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Columbia Sportswear (COLM) Down 15% in a Year: Here's Why
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Columbia Sportswear Company (COLM - Free Report) appears troubled, with its shares down 14.5% in a year compared with the industry’s decline of 9.4%. The company has been bearing the brunt of soft consumer demand due to a difficult operating landscape.
Additionally, management expects 2024 to be a difficult year, with retailers placing orders cautiously and elevated economic and geopolitical uncertainty. Columbia Sportswear has also been seeing elevated SG&A expenses for a while now.
The Zacks Consensus Estimate for 2024 earnings per share has decreased by 4.6% to $3.70 over the past 60 days. This indicates a 15.7% decline from the figure reported in the year-ago period. The consensus mark for sales also suggests a 2.5% year-over-year decrease.
Image Source: Zacks Investment Research
COLM Continues to Face Hurdles
Columbia Sportswear continued navigating a tough operating landscape in the United States, which, along with the warm winter, affected fourth-quarter 2023 results. During the quarter, net sales declined 9% to approximately $1,060 million and missed the consensus mark of $1,081 million. Sales decreased across all channels, categories and brands. The company battled decelerating consumer demand and traffic throughout 2023.
Additionally, SG&A costs, as a percentage of sales, have been increasing year over year for a while now. In the fourth quarter of 2023, SG&A expenses, as a percentage of sales, expanded 360 bps to 38.2% due to elevated direct-to-consumer (DTC) expenses. Management expects SG&A expenses to increase in 2024 due to escalated DTC incentive compensation and enterprise technology expenses, partly countered by cost-curtailment actions and reduced supply-chain costs. As a percentage of net sales, SG&A expenses are anticipated in the range of 43.2-43.5% in 2024, up from the 40.6% reported in 2023.
This Zacks Rank #4 (Sell) company expects the net sales decline to lead to an operating margin contraction in 2024 despite the company’s cost-containment efforts. For 2024, Columbia Sportswear expects net sales to decline 4-2% to the $3.35-$3.42 billion band. Management envisions EPS in the range of $3.45-$3.85 in 2024, suggesting a decline of 16-6% from the $4.09 reported in 2023. For 2024, the operating margin is expected in the range of 7.6-8.4%, which implies a contraction of 130-50 basis points from 2023.
For the first half of 2024, management expects net sales to decline 9-6% to the $1,310-$1,352 million band. The EPS is envisioned in the band of 1-26 cents for the first half of 2024 compared with 88 cents reported in the same year-ago period.
For the first quarter of 2024, COLM anticipates a net sales decline of 11-8% to the $730-$753 range. Finally, management envisions first-quarter EPS of 30-45 cents compared with 74 cents reported in the year-ago period. For the first quarter of 2024, the operating margin is expected to be 2.2-3.8%, down from the 6.9% reported in the first quarter of 2023.
Wrapping Up
In its fourth-quarter 2023 earnings release, Columbia Sportswear stated that to enhance operational efficiency and protect profits, it is implementing a multi-year profit improvement program, which targets annual savings of $125-$150 million by 2026. The company’s brand-enhancing and marketing initiatives also bode well. However, the abovementioned hurdles keep the near-term outlook subdued.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings implies growth of 5.6% and 19.1%, respectively, from the year-ago reported figure.
Ralph Lauren (RL - Free Report) , which designs, markets and distributes lifestyle products, currently carries a Zacks Rank #2 (Buy). RL has a trailing four-quarter earnings surprise of 18.7%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings indicates growth of 2.7% and 22.7%, respectively, from the year-ago reported number.
Gildan Activewear (GIL - Free Report) , which manufactures and sells various apparel products, currently carries a Zacks Rank #2. GIL delivered consecutive earnings surprises in the last three quarters.
The Zacks Consensus Estimate for Gildan Activewear’s current fiscal-year sales and earnings suggests growth of 1.7% and 14.4%, respectively, from the year-ago reported numbers.
