Columbia Sportswear continues to project a 2 to 4 percent annual sales decline to $3.35 to $3.42 billion for the full fiscal year but has raised its operating profit outlook from a prior forecast by a modest 1 percent to $259–$291 million. Annual gross margin is now forecast to expand by 80 to 120 basis points to 50.4 to 50.8 percent versus prior guidance of 50.6 to 51.1 percent. Under a previously announced profit improvement strategy, the company intends to deliver $75 to $90 million in cost savings this year and a total of $125 to $150 million by 2026.
The group’s revised outlook came as the company reported a largely down Q1 late last week, with total sales down by 6.2 percent to $770 million from $820.6 million as operating income tumbled by 21 percent year-over-year to $44.7 million from $56.4 million. Net income fell 8.5 percent to $42.3 million, but gross margin improved by 190 basis points to 50.6 percent on lower inbound freight costs and favorable regional and channel sales mix. The quarter-end inventory level was down 37 percent to $607.4 million from $959.2 million a year earlier, but President and CEO Tim Boyle thinks there is room for further improvement via more automation.
While the company’s home North American market remains its most challenging region due to cautious retailers and weak trends in traditional outdoor categories, Columbia is experiencing stronger developments in other global markets, including China, Japan and Europe.
In EMEA specifically, constant currency sales declined by 6 percent in Q1 to $102.3 million. Direct sales were essentially flat, while the DTC channel grew in the market. Despite economic and geopolitical pressures, the company said the Columbia brand continues “to perform well” as measured by its healthy DTC business and wholesale sell-throughs. The EMEA distributor business, impacted by a shift in Spring 2024 orders to Q4/23, resulted in a low 40 percent decline in quarterly sales.
During Q1, Columbia expanded its Hike Society program into France following a successful launch in the UK in 2023. The company presently has Hike Society programs, where young hikers meet like-minded people to explore the outdoors with and learn about Columbia’s brand technologies in several European and Asian direct markets. To further expand the brand’s presence in the hiking segment, the company is moving forward with its Megamarsch partnership that will feature a series of 23 hiking events across Germany, Austria and Switzerland this year, with typically more than 1,000 participants in each one.
A deeper examination of the group’s Q1 results shows sales declines in all regions except for Latin America/Asia Pacific (LAAP), which rose 7 percent on a currency-neutral basis to $145.3 million. US sales slipped by 8 percent to $474.4 million, and revenues generated in Canada declined by 11 percent to $52.0 million. Meanwhile, all brands reported lower year-over-year sales except for Mountain Hardwear (+18% to $29.2 million). Columbia brand sales declined by 5 percent to $667.9 million, fell by 25 percent at Sorel to $45.6 million, and dipped by 4 percent at prAna to $31.3 million.
First-quarter product category sales showed a 19 percent drop in currency-neutral footwear sales to $151.7 million and a 2 percent decline for apparel/accessories/equipment sales to $622.3 million. Meanwhile, the group’s Q1 wholesale business fell 13 percent year-over-year to $392 million, while its DTC segment sales rose 4 percent to $382.0 million.
