Columbia Sportswear Company reported a 10 percent decline in U.S. sales in the first quarter, but company Chairman and CEO Tim Boyle told analysts on a Thursday evening conference call that sales are expected to return to growth in the second half based on positive trends in fall orders. COLM shares were up in the low- to mid-single digits in early trading on Friday, May 1.

Overall, Columbia’s first-quarter results topped expectations, driven by early Spring 2026 wholesale shipments and better-than-expected demand in Europe and the U.S. as well as disciplined expense management. The company raised its guidance for the year due to lower-than-planned U.S. tariffs driven by the temporary tariffs that are in place through July 2026.

On the call, Boyle said the international business, which represents over 40 percent of sales, continues to lead growth, up 16 percent year-over-year in the quarter. The decline in U.S. sales was largely anticipated based on the decline in advanced Spring ’26 wholesale orders. This also reflected a decision last year to reduce the supply of certain winter products as a precautionary measure in response to U.S. tariff announcements. Cleaner inventories also drove less clearance sales.

However, he also said he’s “encouraged by signs of growing momentum in the U.S., including an increased fall 2026 order book,  which we expect to enable the wholesale business to return to growth in the second half.”

In the quarter ended March 31, sales were relatively flat (decrease of 3 percent on a constant-currency basis) at $779.0 million from $778.5 million for the comparable period in 2025. Guidance had called for the decrease of 4.0 to 2.5 percent on a reported basis.

Gross margin contracted 20 basis points to 50.7 percent, reflecting a 310-basis-point impact of unmitigated incremental U.S. tariffs, partially offset by mitigation tactics, which primarily included targeted price increases.

SG&A expenses were $357.1 million, or 45.8 percent of sales, compared to $354.5 million, or 45.5 percent of net sales, for the comparable period in 2025. The largest changes in SG&A expenses were driven by higher DTC expenses, partially offset by lower enterprise technology and supply chain expenses, resulting from prior-year actions taken as part of its Profit Improvement Program. SG&A included an unfavorable impact of $6.7 million from foreign currency translation.

Operating income decreased 10 percent to $42.0 million, or 5.4 percent of sales, compared to operating income of $46.5 million, or 6.0 percent, for the comparable period in 2025. Operating margin included a favorable impact of $5.3 million from foreign currency translation.

Net income declined 18.7 percent to $34.3 million, or 65 cents per share, significantly ahead of company guidance in the range of 29 cents to 37 cents.

Columbia Brand’s Increase 1 Percent in Q1
Columbia Brand’s sales were $690.1 million, up 1 percent on a reported basis (down 2 percent on a currency-neutral basis) as declines in the U.S. were offset by gains overseas.

Boyle said U.S. sales were down 10 percent but topped plans. The decline reflects a lower spring 2026 order book, constrained supply of winter season product, which limited Columbia’s ability to fulfill consumer demand, and lower clearance sales on lean inventory.

The U.S. wholesale business was down low-teens.  U.S. DTC sales declined high-single-digits in the quarter.  Brick-and-mortar was down mid-single digits, partially reflective of clean inventories and inclusive of the impact of less temporary clearance stores compared to last year.  E-commerce was down low-teens, driven by the shortage of winter products and lower conversion of consumer traffic.

Said Boyle, “We’re encouraged with the early spring 2026 selling, led by key categories including footwear, outerwear, women’s sportswear, and PFG. We continue to see momentum building through our elevated homepage, personalized and digital marketing efforts, including improvements in engagement and customer acquisition.”

Boyle said the Columbia brand’s newer product collections and marketing activations launched under the Accelerate growth strategy, focused on elevating the Columbia brand to attract younger and more active consumers, coupled with the “Engineered for Whatever” campaign, are “increasingly resonating with consumers,” marked by improved organic search interest, direct site traffic and customer acquisition rate for the first quarter.

Brand highlights for  Columbia include the U.S. Curling team’s win at the Winter Olympics, delivering more than 25 million views of Columbia’s U.S. Curling jerseys on social media. Longtime Columbia and Team USA Freestyle skiing athlete, Alex Ferreira, likewise claimed a gold medal in the men’s halfpipe.

Columbia also earned significant coverage from its activation around Nature Calls, its beer made with sterilized bear poop, at The Players Tailgate game in Santa Clara, CA just prior to the Super Bowl. Said Boyle, “Social media content from the game itself, generating over 9 million views on social media alongside hundreds of news articles.”

He further said the “Engineered for Whatever” campaign, which re-embraces the brand’s irreverent roots, was recently awarded a Gold Clio Award for the “Expedition Impossible Challenge” execution that generated over 10 million organic views on social media.

