Sales ahead of expectations
Columbia Sportswear’s (COLM) sales rose 6.5% to $795.8 million in the third quarter, surpassing analysts’ estimate of $789.5 million. Excluding a $6.9 million gain associated with the adoption of a new accounting standard, the company’s comparable sales grew 5.6% YoY (year-over-year) to $788.9 million in the quarter. Its DTC (direct-to-consumer) business continued to deliver strong results in the brick-and-mortar and e-commerce channels.
Rival Nike’s (NKE) sales grew 9.7% to $9.9 billion in the first quarter of fiscal 2019 driven by strong growth across the apparel and footwear categories.
Performance by region
Columbia Sportswear’s US sales rose ~9% in the third quarter driven by growth in the high teens in its DTC business and mid-single-digit growth in its wholesale business. The region’s e-commerce sales growth was in the high 20% range due to improved traffic, conversion, and brand strength.
The company’s international sales were up 2% when adjusted for currency changes and the new accounting standard. Its top line growth in the international market was driven by the performances of its Europe-direct, Japan, and Korea businesses. However, the company’s performance in China and the performance of its international distributor business were unimpressive. The timing of shipments negatively impacted Columbia Sportswear’s international distributor business in the third quarter.
The company’s China business was down by the low double digits in the third quarter. To improve its business in China, which is a key market, Columbia Sportswear is taking steps to enhance the in-store shopping experience and is fully renovating 135 stores in 2018.
Columbia Sportswear now expects its 2018 sales to grow in the 11.0%–11.5% range compared to its previous forecast of 9.0%–10.5%. Columbia generated net sales of $2.47 billion in 2017. Excluding the impact of one-time items, the company expects comparable sales growth in the 9.5%–10.0% range in 2018.
We’ll discuss Columbia Sportswear’s margins in the next article.