Core Insights - Columbia Sportswear reported revenue of $570.24 million for the quarter ended June 2024, reflecting an 8.2% decline year-over-year and a slight miss of 0.47% against the Zacks Consensus Estimate of $572.96 million [1] - The company's EPS was -$0.20, a decrease from $0.14 in the same quarter last year, but it surpassed the consensus estimate of -$0.31 by 35.48% [1] Revenue Performance by Geography - Canada net sales were $26.60 million, exceeding the average estimate of $23.97 million, but showing a year-over-year decline of 4% [2] - EMEA net sales reached $103.90 million, surpassing the estimated $90.55 million, with a year-over-year increase of 3.1% [2] - United States net sales were $340.20 million, below the average estimate of $368 million, marking a significant year-over-year decline of 14.8% [2] - LAAP net sales amounted to $99.50 million, exceeding the average estimate of $89.68 million, with a year-over-year growth of 6.7% [2] Stock Performance - Columbia Sportswear shares have returned -2.2% over the past month, compared to a -0.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Columbia Sportswear (COLM) came out with a quarterly loss of $0.20 per share versus the Zacks Consensus Estimate of a loss of $0.31. This compares to earnings of $0.14 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 35.48%. A quarter ago, it was expected that this maker of outdoor gear would post earnings of $0.35 per share when it actually produced earnings of $0.71, delivering a surprise of 102.86%.Over the last four quarter ...

Financial Performance - Net sales decreased 8 percent (7 percent constant-currency) to $570.2 million compared to $620.9 million in Q2 2023[2] - Loss from operations was $23.8 million, or (4.2) percent of net sales, compared to operating income of $6.2 million, or 1.0 percent of net sales in Q2 2023[2] - Net loss per share was $(0.20), compared to diluted earnings per share of $0.14 in Q2 2023[2] - For the three months ended June 30, 2024, net sales were $570,244 thousand, a decrease of 8.1% compared to $620,933 thousand for the same period in 2023[35] - Gross profit for the same period was $273,419 thousand, resulting in a gross margin of 47.9%, down from 50.6% in the prior year[35] - Operating income for the three months ended June 30, 2024, was $(23,802) thousand, compared to an operating income of $6,229 thousand for the same period in 2023[35] - Net income for the three months ended June 30, 2024, was $(11,741) thousand, a significant decline from net income of $8,350 thousand in the same period last year[35] - Net income for the six months ended June 30, 2024, was $30,559,000, a decrease of 44% compared to $54,552,000 for the same period in 2023[38] - Total net sales for the first half of 2024 were $1,340.2 million, down 7% from $1,441.5 million in the first half of 2023[44] Cash and Investments - Cash, cash equivalents, and short-term investments totaled $711.1 million, with no borrowings[2] - The company’s cash and cash equivalents increased to $341,822 thousand as of June 30, 2024, up from $231,571 thousand a year earlier, representing a growth of 47.7%[31] - Net cash provided by operating activities increased significantly to $108,893,000 from $9,708,000 year-over-year[38] - Cash and cash equivalents at the end of the period were $341,822,000, an increase from $231,571,000 at the end of the same period in 2023[38] - The company reported a net cash used in financing activities of $138,960,000, compared to $115,194,000 in the previous year[38] Future Projections - Full year 2024 net sales are expected to be $3.35 to $3.42 billion, representing a decline of 4.0 to 2.0 percent compared to 2023[3] - Operating income for 2024 is projected to be $256 to $288 million, resulting in an operating margin of 7.7 to 8.4 percent[3] - Third quarter 2024 net sales are expected to be $927 to $959 million, representing a decline of 6 to 3 percent from $985.7 million in Q3 2023[20] - Operating cash flow is expected to be at least $350 million for 2024[20] Inventory and Assets - Inventories decreased 29 percent to $823.6 million compared to $1,162.5 million as of June 30, 2023[15] - Total current assets decreased to $1,847,810 thousand as of June 30, 2024, from $1,901,140 thousand a year earlier, reflecting a decline of 2.8%[31] - Total liabilities increased to $936,859 thousand as of June 30, 2024, compared to $915,146 thousand in the prior year, marking a rise of 2.0%[31] Strategic Focus - The company plans to invest in strategic priorities to accelerate profitable growth and enhance consumer experiences[6] - Columbia Sportswear Company continues to focus on innovation in outdoor and active lifestyle products, with a presence in over 100 countries[27] Sales Breakdown - In the United States, reported net sales decreased by 15% to $340.2 million from $399.1 million in the second quarter of 2023[41] - The footwear category saw a significant decline, with reported net sales of $106.2 million, down 20% from $132.0 million in the same quarter last year[41] - Constant-currency net sales for the second quarter of 2024 were $576.4 million, reflecting a 7% decline compared to the previous year[41] - Reported net sales for the second quarter of 2024 were $570.2 million, representing an 8% decrease compared to $620.9 million in the same quarter of 2023[41]

