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Columbia Sportswear (COLM) Q1 Earnings Miss Estimates, Dip Y/Y
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Columbia Sportswear Company (COLM - Free Report) posted first-quarter 2023 results, wherein the bottom line declined year over year and missed the Zacks Consensus Estimate. This could be attributed to elevated costs. However, the top line increased and came ahead of the consensus mark. Sales were backed by solid consumer demand across several business areas.
Management remains encouraged about its innovative products for the summer season. It is also making marketing investments in the footwear and apparel categories. The company is focused on accelerating profitable growth, driving brand engagement and enhancing the consumer experience, among other strategic priorities.
Management reiterated its net sales guidance for 2023 while narrowing the range of its bottom-line view.
Quarter in Detail
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted quarterly earnings of 74 cents per share. The company reported earnings of $1.03 in the year-ago quarter. The Zacks Consensus Estimate and our estimate for the bottom line were both pegged at 88 cents.
Columbia Sportswear Company Price, Consensus and EPS Surprise
Net sales advanced 8% (up 10% at constant currency or cc) to $820.6 million and surpassed the consensus mark and our estimate of $813.6 million. Sales growth was backed by the earlier shipment of Spring 2023 wholesale orders and direct-to-consumer (DTC) strength.
The gross margin declined 100 basis points (bps) to 48.7%, mainly caused by greater promotional activity relative to the year-ago quarter. This was partly compensated by reduced inbound ocean freight costs.
SG&A expenses escalated by 16% to $347.1 million. As a percentage of sales, the same expanded from 39.3% to 42.3%. The year-over-year rise in SG&A expenses can be attributed to elevated supply-chain costs, increased DTC costs to fuel growth and investments to support the company’s strategies.
Columbia Sportswear’s operating income came in at $56.4 million, down 33% year over year. The operating margin contracted from 11% to 6.9%.
Channels & Regional Segments
In the United States, net sales increased 2% to $517.5 million. Net sales ascended 14% to $108.3 million in the EMEA. Latin America/Asia Pacific net sales advanced 12% to $136.4 million. In Canada, net sales surged 35% to $58.4 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category ascended by 12% to $632.6 million, while the same for Footwear fell 4% to $188 million.
The SOREL and prAna brands registered a sales decline of 5% and 1%, respectively. Columbia’s net sales gained 9%, and Mountain Hardwear saw a 16% jump in sales.
Other Financial Updates
Columbia Sportswear ended the quarter with cash and short-term investments of $460.6 million and shareholders’ equity of $1,947.8 million. The company had no borrowings on its balance sheet as of Mar 31, 2023.
During the three months ended Mar 31, Columbia Sportswear’s cash provided by operating activities was $78 million, while capital expenditures were $14 million.
For 2023, COLM expects operating cash flow of more than $600 million. Capital expenditures are envisioned in the band of $70-$80 million.
During the quarter, the company repurchased 179,421 shares for $15.8 million. On Mar 31, 2023, Columbia Sportswear had $513.6 million available under its share buyback authorization. Management announced a quarterly cash dividend of 30 cents per share, which is payable on Jun 1, 2023, to shareholders of record as of May 18.
Guidance
Management’s guidance for the first half and full-year 2023 considers estimates as of Apr 27, 2023, related to the impact of economic conditions. These include inflation, supply-chain headwinds, geopolitical tensions, changing consumer behavior and increased marketplace inventories.
For 2023, Columbia Sportswear expects net sales to grow 3-6% to the $3.57-$3.67 billion band. The company expects foreign currency translation to hurt net sales growth by roughly 20 bps in 2023. Management expects the gross margin to expand by nearly 60 bps to nearly 50%.
As a percentage of net sales, SG&A expenses are anticipated in the range of 39-39.2% now compared with the 38.3-39% expected earlier. The revised guidance reflects additional distribution and third-party logistics costs related to increased inventory levels.
