Columbia Sportswear Company COLM appears attractive, given its solid growth prospects. This also becomes evident from management’s encouraging outlook for 2019. We note that the company’s robust strategies have helped its shares return 7.5% in the past year against the industry’s decline of 11.4%.
Let’s delve deeper into the factors that are likely to fuel this Zacks Rank #2 (Buy) stock’s growth.
Project CONNECT a Major Driver
Columbia Sportswear is progressing well with its Project CONNECT program, which is aimed at driving sales and earnings growth. Project CONNECT focuses on connecting consumers, wholesale customers and international distributors with its manufacturing partners and employees around the globe. Markedly, the program is helping to boost net income and revenues, capture efficiencies of cost of sales, improve gross margin, enhance marketing efforts, and lower SG&A costs. The company is optimistic about generating substantial financial value from this project in 2019 and beyond.
DTC Business & Strong International Presence to Aid Sales
Columbia Sportswear remains committed to expanding and enhancing its global direct-to-consumer (DTC) business through accelerated investments. In the second quarter of 2019, DTC channels witnessed sales growth of nearly 6% (up 7% at constant currency). Within the DTC business, the brick-and-mortar and e-commerce businesses have been strong. Management expects this channel to continue performing well in the forthcoming periods.
Further, the company has a solid international presence, which provides it a solid foundation and enables it to seek new opportunities. Sales from international markets improved 6% in the first half of 2019. Results were backed by strength in Europe-direct, Japan, China and Korea businesses.
Outlook Boosts Confidence
Driven by such upsides and brand-enhancing efforts, Columbia Sportswear’s top and bottom lines marked the 10th and 26th straight respective beats in second-quarter 2019. The company expects consistent growth in 2019 on strong brands and sales channels. That said, management raised the 2019 view when it issued second-quarter results. Net sales are expected to be $3.00-$3.04 billion compared with $2.98-$3.04 billion mentioned earlier. The revised top-line view depicts growth of nearly 7-8.5% year over year.
Further, earnings per share for 2019 are estimated at $4.65-$4.75, up from the previously stated $4.40-$4.55. For the third quarter, the company expects year-over-year net sales growth in a low-double-digit percentage and earnings per share growth in a mid to high-single-digit.
All said, we expect Columbia Sportswear to keep up with its robust record and instill further confidence among investors.
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