Core Viewpoint - Columbia Sportswear (COLM) is expected to report a quarterly loss of $0.31 per share, reflecting a significant year-over-year decline of 321.4%, with revenues projected at $572.96 million, down 7.7% from the previous year [1] Financial Projections - The consensus EPS estimate has been revised upward by 0.5% in the past 30 days, indicating analysts' reassessment of initial earnings projections [1] - Geographic Net sales to unrelated entities in Canada are estimated to reach $23.97 million, representing a decline of 13.5% from the prior-year quarter [2] - The consensus estimate for Geographic Net sales to unrelated entities in Europe, Middle East, and Africa (EMEA) is $90.55 million, indicating a decrease of 10.2% from the previous year [2] - Geographic Net sales to unrelated entities in the United States are projected at $368.00 million, reflecting a decline of 7.8% from the prior-year quarter [3] - Estimated Geographic Net sales to unrelated entities in Latin America and Asia Pacific (LAAP) are $89.68 million, showing a decrease of 3.9% from the previous year [3] Stock Performance - Over the past month, Columbia Sportswear shares have recorded a return of -2.2%, compared to a -0.3% change in the Zacks S&P 500 composite [3] - Based on its Zacks Rank 3 (Hold), Columbia Sportswear is expected to perform in line with the overall market in the upcoming period [3]

Core Viewpoint - Columbia Sportswear Company (COLM) is expected to report a decline in both revenue and earnings for the second quarter of 2024, with revenues estimated at $573.4 million, reflecting a 7.7% decrease year-over-year [1]. Financial Performance - The consensus estimate for COLM's earnings has worsened to a loss of 31 cents per share, down from a profit of 14 cents in the same quarter last year [1]. - The company anticipates a net sales decline of 10-7%, projecting revenues in the range of $557-$576 million for the second quarter [2]. - An operating loss is expected to be between $42 million and $27 million, with a projected loss per share ranging from 46 to 26 cents [3]. Market Conditions - Columbia Sportswear is facing a challenging operating environment in North America, with sluggish demand and inflationary pressures impacting consumer spending on soft goods [2]. - The traditional outdoor category, particularly footwear, is experiencing weak trends, leading retailers to adopt a cautious approach to future orders [2]. Cost Structure - Selling, General and Administrative (SG&A) costs as a percentage of sales have been increasing, with a notable rise of 310 basis points to 45.4% in the first quarter of 2024 due to high direct-to-consumer expenses [2]. - Projections indicate that SG&A expenses will further increase by 410 basis points to 54.4% in the second quarter [2]. Strategic Initiatives - Despite the challenges, Columbia Sportswear is benefiting from brand-enhancing marketing initiatives and efforts to improve operational efficiency through a multi-year profit improvement program [3]. Earnings Prediction Model - The Zacks model indicates that Columbia Sportswear is unlikely to achieve an earnings beat this quarter, with a Zacks Rank of 3 and an Earnings ESP of -8.20% [4].

Core Insights - Columbia Sportswear Company (COLM) is positioned for long-term growth through strategic initiatives aimed at enhancing operational efficiency and protecting profits amid challenging market conditions [1][10] Strategic Priorities - The company is focused on demand creation investments to boost brand awareness and sales while enhancing consumer experience and digital capabilities across all networks [2] - Columbia Sportswear is exploring growth opportunities in the direct-to-consumer (DTC) business and is committed to investing in its workforce and optimizing its organizational structure [2] Profit Improvement Program - Columbia Sportswear's multi-year profit improvement program aims for annual savings of $125-$150 million by 2026, with $75-$90 million expected in 2024 [4] - The program is structured around four key areas: operational cost savings, organizational cost savings through workforce reduction, operating model improvements, and cutting indirect spending [5][6] Demand & Cost Challenges - The company is facing a tough operating landscape in North America, with sales declining across most channels and categories during Q1 2024 [8] - For 2024, net sales are expected to decline by 4-2%, with a projected range of $3.35-$3.42 billion, and a Q2 2024 net sales decline of 10-7% to $557-$576 million [8] - SG&A expenses as a percentage of sales increased to 45.4% in Q1 2024, with expectations to remain elevated in 2024 compared to 2023 [9] Conclusion - Despite near-term challenges, Columbia Sportswear's long-term prospects are supported by brand-enhancing strategies and a focus on profit improvement [10]

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) The report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - Forward-looking statements are identified by words such as "will" and "anticipate" and cover future performance and market conditions[7](index=7&type=chunk) - Actual results may differ materially due to risks detailed in Part II, Item 1A of the report[8](index=8&type=chunk) - The company does not undertake any duty to update forward-looking statements unless legally required[8](index=8&type=chunk) PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and accompanying detailed notes [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Condensed Consolidated Balance Sheets (Unaudited) - Key Figures (in thousands) | Metric | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | **ASSETS** | | | | | Cash and cash equivalents | $418,462 | $350,319 | $361,049 | | Short-term investments | $369,270 | $414,185 | $99,511 | | Inventories | $607,373 | $746,288 | $959,234 | | Total current assets | $1,846,218 | $2,014,685 | $1,987,364 | | Total