For 2023, the operating income is expected in the band of $413-$432 million, with the operating margin expected at 11.6-11.8%. Earlier the operating income was expected in the range of $413-$448 million, with the operating margin expected at 11.6-12.2%. In 2022, the company reported an operating margin of 11.3%.
The effective tax rate is likely to be around 24.5% for 2023, wherein management estimates weighted average diluted shares outstanding of 62.4 million. The net income is anticipated in the range of $322-$336 million compared with the prior guided range of $322-$347 million.
Management envisions earnings per share (EPS) for 2023 in the range of $5.15-$5.40 now compared with the prior view in the band of $5.15-$5.55. Columbia Sportswear expects foreign currency translation to hurt the EPS by nearly 3 cents.
For the first half of 2023, management expects net sales growth of a mid-single-digit percent relative to the first half of 2022. Management expects the first-half 2023 EPS in the band of 75-90 cents. Management stated that the second quarter is usually the lowest-volume quarter for the company.
This Zacks Rank #3 (Hold) stock has increased 26.4% in the past three months compared with the industry’s 15.6% growth.
Kontoor Brands, which is a lifestyle apparel company, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for KTB’s current financial-year revenues and EPS suggests growth of 2.5% and 5.8%, respectively, from the year-ago reported figure. Kontoor Brands has a trailing four-quarter earnings surprise of 12.4%, on average.
Crocs, which offers casual lifestyle footwear and accessories, carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 15%.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings suggests growth of 13.1% and 2.8% from the year-ago period. CROX has a trailing four-quarter earnings surprise of 21.8%, on average.
PVH Corp., which is an apparel company, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for PVH Corp.’s current financial-year sales and earnings suggests growth of 3.7% and 11.8% from the year-ago period. PVH has a trailing four-quarter earnings surprise of 23.4%, on average.
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Columbia Sportswear (COLM) Q1 Earnings Miss Estimates, Dip Y/Y
Columbia Sportswear Company (COLM - Free Report) posted first-quarter 2023 results, wherein the bottom line declined year over year and missed the Zacks Consensus Estimate. This could be attributed to elevated costs. However, the top line increased and came ahead of the consensus mark. Sales were backed by solid consumer demand across several business areas.
Management remains encouraged about its innovative products for the summer season. It is also making marketing investments in the footwear and apparel categories. The company is focused on accelerating profitable growth, driving brand engagement and enhancing the consumer experience, among other strategic priorities.
Management reiterated its net sales guidance for 2023 while narrowing the range of its bottom-line view.
Quarter in Detail
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted quarterly earnings of 74 cents per share. The company reported earnings of $1.03 in the year-ago quarter. The Zacks Consensus Estimate and our estimate for the bottom line were both pegged at 88 cents.
Columbia Sportswear Company Price, Consensus and EPS Surprise
Columbia Sportswear Company price-consensus-eps-surprise-chart | Columbia Sportswear Company Quote
Net sales advanced 8% (up 10% at constant currency or cc) to $820.6 million and surpassed the consensus mark and our estimate of $813.6 million. Sales growth was backed by the earlier shipment of Spring 2023 wholesale orders and direct-to-consumer (DTC) strength.
The gross margin declined 100 basis points (bps) to 48.7%, mainly caused by greater promotional activity relative to the year-ago quarter. This was partly compensated by reduced inbound ocean freight costs.
SG&A expenses escalated by 16% to $347.1 million. As a percentage of sales, the same expanded from 39.3% to 42.3%. The year-over-year rise in SG&A expenses can be attributed to elevated supply-chain costs, increased DTC costs to fuel growth and investments to support the company’s strategies.
Columbia Sportswear’s operating income came in at $56.4 million, down 33% year over year. The operating margin contracted from 11% to 6.9%.
