Here's How Columbia Sportswear (COLM) Looks Ahead of 2024
Columbia Sportswear Company COLM has been navigating a tough economic landscape in 2023. An overall inflationary environment has dented consumers’ purchasing power, thereby impacting their spending on discretionary items like apparel and footwear.
While COLM expects the first half of 2024 to remain difficult, its strategic priorities are likely to keep yielding favorably. Strength in the direct-to-consumer (DTC) business and brand-enhancement endeavors are likely to help this Zacks Rank #3 (Hold) company sail through the headwinds in 2024.
The Zacks Consensus Estimate for 2024 sales and earnings suggests growth of 1.6% and 5.1% from the year-ago period figure.
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Strategic Priorities Underway
Columbia Sportswear is on track with its strategic priorities. The company intends to continue with its demand creation investments, which are aimed at driving brand awareness and aiding sales. Further, it remains committed to enhancing consumers’ experience and its digital capacity in all networks and regions.
Columbia Sportswear explores growth opportunities in the DTC business and improving support processes. Finally, the company has been keen on investing in its people and optimizing its organization across its brand portfolio.
Speaking of the DTC business, in the third quarter of 2023, overall DTC sales jumped 4% to $321.4 million. U.S. DTC net sales rose by the low single digits. Within the DTC channel, brick-and-mortar sales increased in the mid-single digits in the third quarter due to sales from the new stores opened last year and higher sales from temporary outlet stores. DTC e-commerce has been benefiting from increased online shopping.
Focus on Strengthening Brands
Columbia Sportswear undertakes brand-enhancing and unique marketing initiatives that further strengthen its presence in the apparel space. The company has been undertaking regular innovation for a while now. Its Omni-Heat Infinity remains one of the fastest-growing parts of its business.
Columbia Sportswear is on track to launch its latest Star Wars collection and is also making expansions to Omni-Heat Helix. On its third-quarter 2023 earnings call, the company stated that it is gearing up for its crucial selling season by undertaking brand enhancements and marketing activations to drive sales.
What Lies Ahead?
For 2023, Columbia Sportswear expects net sales to grow 0.5-2% to the $3.48-$3.53 billion band. It envisions earnings per share (EPS) for 2023 in the range of $4.45-$4.70 compared with the $4.95 recorded in 2022. For the fourth quarter of 2023, management expects net sales to decline 10-5% to the $1,054-$1,106 million range due to a soft start to the fall selling season and cautious expectations for the balance of the year. The quarterly EPS is envisioned in the band of $1.93-$2.18 compared with $2.02 reported in the year-ago period.
Management anticipates economic and geopolitical uncertainty for 2024. It expects the first half of 2024 to remain challenging, including a low-double-digit decline in wholesale net sales in the said period. This is likely to be somewhat compensated by ongoing growth in the company’s global DTC operations.
Consequently, overall net sales are likely to decline by the mid-single-digits in the first half of 2024. The decline is mainly accountable to the challenges likely to impact the spring season order book. In the full year 2024, the company expects to achieve some modest growth in net sales and operating margin, while it will continue to depend on the factors affecting the Spring season.
However, strength in the brand and strategic priorities keep Columbia Sportswear well-positioned. The company’s shares have rallied 16.7% in the past three months compared with the industry’s growth of 27.6%.
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