assets | $2,762,231 | $2,939,013 | $2,888,974 | | **LIABILITIES AND EQUITY** | | | | | Total current liabilities | $447,306 | $596,627 | $568,685 | | Total liabilities | $852,788 | $1,000,403 | $941,189 | | Total shareholders' equity | $1,909,443 | $1,938,610 | $1,947,785 | - Total assets decreased from **$2,939,013 thousand** at December 31, 2023, to **$2,762,231 thousand** at March 31, 2024[10](index=10&type=chunk) - Inventories significantly decreased from **$959,234 thousand** at March 31, 2023, to **$607,373 thousand** at March 31, 2024[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Condensed Consolidated Statements of Operations (Unaudited) - Key Figures (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net sales | $769,982 | $820,593 | | Cost of sales | $380,423 | $421,093 | | Gross profit | $389,559 | $399,500 | | Operating income | $44,681 | $56,427 | | Net income | $42,300 | $46,202 | | Basic EPS | $0.71 | $0.74 | | Diluted EPS | $0.71 | $0.74 | - Net sales decreased by **6.2%** from $820,593 thousand in Q1 2023 to **$769,982 thousand** in Q1 2024[12](index=12&type=chunk) - Net income decreased by **8.4%** from $46,202 thousand in Q1 2023 to **$42,300 thousand** in Q1 2024[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Key Figures (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income | $42,300 | $46,202 | | Other comprehensive income (loss) | $(5,355) | $(3,941) | | Comprehensive income | $36,945 | $42,261 | - Comprehensive income decreased from **$42,261 thousand** in Q1 2023 to **$36,945 thousand** in Q1 2024, primarily due to a larger 'Other comprehensive loss'[14](index=14&type=chunk) - Foreign currency translation adjustments contributed a loss of **$(14,987) thousand** in Q1 2024, compared to a gain of $1,480 thousand in Q1 2023[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $106,773 | $78,002 | | Net cash provided by (used in) investing activities | $37,109 | $(111,680) | | Net cash used in financing activities | $(71,343) | $(35,561) | | Net increase (decrease) in cash and cash equivalents | $68,143 | $(69,192) | | Cash and cash equivalents, end of period | $418,462 | $361,049 | - Net cash provided by operating activities increased by **$28,771 thousand**, from $78,002 thousand in Q1 2023 to $106,773 thousand in Q1 2024[16](index=16&type=chunk) - Investing activities shifted from a net cash outflow of **$111,680 thousand** in Q1 2023 to a net cash inflow of **$37,109 thousand** in Q1 2024[16](index=16&type=chunk) [Condensed Consolidated Statements of Equity (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(Unaudited)) Condensed Consolidated Statements of Equity (Unaudited) - Key Figures (in thousands) | Metric | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | $1,909,443 | $1,938,610 | $1,947,785 | | Retained Earnings | $1,960,634 | $1,984,446 | $1,981,287 | | Accumulated Other Comprehensive Income (Loss) | $(51,191) | $(45,836) | $(34,578) | | Common Stock Shares Outstanding | 59,473 | 59,996 | 62,076 | - Total shareholders' equity decreased from **$1,938,610 thousand** at December 31, 2023, to **$1,909,443 thousand** at March 31, 2024[18](index=18&type=chunk) - The company repurchased **631 thousand shares** of common stock for **$50,168 thousand** during Q1 2024[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1 Basis of Presentation and Organization](index=10&type=section&id=Note%201%20Basis%20of%20Presentation%20and%20Organization) This note outlines the basis for preparing the unaudited financial statements, which are not indicative of full-year results - The financial statements are unaudited and include all normal recurring material adjustments, prepared in accordance with GAAP[21](index=21&type=chunk) - The business is seasonal, meaning Q1 results are not indicative of other quarters or the full year[21](index=21&type=chunk) - The company is evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for future impact[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2 Revenues](index=12&type=section&id=Note%202%20Revenues) This note disaggregates net sales by geographic segment, product category, and channel for Q1 2024 and 2023 Disaggregated Net Sales by Product Category (in thousands) | Product Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Apparel, Accessories and Equipment | $619,054 | $632,602 | | Footwear | $150,928 | $187,991 | | Total | $769,982 | $820,593 | Disaggregated Net Sales by Channel (in thousands) | Channel | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Wholesale | $390,897 | $452,488 | | Direct-to-consumer | $379,085 | $368,105 | | Total | $769,982 | $820,593 | - Wholesale net sales decreased by **$61,591 thousand (13.6%)** from Q1 2023 to Q1 2024, while Direct-to-consumer net sales increased by **$10,980 thousand (3.0%)**[31](index=31&type=chunk) [Note 3 Intangible Assets, Net and Goodwill](index=14&type=section&id=Note%203%20Intangible%20Assets,%20Net%20and%20Goodwill) This note provides a breakdown of intangible assets and confirms no changes to goodwill since year-end 2023 Intangible Assets, Net (in thousands) | Category | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | Net carrying amount (definite lives) | $275 | $687 | $1,925 | | Intangible assets with indefinite lives | $79,221 | $79,221 | $79,221 | | Total Intangible assets, net | $79,496 | $79,908 | $81,146 | - Amortization expense for intangible assets with definite lives was **$0.4 million** for both Q1 2024 and Q1 2023[35](index=35&type=chunk) - There have been no changes to the Company's goodwill since December 31, 2023[36](index=36&type=chunk) [Note 4 Commitments and