On the product side, Columbia’s women’s Arcadia II jacket and men’s Watertight II jacket were both featured in the New York Times’ Wirecutter Guide for “Best Everyday rain jacket.”

PFG, its fishing range, saw strong success in the quarter with the Bahama shirt, a staple of ambassador and country singer Luke Combs wardrobe. The Bahama is celebrating its 30th anniversary and sales are expected to grow by double-digit percent for the spring ’26 season. The Dry Tortuga Boot, also in the PFG segment, saw sales more than triple in Q1. Added Boyle, “We’re excited about the potential for PFG to build on this recent momentum and take share in this growing market, particularly with younger consumers who are increasingly adopting the sport and lifestyle of fishing.”

The 16 percent revenue growth internationally was led by EMEA, which reported revenue gains of 35 percent on a reported basis and 21 percent on a currency-neutral basis. Boyle said the EMEA gains were fueled by strong DTC performance and healthy wholesale sales, partly reflecting earlier shipments of Spring 2026 orders. He said, “Results across channels reflected robust demand for winter season product, aided by favorable weather early in the quarter and ample inventory availability. We’re thrilled with the strong start to the year and anticipate seeing that momentum continue with a strong start to our spring season. Our EMEA distributor business increased low-30 percent, reflecting earlier shipments of orders and a healthy order book for Spring 2026.”

In the LAAP (Latin America and Asia Pacific) region, sales grew 5 percent on a reported basis and 3 percent on a currency-neutral basis. China grew mid-single digits,  driven by growth in wholesale from increased Spring 2026 orders, which benefited from earlier wholesale shipment timing. Japan’s sales declined mid-single digits, reflecting headwinds from softer international tourism, as well as later shipments of Spring 2026 wholesale orders. Korea sales climbed high-single digits, benefiting from leveraging the Engineered for Whatever marketing campaign that helped drive strong sell-through for key products, such as the Tellurix hiking shoe.

Canada’s sales increased low-single digits in the quarter, driven by growth in DTC brick-and-mortar, reflecting increased productivity from existing stores and strong winter sell-through.

Boyle said the Columbia brand’s fall 2026 order book continues to trend positively, reinforcing company expectations for mid-single-digit percentage wholesale growth globally in the second half.

Boyle said, “The overall growth is encouraging, the dimensions of that growth provide further signals of progress under the Accelerate strategy. As a reminder, we launched Accelerate roughly two years ago, and given product development timelines, we’re now increasingly seeing the new products created under this strategy hit the market, driving growth in the order book and representing an increasing share of Columbia brand sales.”

In addition to U.S. growth in the fall 2026 order book, the Columbia brand is seeing double-digit sales growth in orders globally in Columbia’s women’s business and in footwear.

“At a product level on a global basis, we’re seeing outsized growth in our most premium and innovative products and platforms, including double-digit percentage growth or better in our Titanium product and our Omni-Heat Arctic technology, as well as meaningfully scaling of our new MTR fleece,”  said Boyle. “Our two major product launches from fall 2025, the Amaze and ROC lines, will continue to scale, with orders up more than 2x versus the prior year. We’re also thrilled to have Amaze featured in triple the number of Dick’s Sporting Goods locations this fall as compared to last year.”

Sorel’s Q1 Sales Decline 12 Percent
Among its emerging brands, Sorel’s sales declined 12 percent, or 14 percent on a currency-neutral basis, to $37.2 million. Boyle said the decline was due largely to reduced supply of winter-season products in the U.S., as planned, and lower closeout sales, leading to declines across all channels and more than offsetting strong momentum in international markets. He added, “Encouragingly, we have seen sales trends improve with the launch of Spring 2026 styles, including healthy growth in sneakers, a priority category that demonstrates Sorel is becoming viewed as more than just a winter brand.”

Prana’s Sales Slide 5 Percent
Prana’s sales reached $26.7 million, down 5 percent on both a reported and currency-neutral basis. Boyle said the drop was driven by declines in wholesale, partly offset by solid growth in in-line DTC channels. The DTC growth was boosted by low-teens growth in e-com, driven partly by a shift in social media strategy “that’s helping to drive strong brand momentum, including improvement in new customer acquisition, customer retention, revenue per customer, and robust growth with younger consumers,” according to Boyle.

