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Columbia Sportswear (COLM) Looks Solid: Up More Than 15% YTD

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Things appear to be quite bright for Columbia Sportswear Company COLM, which has seen its shares rally 18.4% so far this year, outdoing the industry’s growth of 16.1%. The company also outshone the Zacks Consumer Discretionary sector, which has declined 2.6% during the same time frame. The Zacks Rank #1 (Strong Buy) company has been gaining on its solid direct-to-consumer (“DTC”) e-commerce business, which remained a driver in second-quarter 2021. During the quarter, earnings and sales grew year over year and cruised past the Zacks Consensus Estimate.

Results were backed by a strong fundamental business revival, along with the better-than-expected performance in the U.S. wholesale and the DTC brick & mortar businesses. Despite witnessing escalated ocean freight costs and pandemic-led supply-chain bottlenecks, management raised its top- and bottom-line guidance. The Zacks Consensus Estimate for 2021 earnings has moved up from $4.35 per share to $4.62 over the past 60 days.

Let’s delve deeper into the factors working in favor of this company, which is engaged in designing, distributing, sourcing and marketing outdoor, active and everyday lifestyle apparel, footwear, accessories and equipment.

Columbia Sportswear Company Price, Consensus and EPS Surprise

Columbia Sportswear Company Price, Consensus and EPS Surprise
Columbia Sportswear Company Price, Consensus and EPS Surprise

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

Strength in DTC Business

The company remains committed to expanding and enhancing its global DTC business, through accelerated investments. In the second quarter, the DTC channel sales grew 69% and wholesale net sales rose 89%. The global DTC brick & mortar net sales soared 149%, as the company lapped the year-ago period’s temporary store closures. Sales considerably surpassed anticipations as traffic improved faster than expected. The DTC e-commerce sales increased 5% year over year in the quarter and formed 16% of the company’s total sales mix. The DTC e-commerce channel is likely to continue performing well in the forthcoming periods, as even with stores reopening, a lot of consumers prefer to shop online.

Strategic Priorities on Track

Management is focused on its strategic priorities. To this end, it intends to continue with its demand creation investments, which are aimed at driving brand awareness and aiding sales. Further, the company remains committed toward enhancing consumers’ experience, and its digital capacity in all networks and regions. It will also continue exploring growth opportunities in the DTC business and improving support processes. Finally, the company is keen on investing in its people and optimizing its organization across its brand portfolio.

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Stellar Q2 & Perked Up Guidance

The company posted second-quarter 2021 earnings of 61 cents per share against the net loss of 77 cents reported in the year-ago period. The bottom line crushed the Zacks Consensus Estimate, which was pegged at a loss of 12 cents. Net sales soared 79% to $566.4 million, beating the consensus mark of $500 million. Sales increased across all categories, regions, brands and channels. The company’s second-quarter show reflects the strong fundamental business revival. Certainly, the company’s brands are resonating well with consumer trends.

Columbia Sportswear remains well positioned to gain from the existing consumer and outdoor patterns. Encouragingly, management raised its 2021 guidance. For 2021, the company now expects net sales in the range of $3.13-$3.16 billion, indicating a 25-26.5% increase from the year-ago period’s reported figure. Earlier, the metric was envisioned to be $3.04-$3.08 billion, suggesting 21.5-23% growth. For the second half of 2021, management projects net sales growth in the low-20 percent range. For 2021, operating income is expected to be $365-386 million, calling for an operating margin of 11.7-12.2%. Earlier, the operating income was estimated to be $347-369 million, indicating an operating margin of 11.4-12%. Finally, management now envisions earnings per share in the range of $4.30-$4.55 for the ongoing year compared with the $4.05-$4.30 expected earlier.

3 Other Robust Apparel Picks

Ralph Lauren RL has a projected long-term earnings growth rate of 15% and sports a Zacks Rank #1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp. PVH currently flaunts a Zacks Rank #1 and has a projected long-term earnings growth rate of 38.5%.

Guess? GES has a Zacks Rank #2 (Buy), at present, and its bottom line has outperformed the Zacks Consensus Estimate by a wide margin in all of the trailing four quarters, on average.


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