Contingencies](index=14&type=section&id=Note%204%20Commitments%20and%20Contingencies) This note addresses legal matters, which management believes will not materially affect the company's financial position - The company is involved in litigation and legal matters related to employment, retail, and intellectual property[37](index=37&type=chunk) - Management does not believe the ultimate resolution of these proceedings will materially adversely affect the company's financials[37](index=37&type=chunk) [Note 5 Shareholders' Equity](index=14&type=section&id=Note%205%20Shareholders'%20Equity) This note details the company's stock repurchase program, including total authorization and shares repurchased - Since 2004, the Board of Directors has authorized **$2.0 billion** for common stock repurchases[38](index=38&type=chunk) - As of March 31, 2024, the company had repurchased **34.7 million shares** for **$1,704.8 million**, with **$295.2 million** remaining available[39](index=39&type=chunk) - During Q1 2024, the company repurchased **$50.2 million** of common stock, compared to **$15.8 million** in Q1 2023[39](index=39&type=chunk) [Note 6 Stock-Based Compensation](index=16&type=section&id=Note%206%20Stock-Based%20Compensation) This note outlines stock-based compensation expenses and unrecognized costs for stock options and restricted stock units Stock-Based Compensation Expense (in thousands) | Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Stock options | $1,647 | $2,038 | | Restricted stock units | $3,997 | $3,770 | | Total | $5,644 | $5,808 | - Total stock-based compensation expense decreased slightly from **$5,808 thousand** in Q1 2023 to **$5,644 thousand** in Q1 2024[42](index=42&type=chunk) - As of March 31, 2024, unrecognized costs for stock options totaled **$13.4 million** and for restricted stock units totaled **$45.6 million**[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 7 Earnings Per Share](index=17&type=section&id=Note%207%20Earnings%20Per%20Share) This note provides a reconciliation of common shares used to compute basic and diluted earnings per share (EPS) Earnings Per Share (EPS) Reconciliation (in thousands, except per share amounts) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Weighted average common shares outstanding, basic | 59,823 | 62,133 | | Effect of dilutive stock options and restricted stock units | 175 | 284 | | Weighted average common shares outstanding, diluted | 59,998 | 62,417 | | Basic EPS | $0.71 | $0.74 | | Diluted EPS | $0.71 | $0.74 | - Both basic and diluted EPS decreased from **$0.74** in Q1 2023 to **$0.71** in Q1 2024[47](index=47&type=chunk) - Anti-dilutive common shares excluded from diluted EPS computation were **1,996 thousand** in Q1 2024, up from 1,574 thousand in Q1 2023[47](index=47&type=chunk) [Note 8 Accumulated Other Comprehensive Income (Loss)](index=18&type=section&id=Note%208%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the components and changes in accumulated other comprehensive income (loss) Changes in Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance as of Dec 31, 2023 | Net OCI (Loss) during Q1 2024 | Balance as of Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Available-for-sale securities | $145 | $(145) | $0 | | Derivative transactions | $3,689 | $9,777 | $13,466 | | Foreign currency translation adjustments | $(49,670) | $(14,987) | $(64,657) | | Total | $(45,836) | $(5,355) | $(51,191) | - Accumulated other comprehensive loss increased from **$(45,836) thousand** at December 31, 2023, to **$(51,191) thousand** at March 31, 2024[49](index=49&type=chunk) - Foreign currency translation adjustments were the primary driver of the net other comprehensive loss in Q1 2024, with a **$(14,987) thousand** impact[49](index=49&type=chunk) [Note 9 Segment Information](index=19&type=section&id=Note%209%20Segment%20Information) This note provides financial information for the company's four reportable geographic segments Net Sales to Unrelated Entities by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | U.S. | $474,406 | $517,475 | | LAAP | $138,646 | $136,413 | | EMEA | $104,520 | $108,289 | | Canada | $52,410 | $58,416 | | Total | $769,982 | $820,593 | Segment Operating Income (in thousands) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | U.S. | $72,993 | $81,600 | | LAAP | $21,822 | $18,326 | | EMEA | $19,146 | $20,354 | | Canada | $11,168 | $10,801 | | Total segment operating income | $125,129 | $131,081 | | Unallocated corporate expenses | $(80,448) | $(74,654) | | Income before income tax | $54,149 | $60,560 | - LAAP segment net sales increased by **2% (7% constant-currency)** in Q1 2024, while U.S., EMEA, and Canada segments experienced declines[51](index=51&type=chunk) [Note 10 Financial Instruments and Risk Management](index=19&type=section&id=Note%2010%20Financial%20Instruments%20and%20Risk%20Management) This note describes the company's financial risk management strategies, primarily focusing on currency exchange rate risk - The company uses currency forward contracts designated as cash flow hedges to manage currency risks from foreign purchases and sales[54](index=54&type=chunk)[56](index=56&type=chunk) - Currency forward contracts not designated as hedges are used to manage remeasurement risk of foreign currency assets and liabilities[57](index=57&type=chunk) Gross Notional Amount of Outstanding Derivative Instruments (in thousands) | Category | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | Designated as cash flow hedges | $597,355 | $634,676 | $525,781 | | Not designated as hedges | $231,449 | $342,532 | $393,450 | [Note 11 Fair Value