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Key Takeaways from Columbia Sportswear’s 2Q17 Results

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What drove Columbia Sportswear’s 2Q17 top line?

Columbia Sportswear (COLM), which reported its 2Q17 results on July 27, 2017, posted a 2.6% YoY (year-over-year) rise in sales to $399.0 million. The company outdid Wall Street’s average sales estimates by $4.0 million.

Sales increased 4.0% in the United States, the company’s largest market, representing 60.0% of its total revenue. Growth was driven by a mid-teen rise in DTC (direct-to-consumer) sales. Wholesale revenues, however, continued to fall, recording a high single-digit fall during the quarter. Apparel players continue to be negatively impacted by retail bankruptcies, liquidations, and store closures.

Looking at other geographies, the EMEA (Europe, the Middle East, and Africa) region and Canada recorded a 14.0% and 1.5% rise, respectively, in sales. Sales in the LAAP (Latin America and Asia Pacific) region fell ~9.0%.

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Tim Boyle, president and chief executive officer of COLM, said, “We delivered solid first-half financial results featuring growth from three of our four brands and all four geographic regions. First-half sales growth of three percent and earnings growth of four percent are on pace with our full-year expectations.”

The bottom-line beat

COLM’s 2Q17 gross margin fell 90 basis points to 45.3% of sales, mainly due to increased promotional activity in the United States.

The company recorded an operating loss of $17.3 million, or 4.4% of net sales, driven by a rise of 60 basis points in SG&A (selling, general, and administrative) expenses. About $4.0 million, or 55.0%, of this rise was due to expenses related to COLM’s operating model assessment, which the company began in the first quarter.

As a result, COLM reported a net loss of $11.5 million, or $0.17 per share. However, as we saw in the previous part of this series, the company did better than consensus expectations of a $0.20 loss per share.

ETF investors seeking to add exposure to COLM can consider the iShares Morningstar Small-Cap Growth (JKK), which invests ~0.30% of its portfolio in COLM.

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