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4 Reasons Why Columbia Sportswear (COLM) Looks Appealing Now

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Columbia Sportswear Company (COLM - Free Report) looks quite impressive, given its superb past record and robust strategies. These upsides have helped this Zacks Rank #2 (Buy) stock increase almost 7% in the past year against the industry’s decline of 1.8%.

Let’s delve deeper into the factors that are most likely to help this textile-apparel biggie maintain its sheen.



Prospects From Project Connect

The company is progressing well with its Project CONNECT program, which is aimed at driving sales and earnings alongside strengthening the company’s financial position. This program focuses on connecting consumers, wholesale customers and international distributors with the company’s manufacturing partners and employees around the globe. Markedly, the program is helping boost net income, increase revenues, capture cost of sales efficiencies, improve gross margins, enhance marketing efforts and lower SG&A costs. The company is optimistic about generating substantial financial value from this project in 2019 and beyond. In fact, management expects gains from this program to lead to an 80-bp increase in gross margin in 2019.

Robust International Presence

Columbia Sportswear has a solid international presence and sells its products in more than 100 countries. The widespread global reach provides the company a solid business foundation and enables it to seek new opportunities to enhance profitability. Sales from the international markets improved 3% in the first quarter. Results were backed by strength in Europe-direct, Japan and Korea businesses.

Strength in DTC Business & Brand Enhancement Efforts

Columbia Sportswear is committed toward expanding and enhancing its global direct-to-consumer (DTC) business through accelerated investments. During the first quarter of 2019, DTC channels depicted sales growth of nearly 12%. Management expects this channel to continue performing well in the forthcoming periods. Also, the company undertakes brand-enhancing and unique marketing initiatives that further strengthen its presence in the apparel industry. We note that the Global Columbia brand is steadily gaining market share and the company expects continued growth from its SOREL brand through constant upgrades and effective management strategies.

Columbia Sportswear Company Price, Consensus and EPS Surprise

 

Q1 Retains Stellar Record, Outlook Raised

The first quarter of 2019 marked Columbia Sportswear’s 25th consecutive period of earnings beat and ninth straight time of positive sales surprise. During the quarter, both metrics advanced year over year. Sales were backed by strength in the Columbia and Sorel brands. Moreover, the direct-to-consumer and wholesale businesses depicted steady growth. Management expects to continue with strategic investments related to demand creation, driving brand awareness and enhancing digital capabilities.

The company expects consistent growth in 2019 on the back of strong brands and sales channels. That said, management hiked the view for 2019, when it announced first-quarter 2019 results. Net sales are expected to be $2.98-$3.04 billion compared with the earlier prediction of $2.97-$3.03 billion. Further, earnings per share for 2019 is estimated at $4.40-$4.55, up from the previous view of $4.30-$4.45.

We expect Columbia Sportswear to continue with its growth story.

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