Measures](index=22&type=section&id=Note%2011%20Fair%20Value%20Measures) This note provides information on assets and liabilities measured at fair value on a recurring basis, categorized into a three-tier hierarchy - Fair value is defined as an exit price in an orderly transaction, categorized into Level 1, Level 2, and Level 3 inputs[62](index=62&type=chunk)[68](index=68&type=chunk) Assets Measured at Fair Value (in thousands) - March 31, 2024 | Category | Level 1 | Level 2 | Total | | :--- | :--- | :--- | :--- | | Cash equivalents | $57,144 | $115,527 | $172,671 | | Short-term investments | $2,288 | $366,982 | $369,270 | | Derivative financial instruments (assets) | $0 | $20,265 | $20,265 | | Total assets measured at fair value | $86,413 | $502,774 | $589,187 | - The majority of assets measured at fair value are categorized as **Level 2**, primarily U.S. Government treasury bills and derivatives[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on financial performance, business trends, and liquidity for Q1 2024 [Overview](index=26&type=section&id=OVERVIEW) - Columbia Sportswear Company is a global leader in outdoor, active, and lifestyle products across four key brands[73](index=73&type=chunk) - Strategic priorities include accelerating growth, creating iconic products, and enhancing consumer experiences[74](index=74&type=chunk)[79](index=79&type=chunk) - Investments aim to capture market share, expand gross margin, and improve SG&A efficiency long-term[74](index=74&type=chunk) [Profit Improvement Program](index=27&type=section&id=Profit%20Improvement%20Program) - The company is implementing a multi-year profit improvement program focused on operational and organizational cost savings[75](index=75&type=chunk)[80](index=80&type=chunk) - The program aims to achieve **$125 million to $150 million** in annualized savings by 2026, with **$75 million to $90 million** anticipated in 2024[75](index=75&type=chunk) [Business Environment and Trends](index=27&type=section&id=Business%20Environment%20and%20Trends) - The market is increasingly competitive due to a shift towards casual and lifestyle trends[76](index=76&type=chunk) - Economic uncertainty is impacting consumer demand, leading to cautious inventory management and advance orders[77](index=77&type=chunk) - The company is using temporary clearance locations and outlet stores to liquidate excess inventory[78](index=78&type=chunk) - Lower inbound freight costs are expected to continue benefiting gross margin throughout 2024[84](index=84&type=chunk) - New regulations, such as those related to PFAS chemicals, are impacting expenses and product input costs[87](index=87&type=chunk) [Results of Operations](index=29&type=section&id=RESULTS%20OF%20OPERATIONS) [Non-GAAP Financial Measure](index=29&type=section&id=Non-GAAP%20Financial%20Measure) This section introduces constant-currency net sales as a non-GAAP measure to assess performance excluding currency effects - Constant-currency net sales is a non-GAAP measure calculated by translating current period foreign currency net sales using prior year exchange rates[89](index=89&type=chunk) - This measure helps assess performance without foreign currency volatility and facilitates comparisons[89](index=89&type=chunk) [Results of Operations — Consolidated](index=31&type=section&id=Results%20of%20Operations%20%E2%80%94%20Consolidated) This section provides a consolidated overview of financial performance for Q1 2024 compared to Q1 2023 Consolidated Results of Operations (in millions, except per share amounts) | Metric | Q1 2024 | % of Net Sales (2024) | Q1 2023 | % of Net Sales (2023) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $770.0 | 100.0% | $820.6 | 100.0% | | Gross profit | $389.6 | 50.6% | $399.5 | 48.7% | | Operating income | $44.7 | 5.8% | $56.4 | 6.9% | | Net income | $42.3 | 5.5% | $46.2 | 5.6% | | Diluted earnings per share | $0.71 | | $0.74 | | - Net sales decreased by **6%** to **$770.0 million** in Q1 2024, driven by declines in U.S. and Canada wholesale businesses[92](index=92&type=chunk)[93](index=93&type=chunk) - Gross margin expanded by **190 basis points to 50.6%** in Q1 2024, primarily due to lower inbound freight costs[92](index=92&type=chunk)[96](index=96&type=chunk)[100](index=100&type=chunk) - SG&A expenses increased by **$1.9 million (1%)** to **$349.3 million**, representing 45.4% of net sales[92](index=92&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - Operating income decreased by **20.8%** to **$44.7 million**, and net income decreased by **8.4%** to **$42.3 million**[92](index=92&type=chunk) [Results of Operations — Segment](index=35&type=section&id=Results%20of%20Operations%20%E2%80%94%20Segment) This section analyzes the financial performance of each of the company's four geographic segments Net Sales by Geographic Segment (in millions) | Segment | Q1 2024 | Q1 2023 | Reported % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | U.S. | $474.4 | $517.5 | (8)% | (8)% | | LAAP | $138.7 | $136.4 | 2% | 7% | | EMEA | $104.5 | $108.3 | (4)% | (6)% | | Canada | $52.4 | $58.4 | (10)% | (11)% | | Total | $770.0 | $820.6 | (6)% | (6)% | Operating Income by Geographic Segment (in millions) | Segment | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | U.S. | $73.0 | $81.6 | $(8.6) | | LAAP | $21.8 | $18.3 | $3.5 | | EMEA | $19.1 | $20.4 | $(1.3) | | Canada | $11.2 | $10.8 | $0.4 | | Unallocated corporate expenses | $(80.4) | $(74.7) | $(5.7) | - U.S. operating income decreased by **$8.6 million** due to lower net sales and gross margin, despite lower SG&A expenses[104](index=104&type=chunk) - LAAP operating income