Columbia Sportswear Company saw consolidated net sales decrease 5 percent (-5 percent constant-currency) to $931.8 million in the third quarter, compared to $985.7 million for the comparable period in 2023. The company said the decline in net sales reflects lower Fall ’24 wholesale orders, as well as weak consumer demand in the U.S. partially attributable to warm weather and outdoor category headwinds.

Sales Summary

Income Statement Summary

Gross margin expanded 150 basis points to 50.2 percent of net sales in Q3, compare to 48.7 percent of net sales for the comparable period in 2023, said to primarily reflect lower inbound freight costs and favorable channel and region net sales mix, partially offset by unfavorable FX hedging rates.

SG&A expenses were $361.2 million, or 38.8 percent of net sales, in the quarter, compared to $351.6 million, or 35.7 percent of net sales, for the comparable period in 2023. The largest changes in SG&A expenses were said to be higher direct-to-consumer (DTC) and incentive compensation expenses, partially offset by lower supply chain and demand creation expenses.

Operating income was $112.5 million, or 12.1 percent of net sales, in Q3, compared to operating income of $134.6 million, or 13.7 percent of net sales, for the comparable period in 2023.

Interest income, net of $5.4 million, compared to $1.9 million for the comparable period in 2023, reflects higher yields on increased levels of cash, cash equivalents, and investments.

Income tax expense of $29.0 million resulted in an effective income tax rate of 24.4 percent, compared to income tax expense of $32.6 million, or an effective income tax rate of 24.0 percent, for the comparable period in 2023.

Net income was $90.2 million, or $1.56 per diluted share, compared to net income of $103.5 million, or $1.70 per diluted share, for the comparable period in 2023.

“Third quarter results reflect ongoing strength in most international markets, offset by continued softness in North America,” offered company Chairman, President and CEO Tim Boyle. “While warm weather has curbed early season demand for Fall 2024 cold weather product, I’m excited about the differentiated innovations we are offering consumers, including Omni-Heat Infinity and Omni-Heat Arctic, as well as the lightweight comfort provided by our Omni-Max footwear platform.

Balance Sheet Summary

  • Cash, cash equivalents, and short-term investments totaled $373.9 million at quarter-end, compared to $214.8 million as of September 30, 2023.
  • The company had no borrowings as of either September 30, 2024 or September 30, 2023.
  • Inventories decreased 10 percent to $798.2 million, compared to $885.2 million as of September 30, 2023.

Cash Flow for the Nine Months Ended September 30, 2024

  • Net cash used in operating activities was $76.6 million, compared to net cash provided from operating activities of $22.2 million for the same period in 2023.
  • Capital expenditures totaled $41.7 million, compared to $41.4 million for the comparable period in 2023.

Share Repurchases for the Nine Months Ended September 30, 2024

  • The company repurchased 2,916,970 shares of common stock for an aggregate of $230.9 million, or an average price per share of $79.15.
  • At September 30, 2024, $114.5 million remained available under our stock repurchase authorization.
  • On October 24, 2024, the Board of Directors authorized a $600 million increase to the company’s share repurchase authorization, which does not obligate the company to acquire any specific number of shares or to acquire shares over any specified period of time.

Quarterly Cash Dividend

The Board of Directors approved a regular quarterly cash dividend of 30 cents per share, payable on December 4, 2024 to shareholders of record on November 20, 2024.

Outlook

Full Year 2024 Financial Outlook

Net sales are expected to decrease 5.0 percent to 3.0 percent (prior decrease of 4.0 to 2.0 percent), resulting in net sales of $3.31 to $3.38 billion (prior $3.35 billion to $3.42 billion), compared to $3.49 billion in 2023

Gross margin is expected to expand 40 basis points to 90 basis points (prior 40 basis points to 60 basis points) to 50.0 percent to 50.5 percent of net sales (prior 50.0 percent to 50.2 percent) from 49.6 percent of net sales in 2023.

SG&A expenses, as a percent of net sales, are expected to be 42.8 percent to 43.0 percent (prior 42.4 percent to 43.0 percent), compared to SG&A expense as a percent of net sales of 40.6 percent in 2023.

Operating income is expected to be $257 million to $284 million (prior $256 million to $288 million), resulting in operating margin of 7.7 percent to 8.4 percent (unchanged), compared to operating margin of 8.9 percent in 2023.

Interest income, net is expected to be approximately $30 million (prior $28 million).

Effective income tax rate is expected to be 24.0 to 25.0 percent (unchanged).

Net income is expected to be $217 million to $238 million (prior $215 million to $239 million), resulting in diluted earnings per share of $3.70 to $4.05 (prior $3.65 to $4.05). This diluted earnings per share range is based on estimated weighted average diluted shares outstanding of approximately 58.7 million (prior 59.3 million).

Foreign Currency

Foreign currency translation is expected to have a modestly unfavorable impact on full year net sales.
Foreign currency is expected to have an approximately 1 cent negative impact on diluted earnings per share (prior 7 cents) due to negative foreign currency transactional effects from hedging of inventory production, partially offset by favorable foreign currency translation impacts.

Cash Flows

Operating cash flow is expected to be at least $300 million (prior $350 million).

Capital expenditures are planned to be in the range of $60 to $70 million (prior $60 to $80 million).

Fourth Quarter 2024 Financial Outlook

Net sales are expected to be $1.04 billion to $1.11 billion, representing a decline of 2 percent to growth of 5 percent from $1.06 billion for the comparable period in 2023.

Operating income is expected to be $123 million to $151 million, resulting in operating margin of 11.8 percent to 13.6 percent, compared to operating margin of 10.7 percent in the comparable period in 2023.

Diluted earnings per share is expected to be $1.68 to $2.03, compared to $1.55 per diluted share for the comparable period in 2023.

Preliminary First Half 2025

Based on the company’s Spring ‘25 order book, Columbia Sportswear Company is forecasting mid-single-digit percent growth in global wholesale net sales in first half 2025. This reflects growth across all regions, and in the Columbia, Prana and Mountain Hardwear brands.

 

Image, data and tables courtesy Columbia Sportswear Company