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Columbia Sportswear (COLM) Q1 Earnings Top Estimates, Sales Up
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Columbia Sportswear Company (COLM - Free Report) posted first-quarter 2021 results, with the bottom line surpassing the Zacks Consensus Estimate and the top line missing the same. Net sales and earnings increased year over year. The solid performance reflects the company’s brand strength. Results gained from broad-based business momentum, with growth in every brand, channel and geography.
Management remains encouraged to accelerate brand awareness, enhance consumer experience and digital capabilities as well as expand global direct-to-consumer (DTC) operations.
Taking into account the impressive beginning to 2022 and reduced share count, management is increasing its 2022 earnings per share (EPS) guidance. The company maintained its earlier net sales view, despite removing future sales to Russian-based distributors for the rest of 2022.
Columbia Sportswear Company Price and EPS Surprise
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted earnings of $1.03 per share compared with 84 cents recorded in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate, which was pegged at 86 cents per share.
Net sales rose 22% year over year to $761.5 million, driven by solid consumer demand and higher shipments of Spring 2022 orders, reflecting growth in all brands, channels and geographies. However, net sales missed the Zacks Consensus Estimate of $768.7 million.
Management highlighted that its DTC and wholesale businesses rose 22% each. Under the DTC business, brick-and-mortar rose 22% and e-commerce was up 21%.
The gross margin contracted 170 basis points (bps) to 49.7%, mainly due to increased inbound freight costs, negative year-over-year changes in inventory provisions, unfavorable regional sales mix and reduced wholesale product margins. These were somewhat offset by increased DTC product margins.
SG&A expenses escalated 18% to $299.1 million. As a percentage of sales, the same contracted from 40.7% to 39.3%. The year-over-year rise in SG&A expenses can mainly be attributed to costs incurred to support growth of business and investments to fuel brand-led consumer-focused strategies. The rise in the metric also reflects increased demand creation, global retail and personnel expenses.
The company’s operating income came in at $83.7 million, up 19% from $70.5 million reported in the year-ago quarter. The operating margin fell from 11.3% to 11%.
Regional Segments
In the United States, net sales jumped 23% year over year to $501.9 million. Net sales increased 9% to $121.7 million in the Latin America and the Asia Pacific. In the Europe, Middle East and Africa, net sales rose 34% to $94.7 million. In Canada, net sales rose 26% to $43.2 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category increased 21% to $565.9 million and the same for Footwear increased 25% to $195.6 million. Columbia, SOREL, prAnaand Mountain Hardwear brands registered sales growth of 22%, 37%, 4% and 5%, respectively.
Other Financial Updates
The Zacks Rank #3 (Hold) company ended the quarter with cash, cash equivalents and short-term investments of $610.3 million as well as shareholders’ equity of $1,818.9 million. The company had no borrowings on its balance sheet as of Mar 31, 2022. For three months ended Mar 31, 2022, net cash flow provided by operating activities came in at $33.8 million. Capital expenditures were $12.9 million during this time. For 2022, COLM expects operating cash flow of at least $170 million, while capital expenditures are envisioned in the band of $80-$100 million.
During the three months ended Mar 31, the company repurchased 2,328,623 shares for $217.3 million. On Mar 31, 2022, the company had $99 million available under its current share buyback authorization. On April 22, it authorized a $500-million increase to the share repurchase authorization.
The company declared a quarterly cash dividend of 30 cents per share. This is payable on Jun 2, 2022, to shareholders of record as of May 19.
Image Source: Zacks Investment Research
Guidance
For 2022, Columbia Sportswear expects net sales to grow 16-18% to the $3.63-$3.69 billion range. Management stopped taking any new orders from Russia-based distributors and removed any future sales to them from the guidance. This reflects a nearly 2% headwind on 2022 consolidated net sales. The company expects foreign currency translation to hurt net sales growth by roughly 120 bps in 2022.
Management expects gross margin to contract about 130 bps and reach nearly 50.3%. Earlier, the metric was expected to contract about 160 bps to nearly 50%.