increased by **$3.5 million**, driven by increased net sales (especially in China) and gross margin[105](index=105&type=chunk)[107](index=107&type=chunk) - Unallocated corporate expenses increased by **$5.7 million**, primarily due to higher personnel expenses[110](index=110&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's liquidity position, cash flow activities, and capital allocation strategy - As of March 31, 2024, the company had approximately **$1.5 billion** in total liquidity[111](index=111&type=chunk) Cash Flow Activities (in millions) | Activity | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Operating activities | $106.8 | $78.0 | $28.8 | | Investing activities | $37.1 | $(111.7) | $148.8 | | Financing activities | $(71.4) | $(35.6) | $(35.8) | | Net increase/(decrease) in cash | $68.1 | $(69.2) | $137.3 | - Net cash provided by operating activities increased by **$28.8 million**, primarily due to a **$60.2 million** increase in cash from inventories[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Net cash provided by investing activities was **$37.1 million** in Q1 2024, a significant improvement from **$111.7 million used** in Q1 2023[115](index=115&type=chunk) - Planned 2024 capital expenditures are approximately **$60 to $80 million**, focusing on DTC operations and digital capabilities[125](index=125&type=chunk) - The long-term capital allocation goal includes returning at least **40% of free cash flow** to shareholders[126](index=126&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section identifies critical accounting estimates that require significant management judgment and assumptions - Critical accounting estimates include sales reserves, allowance for uncollectible accounts, inventory valuation, and impairment[128](index=128&type=chunk) - These estimates involve significant judgment and assumptions, and actual results may differ[128](index=128&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section refers to Note 1 for details on recently issued accounting pronouncements not yet adopted - Refer to Note 1 for information on recently issued accounting pronouncements not yet adopted[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to market risk disclosures from the 2023 Annual Report on Form 10-K - No material change in market risk disclosure from the Annual Report on Form 10-K for the year ended December 31, 2023[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures, concluding they are effective - Management concluded that disclosure controls and procedures were effective as of March 31, 2024[134](index=134&type=chunk)[135](index=135&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024[136](index=136&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters which are not expected to have a material adverse effect - The company is involved in litigation and legal matters related to employment, retail, and intellectual property[139](index=139&type=chunk) - Management believes the ultimate resolution of these proceedings will not have a material adverse effect on the company's financials[139](index=139&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks related to product demand, supply chain, strategic execution, IT, and global operations [Changes in Product Demand Can Adversely Affect Our Financial Results](index=44&type=section&id=CHANGES%20IN%20PRODUCT%20DEMAND%20CAN%20ADVERSELY%20AFFECT%20OUR%20FINANCIAL%20RESULTS) - Risks to product demand include volatile economic conditions, competition, and shifts in consumer preferences[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Wholesale order cancellations can lead to sales declines, inventory write-downs, and increased discounts[145](index=145&type=chunk) - Inaccurate demand forecasting can result in excess inventory or lost sales[146](index=146&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk) [We Are Subject to Various Risks in Our Supply Chain](index=48&type=section&id=WE%20ARE%20SUBJECT%20TO%20VARIOUS%20RISKS%20IN%20OUR%20SUPPLY%20CHAIN) - Reliance on contract manufacturers poses risks such as supply disruptions, quality control issues, and non-compliance with labor standards[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - Volatility in raw material availability and prices can adversely affect revenues, costs, and profitability[155](index=155&type=chunk) - Dependence on a limited number of suppliers for technical materials may cause increased costs or production delays[156](index=156&type=chunk) - Success depends on third-party logistics, with risks including operational disruptions, capacity constraints, and geopolitical conflicts[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Our Investment in Strategic Priorities Exposes Us to Certain Risks](index=50&type=section&id=OUR%20INVESTMENT%20IN%20STRATEGIC%20PRIORITIES%20EXPOSES%20US%20TO%20CERTAIN%20RISKS) - Inability to effectively execute strategic priorities could limit business growth and cause profitability to decline[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - Upgrading business processes and IT systems involves risks such as business interruptions, higher costs, and data loss[167](index=167&type=chunk)[168](index=168&type=chunk) - Investments in DTC operations may not yield expected returns if sales are insufficient to cover fixed costs[169](index=169&type=chunk) [We Are Subject to Certain Information Technology Risks](index=52&type=section&id=WE%20ARE%20SUBJECT%20TO%20CERTAIN%20INFORMATION%20TECHNOLOGY%20RISKS) - Reliance on IT systems exposes the company to risks of disruptions, outages, and data loss due to cyberattacks or human