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Columbia Sportswear (COLM) Down 15% in a Year: Here's Why
Columbia Sportswear Company (COLM - Free Report) appears troubled, with its shares down 14.5% in a year compared with the industry’s decline of 9.4%. The company has been bearing the brunt of soft consumer demand due to a difficult operating landscape.
Additionally, management expects 2024 to be a difficult year, with retailers placing orders cautiously and elevated economic and geopolitical uncertainty. Columbia Sportswear has also been seeing elevated SG&A expenses for a while now.
The Zacks Consensus Estimate for 2024 earnings per share has decreased by 4.6% to $3.70 over the past 60 days. This indicates a 15.7% decline from the figure reported in the year-ago period. The consensus mark for sales also suggests a 2.5% year-over-year decrease.
Image Source: Zacks Investment Research
COLM Continues to Face Hurdles
Columbia Sportswear continued navigating a tough operating landscape in the United States, which, along with the warm winter, affected fourth-quarter 2023 results. During the quarter, net sales declined 9% to approximately $1,060 million and missed the consensus mark of $1,081 million. Sales decreased across all channels, categories and brands. The company battled decelerating consumer demand and traffic throughout 2023.
Additionally, SG&A costs, as a percentage of sales, have been increasing year over year for a while now. In the fourth quarter of 2023, SG&A expenses, as a percentage of sales, expanded 360 bps to 38.2% due to elevated direct-to-consumer (DTC) expenses. Management expects SG&A expenses to increase in 2024 due to escalated DTC incentive compensation and enterprise technology expenses, partly countered by cost-curtailment actions and reduced supply-chain costs. As a percentage of net sales, SG&A expenses are anticipated in the range of 43.2-43.5% in 2024, up from the 40.6% reported in 2023.
This Zacks Rank #4 (Sell) company expects the net sales decline to lead to an operating margin contraction in 2024 despite the company’s cost-containment efforts. For 2024, Columbia Sportswear expects net sales to decline 4-2% to the $3.35-$3.42 billion band. Management envisions EPS in the range of $3.45-$3.85 in 2024, suggesting a decline of 16-6% from the $4.09 reported in 2023. For 2024, the operating margin is expected in the range of 7.6-8.4%, which implies a contraction of 130-50 basis points from 2023.
For the first half of 2024, management expects net sales to decline 9-6% to the $1,310-$1,352 million band. The EPS is envisioned in the band of 1-26 cents for the first half of 2024 compared with 88 cents reported in the same year-ago period.
For the first quarter of 2024, COLM anticipates a net sales decline of 11-8% to the $730-$753 range. Finally, management envisions first-quarter EPS of 30-45 cents compared with 74 cents reported in the year-ago period. For the first quarter of 2024, the operating margin is expected to be 2.2-3.8%, down from the 6.9% reported in the first quarter of 2023.
Wrapping Up
In its fourth-quarter 2023 earnings release, Columbia Sportswear stated that to enhance operational efficiency and protect profits, it is implementing a multi-year profit improvement program, which targets annual savings of $125-$150 million by 2026. The company’s brand-enhancing and marketing initiatives also bode well. However, the abovementioned hurdles keep the near-term outlook subdued.
3 Solid Picks
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter average earnings surprise of 715.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings implies growth of 5.6% and 19.1%, respectively, from the year-ago reported figure.
Ralph Lauren (RL - Free Report) , which designs, markets and distributes lifestyle products, currently carries a Zacks Rank #2 (Buy). RL has a trailing four-quarter earnings surprise of 18.7%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings indicates growth of 2.7% and 22.7%, respectively, from the year-ago reported number.
Gildan Activewear (GIL - Free Report) , which manufactures and sells various apparel products, currently carries a Zacks Rank #2. GIL delivered consecutive earnings surprises in the last three quarters.
The Zacks Consensus Estimate for Gildan Activewear’s current fiscal-year sales and earnings suggests growth of 1.7% and 14.4%, respectively, from the year-ago reported numbers.