SG&A expenses are anticipated to rise at a slightly softer rate than net sales growth. As a percentage of net sales, SG&A expenses are anticipated in the range of 37.3-37.7% compared with 37.8% in 2021. The metric was anticipated in the range of 37.2-37.5% in 2022. The company still expects demand creation (as a percentage of net sales) to be 6% in 2022 compared with 5.9% in 2021.
For 2022, operating income is now expected in the band of $477-502 million, implying an operating margin of 13.2-13.6%. In 2021, the operating margin came in at 14.4%. Operating income was expected in the band of $472-498 million, calling for an operating margin of 13-13.5%. Management now envisions EPS in the range of $5.70-$6.00 for 2022, compared with $5.5-$5.80 expected earlier.
For the second quarter of 2022, the company expects mid single-digit net sales growth. Management envisions generating near breakeven earnings in the quarter.
COLM’s shares have dropped 4.9% in the past three months compared with the industry’s 9.2% decline.
Top 3 Picks
G-III Apparel Group, Ltd. (GIII - Free Report) , a women's and men's apparel company, currently sports a Zacks Rank of 1 (Strong Buy). GIII has a trailing four-quarter earnings surprise of 160.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for G-III Apparel 's current financial-year sales suggests growth of 8.7% while the same for EPS indicates a rise of 5.2% from the respective year-ago reported figures.
Delta Apparel, Inc. (DLA - Free Report) , an activewear and lifestyle apparel products company, currently has carries a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and EPS suggests growth of 14.2% and 20.1%, respectively, from the year-ago period's reported numbers.
Kontoor Brands, Inc. (KTB - Free Report) , a lifestyle apparel company, currently carries a Zacks Rank #2. KTB has a trailing four-quarter earnings surprise of 18.1%, on average.
The Zacks Consensus Estimate for Kontoor Brands’ current financial year’s sales and EPS suggests growth of 9.3% and 11.7%, respectively, from the year-ago period's reported numbers.
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Columbia Sportswear (COLM) Q1 Earnings Top Estimates, Sales Up
Columbia Sportswear Company (COLM - Free Report) posted first-quarter 2021 results, with the bottom line surpassing the Zacks Consensus Estimate and the top line missing the same. Net sales and earnings increased year over year. The solid performance reflects the company’s brand strength. Results gained from broad-based business momentum, with growth in every brand, channel and geography.
Management remains encouraged to accelerate brand awareness, enhance consumer experience and digital capabilities as well as expand global direct-to-consumer (DTC) operations.
Taking into account the impressive beginning to 2022 and reduced share count, management is increasing its 2022 earnings per share (EPS) guidance. The company maintained its earlier net sales view, despite removing future sales to Russian-based distributors for the rest of 2022.
Columbia Sportswear Company Price and EPS Surprise
Columbia Sportswear Company price-eps-surprise | Columbia Sportswear Company Quote
Quarter in Detail
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted earnings of $1.03 per share compared with 84 cents recorded in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate, which was pegged at 86 cents per share.
Net sales rose 22% year over year to $761.5 million, driven by solid consumer demand and higher shipments of Spring 2022 orders, reflecting growth in all brands, channels and geographies. However, net sales missed the Zacks Consensus Estimate of $768.7 million.
Management highlighted that its DTC and wholesale businesses rose 22% each. Under the DTC business, brick-and-mortar rose 22% and e-commerce was up 21%.
The gross margin contracted 170 basis points (bps) to 49.7%, mainly due to increased inbound freight costs, negative year-over-year changes in inventory provisions, unfavorable regional sales mix and reduced wholesale product margins. These were somewhat offset by increased DTC product margins.
SG&A expenses escalated 18% to $299.1 million. As a percentage of sales, the same contracted from 40.7% to 39.3%. The year-over-year rise in SG&A expenses can mainly be attributed to costs incurred to support growth of business and investments to fuel brand-led consumer-focused strategies. The rise in the metric also reflects increased demand creation, global retail and personnel expenses.