error[170](index=170&type=chunk)[171](index=171&type=chunk) - Security breaches could lead to substantial costs, litigation, reputational damage, and operational disruptions[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Dependence on legacy IT systems, particularly in Japanese and Korean businesses, may inhibit operational efficiency[176](index=176&type=chunk) [We Are Subject to Legal and Regulatory Risks](index=54&type=section&id=WE%20ARE%20SUBJECT%20TO%20LEGAL%20AND%20REGULATORY%20RISKS) - Success depends on protecting intellectual property rights; risks include infringement, litigation costs, and counterfeit products[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - Products are subject to stringent regulations (e.g., PFAS), which can increase compliance expenses and lead to delays or penalties[182](index=182&type=chunk) - Product recalls or liability claims could harm brand reputation and incur additional expenses[183](index=183&type=chunk) - Additional tax liabilities may arise from changes in tax laws or unfavorable audit findings[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) [We Operate Globally and Are Subject to Significant Risks in Many Jurisdictions](index=56&type=section&id=WE%20OPERATE%20GLOBALLY%20AND%20ARE%20SUBJECT%20TO%20SIGNIFICANT%20RISKS%20IN%20MANY%20JURISDICTIONS) - Global operations expose the company to risks from geopolitical disputes, currency fluctuations, and natural disasters[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Imported products are subject to duties, tariffs, and import limitations, which affect costs and quantities[190](index=190&type=chunk)[191](index=191&type=chunk) - Fluctuations in inflation and currency exchange rates can lead to lower revenues, higher costs, and decreased margins[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) [We Are Subject to Numerous Operational Risks](index=60&type=section&id=WE%20ARE%20SUBJECT%20TO%20NUMEROUS%20OPERATIONAL%20RISKS) - The seasonal nature of the business can impact profits if fixed costs are not managed effectively during lower sales seasons[197](index=197&type=chunk) - Labor matters and changes in labor laws can disrupt sourcing, distribution, and sales[198](index=198&type=chunk)[199](index=199&type=chunk) - Downturns in global markets can lead to increased expenses and challenges in meeting financial covenants[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Acquisitions are subject to risks including integration difficulties, substantial costs, and potential impairment charges[202](index=202&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - Extreme weather, climate change, and disease outbreaks can negatively impact operations and supply chains[207](index=207&type=chunk)[208](index=208&type=chunk) - Dependence on key personnel and the ability to attract and retain talent is crucial[210](index=210&type=chunk) - Licensing proprietary rights to third-parties carries risks of reputational damage if licensees misuse brands[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) [Risks Related to Our Securities](index=64&type=section&id=RISKS%20RELATED%20TO%20OUR%20SECURITIES) - The common stock price may be volatile due to general market conditions and financial results fluctuations[215](index=215&type=chunk) - Three related shareholders collectively control just under **50%** of outstanding common stock, enabling significant influence[216](index=216&type=chunk) - The sale of a substantial number of shares by these controlling shareholders could cause the stock price to decline[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the company's common stock repurchase program and activity during Q1 2024 - The Board of Directors has authorized **$2.0 billion** for common stock repurchases since 2004[219](index=219&type=chunk) - As of March 31, 2024, **$1,704.8 million** had been used to repurchase **34.7 million shares**, with **$295.2 million** remaining available[219](index=219&type=chunk) Common Stock Repurchases (Q1 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :--- | :--- | :--- | :--- | | January 1, 2024 - January 31, 2024 | 2,153 | $74.53 | $345.2 | | February 1, 2024 - February 29, 2024 | 253,900 | $79.02 | $325.1 | | March 1, 2024 - March 31, 2024 | 375,415 | $79.76 | $295.2 | | Total | 631,468 | $79.45 | $295.2 | [Item 5. Other Information](index=66&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were entered into or terminated by directors or officers during Q1 2024 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were entered into or terminated by directors or officers during Q1 2024[222](index=222&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the Quarterly Report on Form 10-Q - The exhibit index includes corporate governance documents, various incentive plan agreements, and required certifications[223](index=223&type=chunk)[224](index=224&type=chunk) [Signatures](index=67&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q - The report is signed by Jim A. Swanson, Executive Vice President and Chief Financial Officer, dated May 2, 2024[225](index=225&type=chunk)[226](index=226&type=chunk)

Columbia Sportswear Company (COLM) posted first-quarter 2024 results, wherein both the top and bottom lines declined year over year due to a tough operating landscape in the United States and sluggish overall demand. However, both metrics came ahead of the respective Zacks Consensus Estimate. Management raised its bottom-line view for 2024 while keeping the sales guidance unchanged.Shares of this Zacks Rank #3 (Hold) company jumped 10.1% in the after-market trading session on Apr 25.The company is on track ...

