Here's Why Columbia Sportswear (COLM) Appears to be Promising

·5 min read

Columbia Sportswear Company COLM appears to be in a robust shape, with its shares having grown 16.6% in the past three months compared with the industry’s growth of 6%. The company has been benefiting from its robust e-commerce business, given consumers’ increased shift to online shopping, especially amid the pandemic. Also, a revival in brick-and-mortar sales with curbs being lifted is acting as an upside. Apart from these, Columbia Sportswear’s focus on strategic priorities is noteworthy.

These factors were witnessed in the company’s first-quarter 2021 results, wherein both top and bottom lines increased year over year and exceeded the Zacks Consensus Estimate. Moreover, the Zacks Rank #2 (Buy) company raised its guidance for 2021, which takes into account a quarter-over-quarter revival in brick-and-mortar retail traffic and sales all through 2021. Markedly, the Zacks Consensus Estimate for 2021 earnings has increased 1.4% to $4.29 per share. Let’s delve deeper.

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

Solid Q1 & View

The company posted earnings of 84 cents per share in the first quarter compared with breakeven earnings per share in the year-ago period. Moreover, the bottom line easily surpassed the Zacks Consensus Estimate of 33 cents. Net sales advanced 10% to $625.6 million, beating the consensus mark of $583 million. Sales were backed by direct-to-consumer (DTC) e-commerce growth, along with better-than-expected enhancement in DTC brick & mortar trend (on a sequential basis). Sales increased across all categories, regions and channels. Brand-wise, sales improved for Columbia and SOREL.

For 2021, the company now expects net sales of $3.04-$3.08 billion, indicating a 21.5-23% increase from the year-ago period. Earlier, the metric was envisioned to be $2.95-$3 billion, suggesting 18-20% growth. In 2021, the company expects all brands and regions to witness growth. For the first half of the year, management now projects net sales growth in the mid to high-20 percent range, up from high-teens percent to low-20-percent range expected before. The raised view is based on solid first-quarter results, growth plans for the global DTC businesses and advance Spring 2021 wholesale orders. Coming back to 2021, management envisions earnings per share of $4.05-$4.30 for the ongoing year compared with $3.75-$4.05 expected earlier.

Zacks Investment Research
Zacks Investment Research

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What’s Driving Columbia Sportswear?

The company remains committed to expanding and enhancing its global DTC business, through accelerated investments. In the first quarter of 2021, the company’s DTC channel displayed sales growth of 20%. Notably, e-commerce sales surged 35% in the quarter and formed 20% of the company’s total sales mix. Certainly, DTC e-commerce is seeing robust momentum with more consumers opting to shop online. This channel is likely to continue performing well in the forthcoming periods. Incidentally, Columbia Sportswear remains on track with its Experience First or the X1 initiative, which is aimed at enhancing e-commerce operations to keep pace with the evolving consumer environment. The company on its first-quarter 2021 earnings call highlighted that it is focused on continuing to build on the recent investments related to X1.

Further, 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 to 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 the organization across its brand portfolio.

All said, we believe that Columbia Sportswear is likely to keep stepping up the growth ladder. Notably, the company has a long-term earnings per share growth rate of 32%.

Other Solid Picks

Crocs CROX has an expected long-term earnings growth rate of 15% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gildan Activewear GIL has a Zacks Rank #1 and a projected long-term earnings growth rate of 28.6%

GIII Apparel GIII has a projected long-term earnings growth rate of 11.6% and a Zacks Rank #2.

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