Columbia Sports Gains on Strong Q3 Earnings; Ups FY View
Shares of Columbia Sportswear Company (COLM) grew 5% since it reported strong third-quarter 2014 results on Oct 30 wherein both earnings and sales beat expectations. The leading apparel and footwear designer also raised its fiscal 2014 outlook.
Third-quarter earnings of 93 cents increased a significant 18% from the year-ago adjusted earnings of 77 cents backed by strong sales. Quarterly earnings also surpassed the Zacks Consensus Estimate of 86 cents by 8.1%.
Columbia Sportswear Company - Earnings Surprise | FindTheBest
Net sales went up 29% to $675.3 million and surpassed the Zacks Consensus Estimate of $634 million by 6.5%, driven by strong demand for Columbia and Sorel brands, especially across the North American wholesale and direct-to-consumer channels. Successful launch of the China joint venture and strong performance by the newly acquired prAna brand also helped drive sales during the quarter. The prAna brand contributed $28.2 million of incremental net sales during the quarter.
Gross profit inflated 32% to $306.78 million during the quarter, owing to higher sales. Gross margin inflated 100 basis points (bps) to 45.4%. Adjusted operating income, excluding the benefit from the prAna acquisition, increased 27.8% to $97.7 million.
Segment Detail
On the Basis of Categories
Apparel and accessories grew 28% year over year to $549.4 million. Footwear net sales increased 33% to $125.9 million.
On Regional Basis
U.S.: Despite currency headwinds, third-quarter U.S. net sales increased 26% backed by incremental sales due to the prAna acquisition.
Canada: Net sales in Canada increased 34%, backed by higher direct-to-consumer business. However, sales were partially impacted by unfavorable currency impact.
Latin America/Asia Pacific (LAAP): Sales soared 72% year over year in the region on the back of sales at the company’s new China joint venture, which offset the currency headwinds.
Europe/Middle East/Africa (EMEA): Sales in this region increased 1% but were benefited by changes in foreign currency exchange rates.
Other Financial Update
During the quarter, the board authorized a 7% increase in the quarterly dividend to 15 cents per share. The dividend is payable on Dec 4, 2014 to shareholders of record as on Nov 20.
On May 30, 2014, Columbia Sportswear acquired lifestyle brand prAna for $190 million. PrAna will complement the company’s existing portfolio of authentic, active outdoor brands, such as Columbia, Mountain Hardwear, Sorel and Montrail.
Raised Outlook
Following better-than-expected third-quarter results, Columbia Sportswear raised the fiscal 2014 outlook. The company’s net sales for 2014 are now expected to grow 22% compared with 2013 levels, as against the previous expectation of 16% to 18% growth. However, more than half of that growth is expected to come from the new China joint venture and the remainder from the company’s global direct-to-consumer and wholesale businesses.
Compared with the prior year, management envisions its full-year operating margin of approximately 8.7%, higher than the prior forecast of 8.25%.
Columbia Sports expects fiscal 2014 earnings per share to be $1.80, up 35% from the year-ago period. The Zacks Consensus Estimate for earnings is pegged at $1.78 for 2014.
Other Stocks to Consider
Columbia Sportswear carries a Zacks Rank #1 (Strong Buy). Other stocks in the textile apparel sector that warrant a look includes Hanesbrands Inc. (HBI) and Gildan Activewear Inc. (GII) and Oxford industries Inc. (OXM) all carrying a Zacks Rank #2 (Buy).
Read the Full Research Report on COLM
Read the Full Research Report on HBI
Read the Full Research Report on OXM
Read the analyst report on GII
Zacks Investment Research
