• Net Sales: $932 million, declined 5% year over year.
• Gross Margin: Expanded 150 basis points to 50.2%.
• SG&A Expenses: Increased 3%.
• Operating Income: Came in above guidance range.
• Cash and Short-term Investments: Over $370 million, with no debt.
• Operating Cash Flow: On track to generate over $300 million this year.
• Share Repurchases: Totaled $231 million for the first three quarters.
• New Share Buyback Authorization: $600 million approved.
• U.S. Net Sales: Decreased 10%, with mid-teens percent decrease in wholesale.
• International Sales: Latin America Asia Pacific net sales increased 18%; Europe, Middle East, and Africa net sales increased 10%.
• China Net Sales: Increased low 20%.
• Japan Net Sales: Increased double-digit percent.
• Korea Net Sales: Increased mid-single-digit percent.
• Canada Net Sales: Decreased 19%.
• Columbia Brand Net Sales: Decreased 1%.
• Mountain Hardware Net Sales: Increased 2%.
• Prana Net Sales: Decreased 7%.
• Sorel Brand Net Sales: Decreased 39%.
• 2024 Financial Outlook: Net sales expected to decline 3 to 5%; gross margin to expand 40 to 90 basis points; SG&A expected to be 42.8 to 43% of sales; operating margin of 7.7 to 8.4%.
• Diluted EPS Guidance: Raised to $3.70 to $4.05.

• Warning! GuruFocus has detected 2 Warning Sign with COLM.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Columbia Sportswear Co (NASDAQ:COLM) exceeded its diluted earnings per share guidance range due to better-than-expected gross margin and disciplined expense management.
• The company maintains a strong financial position with over $370 million in cash and short-term investments and no debt.
• Columbia Sportswear Co (NASDAQ:COLM) is on track to generate over $300 million in operating cash flow this year.
• The company is experiencing positive momentum in its China and Europe direct businesses, with significant growth in these regions.
• Columbia Sportswear Co (NASDAQ:COLM) has launched a new growth strategy, 'Accelerate,' aimed at elevating the brand and attracting younger, more active consumers, which is expected to drive long-term profitable growth.

Negative Points

• Net sales declined 5% year over year, driven by a 9% decline in global wholesale net sales.
• The North American outdoor marketplace remains challenged, with a 10% decrease in US net sales.
• The Sorell brand experienced a significant 39% decrease in net sales due to lower fall orders and elevated clearance and promotional sales activity in the prior year.
• The company is facing external risks and uncertainties, including geopolitical conflicts, supply chain disruptions, and potential impacts from the upcoming US elections.
• Columbia Sportswear Co (NASDAQ:COLM) has reduced its net sales outlook for the year, anticipating a 3 to 5% decline.

Q & A Highlights

Q: Can you elaborate on the Accelerate growth strategy and how you plan to attract younger consumers? A: Timothy Boyle, CEO, explained that younger consumers are already familiar with the brand internationally, and the goal is to engage them more domestically. The strategy involves new marketing leadership and a creative agency to emphasize a humorous and irreverent brand personality, aiming to differentiate and attract these consumers.

Q: What is driving the expected mid-single-digit wholesale growth in the first half of 2025? A: Timothy Boyle, CEO, noted that the growth will be more balanced across regions, with improvements in the US market as retailers become more confident in placing orders. Jim Swanson, CFO, added that pricing has largely been held steady, and the growth is expected to follow the overall first-half expectations.

Q: How do you plan to manage SG&A expenses and improve margins in the coming years? A: Timothy Boyle, CEO, emphasized the focus on growing the top line while controlling costs. Jim Swanson, CFO, mentioned the profit improvement program aimed at reducing supply chain costs and streamlining operations to achieve a more appropriate SG&A level while supporting growth initiatives.

Q: Can you discuss the current promotional environment and its impact on gross margins? A: Jim Swanson, CFO, stated that while the promotional environment remains strong, the company has accounted for this in their guidance. The improvement in gross margins is attributed to cleaner inventory and reduced closeout sales, with expectations for promotions to continue into the holiday season.

Q: What is Columbia Sportswear's exposure to potential China tariffs, and how are you mitigating this risk? A: Timothy Boyle, CEO, explained that the company has strategically reduced its sourcing from China, with only a small percentage of goods imported from there. Jim Swanson, CFO, added that footwear sourcing from China is about 20%, and apparel is in the low single digits, minimizing tariff exposure.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.