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What Awaits Columbia Sportswear (COLM) in Q3 Earnings?

Zacks Equity Research
·3 min read

Columbia Sportswear Company COLM is likely to report a decline in both top and bottom lines when it reports third-quarter 2020 numbers on Oct 29, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $756.5 million, indicating a slump of 16.6% from the prior-year quarter’s tally.

Although the Zacks Consensus Estimate for third-quarter earnings has increased 4 cents over the past seven days to $1.22, the same suggests a decline of about 30% from $1.75 earned in the year-ago period. Notably, this designer, marketer and distributor of outdoor and active lifestyle apparel, footwear, equipment and accessories, has delivered a negative earnings surprise of 18.5% in the last four quarters, on average.

Key Factors to Note

Columbia Sportswear has been bearing the brunt of the ongoing pandemic and stiff competition. Although the company has been taking every step to address the challenges, revenues and margins are likely to have remained under pressure. Impact of a highly promotional environment, soft store traffic and uncertainty related to consumer shopping dynamics cannot be ruled out. Moreover, increased marketing investments and variable expenses associated with the direct-to-consumer business may have put pressure on margins. Also, high COVID-19-related expense are concerning.

On its last earnings call, management commented that it intends to continue its investments to create demand, drive brand awareness and enhance digital capabilities. Though these initiatives are growth oriented, they might have hurt margins in the quarter under review.

Markedly, the company is on track with its Experience First initiative or the X1 initiative, aimed at enhancing e-commerce operations to keep pace with the evolving consumer shopping behavior. Management had earlier notified that direct-to-consumer e-commerce has been robust. Notably, e-commerce sales remained strong through the first few weeks of July. Undeniably, the company has been benefiting from a solid online business, especially amid the pandemic.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Columbia Sportswear this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 

Columbia Sportswear Company Price and EPS Surprise

Columbia Sportswear Company Price and EPS Surprise
Columbia Sportswear Company Price and EPS Surprise

Columbia Sportswear Company price-eps-surprise | Columbia Sportswear Company Quote

Columbia Sportswear carries a Zacks Rank #2 and an Earnings ESP of +2.46%.

Other Stocks Poised to Beat Earnings Estimates

Here are a few other companies you may want to consider, as our model shows that these too have the right combination to post an earnings beat:

Rent-A-Center RCII has an Earnings ESP of +0.87% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wolverine WWW has an Earnings ESP of +17.86% and a Zacks Rank #2.

Gap GPS has an Earnings ESP of +12.68% and a Zacks Rank #3.

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Zacks Investment Research