Columbia Sportswear Q2 Earnings Call Highlights

Key Points

• Second-quarter sales rose 2% to $614 million, exceeding guidance as international revenue grew 9% and e-commerce improved, offsetting a 4% decline in U.S. sales. U.S. store traffic, discretionary spending pressures and wholesale weakness remained challenges.
• Results benefited materially from $78 million in U.S. tariff refunds and interest, lifting reported gross margin to 58.3% and EPS to $0.52; excluding the refunds, the company would have posted an EPS loss of $0.41 and lower gross margin.
• Columbia maintained its full-year sales-growth outlook of 1% to 3% and raised reported EPS guidance to $4.45–$4.90. Spring 2027 orders indicate low- to mid-single-digit growth, although supply-chain disruptions will shift more than $30 million of shipments from the third quarter into the fourth.

Columbia Sportswear NASDAQ: COLM reported second-quarter net sales growth that exceeded its guidance, supported by international markets and e-commerce, while U.S. store traffic and consumer spending pressures continued to weigh on domestic results.

Net sales increased 2% from a year earlier to $614 million. Chairman and Chief Executive Officer Tim Boyle said international sales, which account for more than 40% of company revenue, rose 9% year over year, while U.S. sales declined 4%.

Reported profitability was materially affected by refunds of previously paid U.S. IEEPA tariffs. Columbia recognized about $78 million in tariff refunds and interest during the quarter, including a $60 million benefit to operating margin, primarily through lower cost of sales, and $2 million of interest income. Another $15 million was recorded as a reduction to inventory.

Including the refunds, gross margin expanded 920 basis points to 58.3% and earnings per share were $0.52. Excluding the tariff-refund impact, the company said it would have reported a loss per share of $0.41, roughly in line with the midpoint of its guidance range. Excluding refunds, gross margin declined 50 basis points, reflecting incremental tariffs and increased discounting.

U.S. weakness offset by international growth

Boyle said U.S. direct-to-consumer brick-and-mortar traffic softened during the quarter as inflationary pressure affected discretionary spending. The weaker traffic led to higher discounts and lower-than-expected store sales. U.S. direct-to-consumer sales declined slightly, with store closures and softer traffic largely offset by improved conversion.

U.S. wholesale sales declined by a high-single-digit percentage, primarily because of a lower spring 2026 wholesale order book. However, Chief Financial Officer Jim Swanson said order conversion was stronger than anticipated.

U.S. e-commerce rose by a low-single-digit percentage and exceeded plan, driven by the company’s emerging brands. Columbia-brand e-commerce in the U.S. declined by a low-single-digit percentage, though Boyle cited improving measures including new-customer acquisition.

Swanson said the U.S. store-traffic decline became most pronounced in the middle to latter part of April and then remained relatively stable through the quarter. The company expects continued consumer pressure, promotional activity and higher outbound freight costs in the second half.

International performance was stronger across several markets. On a constant-currency basis, LAAP sales rose 13%, including mid-single-digit growth in China, low-double-digit growth in Japan and Korea, and mid-20% growth in distributor markets. EMEA sales increased by a high-single-digit percentage, while Canada sales declined by a high-single-digit percentage, largely due to wholesale shipment timing and lower spring orders.

Boyle said China remains a major growth opportunity for the company, despite weather and macroeconomic disruptions. Swanson said Columbia still expects China to be among its fastest-growing markets for the year and is tracking toward double-digit growth, aided by e-commerce and the second-half wholesale order book.

Footwear and emerging brands show momentum

Columbia-brand sales increased 1%, as international growth more than offset U.S. declines. Footwear was a notable area of strength, with global sales up by a high-single-digit percentage. Boyle said technical footwear styles featuring Omni-Max technology performed particularly well, including the Tellurax and Peakfreak hiking lines, Konos trail-running products and Dry Tortuga fishing footwear.

The Tellurax Titanium Outdry trail shoe sold out during the quarter after being featured in a campaign with brand ambassador Robert Irwin, according to Boyle. He said the campaign generated more than 3.7 million views and more than 300,000 likes across digital platforms.

Among emerging brands, prAna sales rose 14%, aided by double-digit wholesale growth and high-single-digit e-commerce growth. Mountain Hardwear sales increased 6%, driven by double-digit direct-to-consumer growth, partly offset by lower wholesale closeout sales. SOREL sales declined 14%, largely due to later wholesale shipment timing, though the company expects a stronger second half for the brand.

The company also announced that Joe Vernachio had returned to lead SOREL as president. Boyle said Columbia expects growth in both SOREL wholesale and direct-to-consumer channels during the second half.

Order-book outlook and supply-chain shifts

Columbia said its spring 2027 wholesale order book is nearly complete, with about 90% of orders received. Current indications point to low- to mid-single-digit percentage growth, with contributions across brands and geographies, including the U.S. Columbia brand. Footwear growth is expected to outpace apparel growth, and Swanson said growth appears similar in both dollar and unit terms, with no meaningful pricing change embedded in the order book.

The company continues to expect low- to mid-single-digit growth in U.S. wholesale for the fall 2026 season. However, supply-chain disruptions are expected to shift a meaningful amount of fall shipments from the third quarter into the fourth quarter.

Swanson said the shift is greater than $30 million and is global in nature, though predominantly North America-focused. He cited longer logistics lead times related to the Middle East conflict, capacity constraints in a supply-chain node and a rush by importers to move goods into the U.S. under current tariff rates. Adjusted for timing, the company expects third- and fourth-quarter sales growth rates to be relatively similar, in the 4% to 5% range, with the fourth quarter somewhat stronger.

Full-year outlook maintained despite increased risks

For the third quarter, Columbia expects sales to range from down 1.5% to flat compared with the prior year and diluted earnings per share of $1.15 to $1.35. The outlook assumes a gross-margin decline and slight SG&A deleverage.

For the full year, the company maintained its net-sales outlook for growth of 1% to 3%. It raised reported gross-margin guidance to 52.1% to 52.3%, representing an increase of 160 to 180 basis points, and raised operating-margin guidance to 8.5% to 9.3%. Reported diluted earnings-per-share guidance was raised to $4.45 to $4.90.

The revised outlook assumes current U.S. tariff rates of 10% to 12.5% remain in effect through year-end. Columbia expects the remaining $15 million inventory-related tariff-refund benefit to be recognized relatively evenly in the third and fourth quarters, though factory-partner accommodations are expected to create a net gross-margin headwind in the third quarter and a tailwind in the fourth quarter.

Columbia ended the quarter with inventories down 6% in dollars and 7% in units from a year earlier, $625 million in cash and short-term investments, and no debt.

About Columbia Sportswear (NASDAQ:COLM)

Columbia Sportswear Company develops, sources, markets and distributes a wide range of outdoor apparel, footwear and accessories designed for activities such as hiking, skiing, snowboarding and trail running. Its product portfolio includes weatherproof jackets and pants featuring proprietary technologies like Omni-Tech® waterproofing and Omni-Heat® thermal reflective lining, as well as activewear, footwear, hats, gloves and accessories under the Columbia® brand and complementary brands.

Founded in 1938 as the Columbia Hat Company in Portland, Oregon, the company initially focused on headwear before expanding into outerwear in the 1970s with the introduction of the Bugaboo® interchange jacket.

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