Mountain Hardwear’s Sales Flat in Q1
Mountain Hardwear’s sales totaled $25.0 million, flat on both a reported and currency-neutral basis.  Boyle said of Mountain Hardwear, “Weakness with winter season product amid unfavorable weather in the Western U.S. early in the quarter was eventually offset by strong momentum with Spring 2026 product, particularly in e-commerce, driven by a surge in organic search demand. U.S. wholesale grew low-single-digit percent in the quarter, led by high-quality specialty retail and digital partners, with key product categories of equipment and outerwear driving the growth in Q1. Looking ahead, we’re excited about the recent launch of the Dry Spell technology innovation, which sets a new standard for waterproof breathability. Additionally, Mountain Hardwear’s new Lightness of Being brand campaign will emphasize innovative equipment and technical apparel for the trail, elemental protection from the sun and rain, as well as seasonal sportswear styles inspired by consumer insights.”

Boyle said all of the emerging brands are expected to grow in 2026.

Tariff Update
Boyle said that due to the U.S. Supreme Court’s tariff ruling in late February, the company now expects an approximate 200 basis point unmitigated headwind from tariffs to its full-year gross margin outlook, down from 300 basis points previously. The CEO said, “We are now expecting a slight improvement based on the 10 percent universal tariffs extending through July and the assumption that the U.S. administration will implement new tariffs at or near IEEPA tariff rates following the expiration of the Section 122 rates.”

Boyle noted that Columbia absorbed “nearly all of the fall 2025 impacts of incremental tariffs” and didn’t raise prices. He added that the company paid a total of approximately $80 million in IEEPA tariffs, approximately $55 million of which has been recognized through cost of sales, with the remainder residing in inventory on its balance sheet as of the end of the first quarter.

He said, “We have already taken action by submitting our refund claims, and we fully intend to pursue every avenue available to secure the refunds that we are owed. We have not yet recognized any benefit of refunds in our financial statements, nor have we updated our financial outlook for such refunds.”

Middle East Impact
Boyle said the Middle East conflict has already triggered order cancellations and forecasted order reductions for certain Middle East distributor markets, although those moves have so far “not meaningfully changed” its full-year outlook. A “prolonged” war would pose greater risks, he said.

“Macroeconomic and supply chain risks are among the areas that could have a more profound effect,” said Boyle. He cited the “potential softening of consumer demand driven by the ongoing surge in energy prices and the resulting inflationary pressures.” Increased oil prices are expected to put pressure on product input costs, beginning in the spring 2027 season.

“The conflict’s impact on global supply chains could result in late-arriving inventory, increased freight and logistics costs, and potential order cancellations,” added Boyle. “Due to the high degree of uncertainty associated with the ongoing conflict and resulting impact on the global economy and supply chains, we are not able to incorporate these risks into our updated 2026 financial outlook.”

Outlook

Full Year 2026 Financial Outlook

  • Net sales are expected to increase 1.0 to 3.0 percent (unchanged), resulting in net sales of $3.43 to $3.50 billion, compared to $3.40 billion in 2025. Foreign currency translation is expected to benefit net sales by approximately 50 to 100 basis points (unchanged).
  • Gross margin is expected to contract up to 20 basis points, resulting in gross margin of 50.3 to 50.5 percent of net sales (prior 49.8 to 50.0 percent), compared to 50.5 percent of net sales in 2025. Gross margin expectations include roughly 200 basis points (prior 300 basis points) of unfavorable impact from incremental tariffs prior to mitigation actions.
  • SG&A expenses, as a percent of net sales, are expected to be 43.6 to 44.2 percent (unchanged), compared to SG&A expense as a percent of net sales of 44.2 percent in 2025.
  • Operating margin is expected to be 6.7 to 7.5 percent of net sales (prior 6.2 to 6.9 percent), compared to operating margin of 6.1 percent of net sales in 2025.
  • Effective income tax rate is expected to be 24.0 to 25.0 percent (unchanged).
  • Diluted earnings per share is expected to be $3.55 to $4.00 (prior $3.20 to $3.65), compared to $3.23 in 2025.
  • Operating cash flow is expected to be $300 to $330 million.
  • Capital expenditures are planned to be in the range of $65 to $75 million (unchanged), roughly in-line with its run rate over the past several years.

Second Quarter 2026 Financial Outlook

  • Net sales are expected to be $600 to $610 million, representing a decrease of 1.0 percent to an increase of 1.0 percent from $605 million for the comparable period in 2025. Foreign currency translation is not expected to have a material impact on net sales.
  • Operating loss is expected to be 5.5 to 4.5 percent of net sales, compared to operating loss of 3.9 percent of net sales in the comparable period in 2025. Operating margin includes SG&A expense deleverage driven by low-single-digit percent SG&A growth and gross margin contraction primarily resulting from the impact of unmitigated incremental U.S. tariffs.
  • Diluted loss per share is expected to be 46 cents to 37 cents, compared to $0.19 for the comparable period in 2025. This range reflects an estimated effective tax rate of approximately 20 percent for the second quarter.

Image courtesy Columbia Sportswear Company