Columbia(US:COLM)2025-11-06 21:20Financial Performance - Q3 2025 net sales reached $943.4 million, a slight increase from $931.8 million in Q3 2024, representing a 1.4% growth[121] - Gross profit margin for Q3 2025 was 50.0%, consistent with Q3 2024, while operating income decreased to $67.4 million from $112.5 million, reflecting a decline in operating margin[121] - Net sales for Q3 2025 were $943.4 million, a 1% increase from $931.8 million in Q3 2024, with constant currency net sales also reflecting a 1% increase[122] - The Columbia brand net sales reached $803.9 million, a slight increase of 1% compared to $799.7 million in the same period last year[122] - Gross profit for Q3 2025 was $471.8 million, representing a 1% increase from $467.6 million in Q3 2024, with a gross margin of 50.0%, down 20 basis points year-over-year[124] - For the nine months ended September 30, 2025, total net sales were $2.33 billion, a 2% increase from $2.27 billion in the same period of 2024[131] - U.S. net sales decreased by $24.6 million, or 4%, to $546.7 million for the three months ended September 30, 2025, compared to $571.3 million in 2024[141] - Total segment operating income decreased by $12.2 million to $179.2 million for the three months ended September 30, 2025, compared to $191.4 million in 2024[142] - U.S. segment operating income decreased by $31.5 million to $180.3 million, representing 13.3% of net sales for the nine months ended September 30, 2025, down from 15.3% in 2024[152] - U.S. net sales decreased by $33.0 million, or 2%, for the nine months ended September 30, 2025, primarily due to declines in DTC brick-and-mortar and e-commerce businesses[152] Cost Management - The Profit Improvement Program achieved approximately $90 million in annualized cost savings in 2024, with cumulative savings exceeding $150 million by Q3 2025[103] - Selling, general and administrative expenses increased to 40.4% of net sales in Q3 2025, up from 38.8% in Q3 2024[121] - SG&A expenses increased by 5% to $380.9 million in Q3 2025, up from $361.2 million in Q3 2024, with SG&A as a percentage of net sales rising to 40.4%[125] - Unallocated corporate expenses increased by $33.0 million to $111.8 million in the third quarter of 2025, primarily due to $29.0 million of impairment charges[149] - Unallocated corporate expenses increased by $26.1 million to $253.2 million for the nine months ended September 30, 2025, primarily due to impairment charges related to Mountain Hardwear and prAna[156] Strategic Initiatives - The ACCELERATE Growth Strategy aims to attract younger consumers and enhance brand perception, with new product launches like the Amaze Puff[99] - The company continues to focus on enhancing consumer experiences and marketplace excellence through digital and omni-channel strategies[101] - The Columbia brand's U.S. direct-to-consumer e-commerce channel experienced reduced sales year-over-year as part of a strategic repositioning[105] - The company plans to increase U.S. pricing by a high-single digit percentage for Spring 2026 to offset higher tariffs[113] - The Columbia brand's wholesale sales in the U.S. are expected to decline for the full year 2025 and into the first half of 2026[105] Impairment and Charges - The company recognized $29.0 million in impairment charges during Q3 2025, primarily related to the prAna and Mountain Hardwear brands[125] - The prAna trade name recorded an impairment charge of $8.0 million, with a fair value less than its carrying value of $51.8 million[178] - The prAna reporting unit had a fair value less than its carrying value of $12.2 million, leading to an impairment charge of $8.8 million[179] - The Mountain Hardwear reporting unit recorded a full impairment charge of $12.2 million, reflecting its carrying value[179] Tax and Interest - The effective income tax rate for Q3 2025 increased to 26.7%, up from 24.4% in Q3 2024, primarily due to non-deductible impairment charges[128] - Income tax expense decreased by $12.4 million, or 33%, to $25.2 million for the nine months ended September 30, 2025, compared to $37.6 million in 2024[138] - Interest income, net decreased by 46% to $2.9 million in Q3 2025, down from $5.4 million in Q3 2024, reflecting lower yields on cash and investments[127] Segment Performance - LAAP segment net sales increased by $8.4 million, or 6%, for the third quarter of 2025, driven primarily by distributor and China businesses[146] - EMEA segment net sales increased by $22.7 million, or 16%, for the third quarter of 2025, attributed to robust demand across wholesale and DTC channels[147] - Canada segment net sales increased by $5.2 million, or 6%, for the third quarter of 2025, primarily driven by the wholesale business[148] - EMEA segment gross margin expanded to 49.7% for the third quarter of 2025, up from 49.6% in 2024[147] - LAAP segment operating income increased by $6.1 million to $54.5 million, or 13.4% of net sales, driven by a 9% increase in net sales for the nine months ended September 30, 2025[153] - EMEA segment operating income increased by $12.0 million to $78.8 million, or 19.6% of net sales, with net sales rising by $52.3 million, or 15% for the nine months ended September 30, 2025[154] - Canada segment operating income decreased by $3.7 million to $29.8 million, or 18.2% of net sales, despite a 1% increase in net sales for the nine months ended September 30, 2025[155] Cash Flow and Liquidity - Cash flows from operating activities showed a net cash outflow of $333.4 million for the nine months ended September 30, 2025, compared to an outflow of $76.6 million in 2024[160] - As of September 30, 2025, cash and cash equivalents were $228.8 million, down from $531.9 million as of December 31, 2024[163] - The company plans full-year 2025 capital expenditures of approximately $65 to $75 million, focusing on DTC operations and supply chain capabilities[170] - Inventory purchase obligations were $404.2 million as of September 30, 2025, down from $473.0 million as of December 31, 2024[172] Market Risks - Incremental tariffs on imports are expected to impact financials by approximately $35 to $40 million in 2025, with an annualized impact of around $160 million based on 2024 import levels[108] - A 10% unfavorable exchange rate change in various currencies against the U.S. dollar could lead to a decline in net fair value by approximately $94.0 million[184] - The company employs currency forward contracts to manage foreign exchange rate risks associated with anticipated cash flows[183] - The impairment tests are based on assumptions regarding projected net sales, income, cash flows, and discount rates, which may change due to economic conditions[180] - The company does not engage in speculative trading in financial or capital markets, focusing instead on risk mitigation[182] - There have been no material changes in market risk disclosures since the last annual report[185]