Columbia Sportswear Inc. (COLM Quick QuoteCOLM - Free Report) reported narrower-than-expected loss in the second quarter of 2016.

The company’s second-quarter loss per share of 12 cents was narrower than the Zacks Consensus Estimate of a loss of 18 cents. The quarterly loss, however, was wider than the net loss of 9 cents per share reported a year ago.

Revenues and Operating Profits

Quarterly revenues increased 2% (up 2% on a constant currency basis) to $388.8 million on higher sales in the U.S. and Canada. The upside was partially offset by weakness in Latin America. Sales came in slightly below the Zacks Consensus Estimate of $390 million.

Cost of sales inched up 0.11% to $209.16 million. Gross profit increased 4.8% to $179.58 million buoyed by higher revenues. Gross margin expanded 110 basis points (bps) to 46.2%. The company reported net operating loss of $11.8 million, wider than a loss of $9 million incurred a year ago.

COLUMBIA SPORTS Price, Consensus and EPS Surprise

COLUMBIA SPORTS Price, Consensus and EPS Surprise | COLUMBIA SPORTS Quote

Regional Segments

U.S.: Net sales grew 8% to $228.8 million supported by growth in wholesale channels and direct-to-consumer channels along with strong sales of the Sorel brand.

Canada: Net sales surged 20% (up 27% at constant dollar) to $13.6 million.

Latin America/ Asia Pacific: Net sales declined 10% (down 11% at constant dollar) to $87 million due to lower sales in Korea.

Europe/Middle East/Africa (EMEA): Net sales dipped 1% (down 2% at constant dollar) to $59.1 million, as soft sales in Russia offset high teen sales growth in European markets.

Category Segments

Apparel, Accessories & Equipment segment’s net sales increased 4% (also up 4% in constant dollar) to $321.5 million. Footwear net sales fell 4% both in constant dollar and absolute  terms to $67.3 million.

Brands

For the first half of 2016, Columbia brand’s net sales increased 3% (up 2% in constant dollar) on the back of progress in Europe-direct markets in categories like sportswear and rainwear. Sorel brand’s net sales climbed 22% (up 25% in constant dollar) due to strong performance by the Spring apparel category and late winter weather that drove higher sales of Fall styles. Sales of Mountain Hardwear slipped 9% year over year (down 7% in constant currency) to $25.2 million. Net sales in the prAna brand surged 16%.

Other Financial Updates

During the quarter, management approved a quarterly dividend of 17 cents per share, payable on Sep 1, 2016 to shareholders on record as of Aug 18, 2016.

2016 Guidance Maintained

Columbia Sportswear maintained its full-year 2016 earnings guidance. Net sales growth outlook was maintained at mid-single digits growth from the 2015 levels. Currency is expected to affect sales by less than 1%. Operating income is expected between $254 million and $263 million, up mid-single-digit percentage year over year.

Marginis estimated at 10.7% of sales.  Earnings per share are forecasted in the $2.60–$2.70 range. The company reported earnings of $2.45 in 2015.

The guidance incorporates anticipated effects of recent macroeconomic headwinds like bankruptcies of several U.S.-based wholesale customers, 2016 advance orders in response to slowing traffic and the lingering effects of last year's warm winter, and further deterioration of the overall Korean outerwear market. However, the company expects to counter these headwinds with strong sales across its brands.

Columbia Sportswear has a Zacks Rank #3 (Hold). Some better-ranked stocks in the textile apparel sector is Hanesbrands Inc. (HBI Quick QuoteHBI - Free Report) and Duluth Holdings (DLTH Quick QuoteDLTH - Free Report) both holding a Zacks Rank #2 (Buy). Another stock in the broader consumer discretionary sector worth considering is Apollo Education Group Inc , which also holds a Zacks Rank #2 (Buy).

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