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Why Is Columbia Sportswear (COLM) Down 7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Columbia Sportswear (COLM - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Columbia Sportswear due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Columbia Sportswear reported robust first-quarter 2019 results, with revenues and earnings improving year over year, as well as beating the Zacks Consensus Estimate. Notably, the top line marked its ninth straight quarter of beat and the bottom line delivered positive surprise for 25 quarters in a row. Management also raised its view for 2019.
Q1 in Detail
Quarterly adjusted earnings came in at $1.07 per share, which beat the Zacks Consensus Estimate of 84 cents. Also, quarterly earnings rose nearly 39% year over year.
Net sales advanced nearly 8% to $654.6 million. On a constant-currency (cc) basis, net sales grew almost 10%. The top line surpassed the consensus estimate of $642.9 million. Performance was mainly driven by strength in the Columbia and Sorel brands. In the reported quarter, DTC channels depicted sales growth of nearly 12% (up 14% at cc) and wholesale net sales advanced 4% (up 6% at cc).
Gross profit grew almost 12.5% to $336.7 million. Gross margin expanded 210 basis points (bps) to 51.4%, mainly driven by benefits from Project CONNECT, higher product mix in wholesale category, favorable currency hedge rates and improved DTC sales mix. Also, operating income came in at $88 million, depicting a rise of almost 48.2% year over year. Also operating margin came in at 13.4%, up 360 bps.
Regional Segments
United States: Net sales jumped 14% to $412.2 million, owing to growth across the DTC and wholesale businesses.
Europe/Middle East/Africa (EMEA): Net sales declined 1% (up 5% at cc) to $71.3 million.
Canada: Net sales declined 7% (down 1% at cc) to $38.2 million.
Latin America/Asia Pacific (LAAP): Net sales improved 1% (up 4% at cc) to $132.9 million.
Category and Brand Segments
The Columbia and SOREL brands registered growth of 9% to $552.2 million and 28% to $39.5 million, respectively. However, net sales in the Global Mountain Hardwear and prAna brands slumped 11% to $21.7 million and 3% to $41.2 million, respectively. Further, net sales at the Apparel, Accessories and Equipment category increased 7% to $526 million and Footwear sales rose 10% to $128.6 million.
Other Financial Updates
Columbia Sportswear ended the quarter with cash and cash equivalents of $430.4 million and total equity of $1,720.6 million. Inventories advanced 28% to $520.6 million as of Mar 31, 2019. During the first quarter, the company generated cash flow from operating activities of $58.6 million, while it incurred capital expenditures of $25.2 million.
Further, in the quarter, Columbia Sportswear paid dividends worth $16.4 million to shareholders and repurchased 195,681 shares for nearly $19.1 million. Additionally, on Apr 19, 2019, management announced quarterly dividends of 24 cents per share, payable May 30 to shareholders of record as on May 16.
Guidance
Management is impressed with the sales and profitability momentum achieved in the first quarter. The company expects to continue reaping financial gains from Project CONNECT. Further, management intends to continue with its strategic investments related to demand creation, drive brand awareness and enhance digital capabilities. It will also continue exploring growth opportunities in DTC business and improve support processes.
That said, management raised its view for 2019. Net sales are expected in the range of $2.98-$3.04 billion compared to the earlier prediction of $2.97-$3.03 billion. The revised top-line view depicts growth of nearly 6.5-8.5% year over year. Adverse currency movements are likely to impede sales by nearly 70 bps. Further, operating income is estimated in the band of $378 million to $391 million compared with $369-$382 million projected earlier. Operating margin is expected to be 12.7-12.9%. Management expects earnings per share for 2019 to be $4.40-$4.55, up from the prior view of $4.30-$4.45.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -97.99% due to these changes.
VGM Scores
At this time, Columbia Sportswear has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Columbia Sportswear has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Columbia Sportswear (COLM) Down 7% Since Last Earnings Report?
It has been about a month since the last earnings report for Columbia Sportswear (COLM - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Columbia Sportswear due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Columbia Sportswear reported robust first-quarter 2019 results, with revenues and earnings improving year over year, as well as beating the Zacks Consensus Estimate. Notably, the top line marked its ninth straight quarter of beat and the bottom line delivered positive surprise for 25 quarters in a row. Management also raised its view for 2019.
Q1 in Detail
Quarterly adjusted earnings came in at $1.07 per share, which beat the Zacks Consensus Estimate of 84 cents. Also, quarterly earnings rose nearly 39% year over year.
Net sales advanced nearly 8% to $654.6 million. On a constant-currency (cc) basis, net sales grew almost 10%. The top line surpassed the consensus estimate of $642.9 million. Performance was mainly driven by strength in the Columbia and Sorel brands. In the reported quarter, DTC channels depicted sales growth of nearly 12% (up 14% at cc) and wholesale net sales advanced 4% (up 6% at cc).
Gross profit grew almost 12.5% to $336.7 million. Gross margin expanded 210 basis points (bps) to 51.4%, mainly driven by benefits from Project CONNECT, higher product mix in wholesale category, favorable currency hedge rates and improved DTC sales mix. Also, operating income came in at $88 million, depicting a rise of almost 48.2% year over year. Also operating margin came in at 13.4%, up 360 bps.
Regional Segments
United States: Net sales jumped 14% to $412.2 million, owing to growth across the DTC and wholesale businesses.
Europe/Middle East/Africa (EMEA): Net sales declined 1% (up 5% at cc) to $71.3 million.
Canada: Net sales declined 7% (down 1% at cc) to $38.2 million.
Latin America/Asia Pacific (LAAP): Net sales improved 1% (up 4% at cc) to $132.9 million.
Category and Brand Segments
The Columbia and SOREL brands registered growth of 9% to $552.2 million and 28% to $39.5 million, respectively. However, net sales in the Global Mountain Hardwear and prAna brands slumped 11% to $21.7 million and 3% to $41.2 million, respectively. Further, net sales at the Apparel, Accessories and Equipment category increased 7% to $526 million and Footwear sales rose 10% to $128.6 million.
Other Financial Updates
Columbia Sportswear ended the quarter with cash and cash equivalents of $430.4 million and total equity of $1,720.6 million. Inventories advanced 28% to $520.6 million as of Mar 31, 2019. During the first quarter, the company generated cash flow from operating activities of $58.6 million, while it incurred capital expenditures of $25.2 million.
Further, in the quarter, Columbia Sportswear paid dividends worth $16.4 million to shareholders and repurchased 195,681 shares for nearly $19.1 million. Additionally, on Apr 19, 2019, management announced quarterly dividends of 24 cents per share, payable May 30 to shareholders of record as on May 16.
Guidance
Management is impressed with the sales and profitability momentum achieved in the first quarter. The company expects to continue reaping financial gains from Project CONNECT. Further, management intends to continue with its strategic investments related to demand creation, drive brand awareness and enhance digital capabilities. It will also continue exploring growth opportunities in DTC business and improve support processes.
That said, management raised its view for 2019. Net sales are expected in the range of $2.98-$3.04 billion compared to the earlier prediction of $2.97-$3.03 billion. The revised top-line view depicts growth of nearly 6.5-8.5% year over year. Adverse currency movements are likely to impede sales by nearly 70 bps. Further, operating income is estimated in the band of $378 million to $391 million compared with $369-$382 million projected earlier. Operating margin is expected to be 12.7-12.9%. Management expects earnings per share for 2019 to be $4.40-$4.55, up from the prior view of $4.30-$4.45.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -97.99% due to these changes.
VGM Scores
At this time, Columbia Sportswear has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Columbia Sportswear has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.