The company’s operating income came in at $83.7 million, up 19% from $70.5 million reported in the year-ago quarter. The operating margin fell from 11.3% to 11%.
Regional Segments
In the United States, net sales jumped 23% year over year to $501.9 million. Net sales increased 9% to $121.7 million in the Latin America and the Asia Pacific. In the Europe, Middle East and Africa, net sales rose 34% to $94.7 million. In Canada, net sales rose 26% to $43.2 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category increased 21% to $565.9 million and the same for Footwear increased 25% to $195.6 million. Columbia, SOREL, prAnaand Mountain Hardwear brands registered sales growth of 22%, 37%, 4% and 5%, respectively.
Other Financial Updates
The Zacks Rank #3 (Hold) company ended the quarter with cash, cash equivalents and short-term investments of $610.3 million as well as shareholders’ equity of $1,818.9 million. The company had no borrowings on its balance sheet as of Mar 31, 2022. For three months ended Mar 31, 2022, net cash flow provided by operating activities came in at $33.8 million. Capital expenditures were $12.9 million during this time. For 2022, COLM expects operating cash flow of at least $170 million, while capital expenditures are envisioned in the band of $80-$100 million.
During the three months ended Mar 31, the company repurchased 2,328,623 shares for $217.3 million. On Mar 31, 2022, the company had $99 million available under its current share buyback authorization. On April 22, it authorized a $500-million increase to the share repurchase authorization.
The company declared a quarterly cash dividend of 30 cents per share. This is payable on Jun 2, 2022, to shareholders of record as of May 19.
Image Source: Zacks Investment Research
Guidance
For 2022, Columbia Sportswear expects net sales to grow 16-18% to the $3.63-$3.69 billion range. Management stopped taking any new orders from Russia-based distributors and removed any future sales to them from the guidance. This reflects a nearly 2% headwind on 2022 consolidated net sales. The company expects foreign currency translation to hurt net sales growth by roughly 120 bps in 2022.
Management expects gross margin to contract about 130 bps and reach nearly 50.3%. Earlier, the metric was expected to contract about 160 bps to nearly 50%.
SG&A expenses are anticipated to rise at a slightly softer rate than net sales growth. As a percentage of net sales, SG&A expenses are anticipated in the range of 37.3-37.7% compared with 37.8% in 2021. The metric was anticipated in the range of 37.2-37.5% in 2022. The company still expects demand creation (as a percentage of net sales) to be 6% in 2022 compared with 5.9% in 2021.
For 2022, operating income is now expected in the band of $477-502 million, implying an operating margin of 13.2-13.6%. In 2021, the operating margin came in at 14.4%. Operating income was expected in the band of $472-498 million, calling for an operating margin of 13-13.5%. Management now envisions EPS in the range of $5.70-$6.00 for 2022, compared with $5.5-$5.80 expected earlier.
For the second quarter of 2022, the company expects mid single-digit net sales growth. Management envisions generating near breakeven earnings in the quarter.
COLM’s shares have dropped 4.9% in the past three months compared with the industry’s 9.2% decline.
Top 3 Picks
G-III Apparel Group, Ltd. (GIII - Free Report) , a women's and men's apparel company, currently sports a Zacks Rank of 1 (Strong Buy). GIII has a trailing four-quarter earnings surprise of 160.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for G-III Apparel 's current financial-year sales suggests growth of 8.7% while the same for EPS indicates a rise of 5.2% from the respective year-ago reported figures.
Delta Apparel, Inc. (DLA - Free Report) , an activewear and lifestyle apparel products company, currently has carries a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and EPS suggests growth of 14.2% and 20.1%, respectively, from the year-ago period's reported numbers.
Kontoor Brands, Inc. (KTB - Free Report) , a lifestyle apparel company, currently carries a Zacks Rank #2. KTB has a trailing four-quarter earnings surprise of 18.1%, on average.
The Zacks Consensus Estimate for Kontoor Brands’ current financial year’s sales and EPS suggests growth of 9.3% and 11.7%, respectively, from the year-ago period's reported numbers.