Columbia Sportswear Company (COLM Quick QuoteCOLM - Free Report) is scheduled to release second-quarter 2018 results on Jul 26. We expect the company to continue gaining from its brand enhancing initiatives, robust geographical reach and Project CONNECT program. These strategies have been driving growth for this marketer and distributor of outdoor and active lifestyle apparel and accessories, which boasts a splendid earnings and sales surprise history. That said, let’s see if Columbia Sportswear will keep its stellar show on, this time around too.

Project CONNECT, Brand Strength Remain Key Drivers

Columbia Sportswear remains poised to gain from its Project CONNECT program that was announced last year, with the intention of enhancing the company’s performance by working on its four core strategies. First, the company remains focused on driving brand awareness and boosting sales growth in both wholesale and direct-to-consumer channels, by concentrating on creating demand.  Second, management plans to enrich customers’ experience and digital operations. Further, Project CONNECT will help Columbia Sportswear improve and solidify global direct-to-consumer networks. Finally, the core strategies include making customer-centric investments and optimizing organizational growth. Clearly, the program is likely to drive sales and earnings growth, alongside strengthening the company’s financial position.

Also, the company is set to gain from its innovative marketing techniques, which will further strengthen its presence in the apparel industry. The company’s prAna brand is seeing an increasing female customer base, besides successfully meeting its sustainability targets. Further the company expects continued growth from its SOREL brand, through constant upgrade and effective management strategies. Additionally, Columbia Sportswear’s widespread global reach provides the company with a solid business foundation and enables it seek new opportunities to enhance profitability. In fact, the company’s advancement in the EMEA region has been impressive, lately. Management is on track to exploit further opportunities in this region. 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.

A Look Back & Outlook

These positives drove strength across most categories and regions in Columbia Sportswear’s first-quarter 2018, wherein both top and the bottom lines improved year over year and beat the Zacks Consensus Estimate. Notably, this marked Columbia Sportswear's 21st and fifth straight quarter of earnings and sales beat, respectively. Performance during the quarter mainly gained from strong DTC and wholesale businesses. Moreover, positive currency rates, solid gross margin growth and disciplined SG&A expense management encouraged results. Along with its first-quarter results, the company guided higher sales for the fall season, which will boost second-half performance. Operating expenses are expected to be spread equally throughout the second quarter. Management stated that the company will continue with its strategic investments to enhance demand creation and digital capabilities. It will also continue exploring growth opportunities in DTC business, alongside improving supporting processes.

Expectations in Numbers

The consensus marks for second-quarter sales from Canada, EMEA, LAAP and the United States are pegged at $15.4 million, $83 million, $92 million and $260 million, reflecting upsides of nearly 10.8%, 24%, 15% and 9.2%, from their respective year-ago reported sales figures. Coming to brands, the Zacks Consensus Estimate for sales of prAna, Columbia and Sorel to rise roughly 15.7%, 8% and 15% to $40.5 million, $368 million and $6.9 million, respectively. The consensus estimate for Mountain Hardwear brand stands at 15.3 million, down from $16.1 million reported in the year-ago period.

The Zacks Consensus Estimate for overall sales is currently pegged at nearly $439 million, up from $399 million reported in the second quarter of 2017.

Notably, management expects results in 2018 to gain from lower effective tax rate, thanks to the recent tax reforms, which can have a favorable impact on the quarter to be reported too. The Zacks Consensus Estimate is pegged at a loss per share of 10 cents, narrower than a loss of 17 cents recorded in the year-ago period. Notably, the estimate has improved by a notch over the past 30 days. That said, we remain encouraged about Columbia Sportswear’s upcoming results.

What the Zacks Model Unveils

To top it, our proven model shows that Columbia Sportswear is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Markedly, Columbia Sportswear’s Zacks Rank #2 and Earnings ESP of +51.61% make us reasonably confident of an earnings beat.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat:

Michael Kors Holdings Limited , a Zacks #3 Ranked stock, has an Earnings ESP of +0.87%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Guess?, Inc. (GES Quick QuoteGES - Free Report) , a Zacks #2 Ranked company, has an Earnings ESP of +4.08%.

Francesca's Holdings Corporation has an Earnings ESP of +60.00% and a Zacks Rank of 3.

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