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Columbia Sportswear Rides on Strong International Sales

Zacks Equity Research
Updated

Shares of Columbia Sportswear Company COLM have jumped 16.5% in the past year compared with the industry’s decline of 3.6%. These upsides are mainly related to the company’s stellar performance on the international platform.

Strong Brand Performance Aids International Growth

Notably, Columbia Sportswear has been gaining from solid sales growth in international regions, particularly from European wholesale and direct-to-consumer businesses. The company’s Columbia and SOREL brands have been depicting strong growth in the European and Canada regions.

In order to strengthen the presence of its brands internationally, Columbia Sportswear has undertaken several marketing initiatives. In the past year, the company developed more than 150 shop-in-shops and increased the number of brand presentations in key partner store locations. The company’s unique marketing initiatives and campaigns focus on enabling consumers enjoy outdoor activities.

Further, constant upgrades and effective management have boosted the consumer base for prAna and SOREL brands. Further, the company’s international brand performance is expected to benefit from the initiatives under the Project CONNECT program, which focuses on lowering SG&A costs and capturing efficiencies.

Additionally, consumers’ inclination toward healthier lifestyle has enhanced participation in outdoor activities have been driving the active apparel and accessories industry. Sportswear is increasingly becoming a style statement and is being worn casually owing to advanced designs and comfort level. Such trends are particularly benefiting the company’s prAna brand.

Notably, strength in the international segment fueled the company’s third-quarter fiscal 2017 results, following which its shares have gained 8.6%.



Factors Posing Concern

However, Columbia Sportswear has been facing challenges in the U.S. region, especially on the wholesale front due to a tough consumer landscape. This has caused several clients to announce store closures and bankruptcies.  

Additionally, the company has been grappling with increased selling, general and administrative expenses, stemming from enhanced marketing spend and initiatives for improving performance. While these efforts are in line with the company’s strategy to improve efficiency, they are likely to drag profit.

Bottom Line

In conclusion, we expect that continued growth of Columbia Sportswear’s key brands across international market regions will adequately cushion this Zacks Rank #3 (Hold) company against the aforementioned hurdles.

Do Consumer Discretionary Stocks Interest You? Check These

Investors interested in the same sector may also consider stocks such as Michael Kors Holdings Limited KORS, Deckers Outdoor Corporation DECK and Ralph Lauren Corporation RL. While Ralph Lauren and Deckers Outdoor sport a Zacks rank #1 (Strong Buy), Michael Kors carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ralph Lauren came up with an average positive earnings surprise of 11.6% in the trailing four quarters. It has a long-term earnings growth rate of 15%.

Deckers Outdoor Corporation pulled off an average positive earnings surprise of 88.3% in the trailing four quarters. It has a long-term earnings growth rate of 10.7%.

Michael Kors delivered an average positive earnings surprise of 23.7% in the trailing four quarters. It has a long-term earnings growth rate of 7.5%.

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Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
 
Columbia Sportswear Company (COLM) : Free Stock Analysis Report
 
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
 
Michael Kors Holdings Limited (KORS) : Free Stock Analysis Report
 
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