12% constant-dollar) to $596.1 million. Footwear net sales grew 36% (46% constant-dollar) to $171.5 million.

Columbia brand’s net sales increased 10% (14% constant-dollar) to $609.7 million backed by improvement in wholesale advance orders and growth in direct-to-consumer sales. Sorel brand’s net sales climbed 48% (59% constant-dollar) to $86.2 million backed by volume growth of lightweight fall styles for delivery in the third quarter, along with robust growth in winter styles. Mountain Hardwear’s net sales went up 12% (17% constant-currency) to $21.2 million. Net sales in the prAna brand increased 22% to $34.4 million.

Innovations for Fall 2015

Columbia brand's innovation for fall 2015 features TurboDown Wave, a unique high-end outerwear product and Out Dry Extreme, an ultra-breathable waterproof rainwear. We believe that such innovations will keep the brand's momentum going into 2016 and beyond.

Further, on Oct 9, Columbia Sportswear launched a global campaign “Tested Tough”, inspired by its Pacific Northwest heritage and the original Tough Mother initiative that featured current Chairman, Gert Boyle, and her son and present CEO, Tim Boyle.

Other Financial Updates

Concurrent with the earnings conference call, Columbia Sportswear announced a 13% hike in the regular quarterly dividend to 17 cents per share from 15 cents. The new dividend will be payable on Dec 3, 2015 to shareholders of record as on Nov 19.

Updates Full-Year 2015 Guidance

In view of the upbeat third-quarter performance, Columbia Sportswear raised the 2015 earnings outlook.

Columbia Sportswear expects earnings per share in a range of $2.32 to $2.37 as against $2.25 to $2.35, representing 20% to 23% year-over-year growth from $1.94.

The company raised its operating income growth estimate from a high-teen percentage range to 20–23% which translates to a $239 million to $244 million increase from the year-ago level.

For 2015, Columbia Sportswear maintained its sales outlook and expects sales to grow 10.5% (14.5% constant-currency) to more than $2.3 billion, compared with 2014 net sales of $2.1 billion.

The company expects net income between $165 million and $169 million, up from $160 million to $168 million.

Columbia Sportswear  enjoys a Zacks Rank #1 (Strong Buy). Other stocks in the same sector worth considering are GIII Apparel GIII, Oxford Industries Inc. OXM and Perry Ellis International Inc. PERY. All these stocks carry a Zacks Rank #2 (Buy).

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