Channels & Regional Segments
In the United States, net sales increased 2% to $517.5 million. Net sales ascended 14% to $108.3 million in the EMEA. Latin America/Asia Pacific net sales advanced 12% to $136.4 million. In Canada, net sales surged 35% to $58.4 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category ascended by 12% to $632.6 million, while the same for Footwear fell 4% to $188 million.
The SOREL and prAna brands registered a sales decline of 5% and 1%, respectively. Columbia’s net sales gained 9%, and Mountain Hardwear saw a 16% jump in sales.
Other Financial Updates
Columbia Sportswear ended the quarter with cash and short-term investments of $460.6 million and shareholders’ equity of $1,947.8 million. The company had no borrowings on its balance sheet as of Mar 31, 2023.
During the three months ended Mar 31, Columbia Sportswear’s cash provided by operating activities was $78 million, while capital expenditures were $14 million.
For 2023, COLM expects operating cash flow of more than $600 million. Capital expenditures are envisioned in the band of $70-$80 million.
During the quarter, the company repurchased 179,421 shares for $15.8 million. On Mar 31, 2023, Columbia Sportswear had $513.6 million available under its share buyback authorization. Management announced a quarterly cash dividend of 30 cents per share, which is payable on Jun 1, 2023, to shareholders of record as of May 18.
Guidance
Management’s guidance for the first half and full-year 2023 considers estimates as of Apr 27, 2023, related to the impact of economic conditions. These include inflation, supply-chain headwinds, geopolitical tensions, changing consumer behavior and increased marketplace inventories.
For 2023, Columbia Sportswear expects net sales to grow 3-6% to the $3.57-$3.67 billion band. The company expects foreign currency translation to hurt net sales growth by roughly 20 bps in 2023. Management expects the gross margin to expand by nearly 60 bps to nearly 50%.
As a percentage of net sales, SG&A expenses are anticipated in the range of 39-39.2% now compared with the 38.3-39% expected earlier. The revised guidance reflects additional distribution and third-party logistics costs related to increased inventory levels.
For 2023, the operating income is expected in the band of $413-$432 million, with the operating margin expected at 11.6-11.8%. Earlier the operating income was expected in the range of $413-$448 million, with the operating margin expected at 11.6-12.2%. In 2022, the company reported an operating margin of 11.3%.
The effective tax rate is likely to be around 24.5% for 2023, wherein management estimates weighted average diluted shares outstanding of 62.4 million. The net income is anticipated in the range of $322-$336 million compared with the prior guided range of $322-$347 million.
Management envisions earnings per share (EPS) for 2023 in the range of $5.15-$5.40 now compared with the prior view in the band of $5.15-$5.55. Columbia Sportswear expects foreign currency translation to hurt the EPS by nearly 3 cents.
For the first half of 2023, management expects net sales growth of a mid-single-digit percent relative to the first half of 2022. Management expects the first-half 2023 EPS in the band of 75-90 cents. Management stated that the second quarter is usually the lowest-volume quarter for the company.
This Zacks Rank #3 (Hold) stock has increased 26.4% in the past three months compared with the industry’s 15.6% growth.
Take a Look at These Solid Picks
Three better-ranked stocks include Kontoor Brands, Inc. (KTB - Free Report) , Crocs, Inc. (CROX - Free Report) and PVH Corp. (PVH - Free Report) .
Kontoor Brands, which is a lifestyle apparel company, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for KTB’s current financial-year revenues and EPS suggests growth of 2.5% and 5.8%, respectively, from the year-ago reported figure. Kontoor Brands has a trailing four-quarter earnings surprise of 12.4%, on average.
Crocs, which offers casual lifestyle footwear and accessories, carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 15%.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings suggests growth of 13.1% and 2.8% from the year-ago period. CROX has a trailing four-quarter earnings surprise of 21.8%, on average.
PVH Corp., which is an apparel company, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for PVH Corp.’s current financial-year sales and earnings suggests growth of 3.7% and 11.8% from the year-ago period. PVH has a trailing four-quarter earnings surprise of 23.4%, on average.