Financial Data and Key Metrics Changes - Net sales decreased 6% year-over-year to $770 million, exceeding the high end of guidance due to earlier timing of spring wholesale shipments [11][12] - Gross margin expanded by 190 basis points, driven by lower inbound freight costs and a favorable channel mix [12] - Diluted earnings per share decreased 4% to $0.71 [12] Business Line Data and Key Metrics Changes - Direct-to-consumer net sales increased 3%, led by brick-and-mortar growth, while e-commerce sales declined due to last year's promotional activity [11][12] - Wholesale business declined 14% year-over-year, primarily due to lower spring 2024 orders [12] - Columbia brand net sales decreased 6%, reflecting lower spring orders but partially offset by DTC brick-and-mortar growth [19] Market Data and Key Metrics Changes - North America remains the most challenging market, with net sales decreasing 8% driven by mid-teens percent decrease in wholesale sales [13] - Latin America and Asia Pacific region net sales increased 7%, with China net sales increasing high 20% due to exceptional e-commerce performance [15] - Europe, Middle East, and Africa region net sales decreased 6%, with Europe direct net sales essentially flat [16] Company Strategy and Development Direction - The company is focused on bringing younger active consumers into the brand through a reinvigorated product line emphasizing innovation, performance, and style [9] - A profit improvement program is on track to deliver $125 million to $150 million in savings by 2026, with $75 million to $90 million in cost savings expected this year [10] - The company is investing in strategic priorities to accelerate profit and growth, enhance consumer experiences, and drive brand engagement [28] Management's Comments on Operating Environment and Future Outlook - Management reiterated the full year net sales outlook while modestly raising the diluted earnings per share range [8] - The company expects to continue facing inflationary pressures impacting consumer demand, particularly in North America [12] - Management remains confident in the long-term growth opportunities despite current challenges [28] Other Important Information - Inventory was down 37% year-over-year, with a focus on improving inventory turns and operational efficiency [8][10] - The company is actively managing promotional activity to establish its e-commerce site as the best expression of the brand [14] Q&A Session Summary Question: Inventory reduction and comfort level for the fall season - Management expressed pride in the 37% inventory reduction and indicated there is still room for improvement in inventory utilization [30][31] Question: European business health and order trends - Management reported positive trends in the European business and expressed optimism for growth opportunities [32] Question: Q1 top line beat and international performance - The upside surprise in Q1 was attributed to favorable weather in January and earlier shipments [34][35] Question: US consumer activity and outdoor category trends - Management noted that consumer activity is improving, particularly around seasonal events like Mother's Day and Father's Day [46] Question: Hike Society initiative and younger consumer engagement - Management confirmed the success of the Hike Society initiative in Europe and indicated plans to introduce it in the US [49] Question: Gross margin guidance and competitive environment - Management explained the slight reduction in gross margin guidance due to shifts in business composition and increased reliance on outlet stores [51][52] Question: Order book status and SOREL brand outlook - The consolidated order book for fall 2024 is expected to be down low single digits, with SOREL facing challenges in e-commerce [59][62] Question: China market performance and margin comparison - Management highlighted improvements in the China market due to better operations and local market relevance, noting it is among the most profitable regions [80][82]

Columbia Sportswear (COLM) came out with quarterly earnings of $0.71 per share, beating the Zacks Consensus Estimate of $0.35 per share. This compares to earnings of $0.74 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 102.86%. A quarter ago, it was expected that this maker of outdoor gear would post earnings of $2 per share when it actually produced earnings of $1.86, delivering a surprise of -7%.Over the last four quarters, ...