Columbia Sportswear (COLM) Q4 Earnings Top Estimates, Sales Up
Columbia Sportswear Company COLM posted fourth-quarter 2022 results, wherein the top and bottom lines increased year over year. Both earnings and net sales came ahead of the Zacks Consensus Estimate.
Management remains encouraged about its innovative products for the Spring season. The company is focused on accelerating profitable growth, driving brand engagement and enhancing the consumer experience, among others.
Quarter in Detail
This designer, marketer and distributor of outdoor and active lifestyle apparel, footwear and accessories posted quarterly earnings of $2.02. Excluding prAna impairment charges, adjusted earnings per share came in at $2.45. The company reported earnings of $2.39 in the year-ago quarter. The Zacks Consensus Estimate for the bottom line was pegged at $2.31.
Net sales advanced 4% (up 8% at constant currency or cc) to $1,169.6 million and surpassed the consensus mark of $1,164.3 million. Sales were backed by growth in the Columbia brand, somewhat offset by drab net sales in the emerging brands.
The gross margin declined 180 basis points (bps) to 50.4%, mainly caused by greater promotional activity relative to the year-ago quarter.
SG&A expenses escalated by 5% to $405.1 million. As a percentage of sales, the same expanded from 34% to 34.6%. The year-over-year rise in SG&A expenses can be attributed to expenses related to business growth and investments undertaken to fuel brand-led consumer-focused strategies. Also, inflationary pressures were a headwind.
The Zacks Rank #4 (Sell) company’s operating income came in at $155.4 million, down 27% year over year. The operating margin contracted from 18.7% to 13.3%.
Columbia Sportswear Company Price, Consensus and EPS Surprise
Columbia Sportswear Company price-consensus-eps-surprise-chart | Columbia Sportswear Company Quote
Channels & Regional Segments
In the United States, net sales increased 2% to $780.8 million. Net sales increased 17% to $132.8 million in Europe, the Middle East and Africa (EMEA). Latin America/Asia Pacific net sales fell 5% to $164 million. In Canada, net sales gained 13% to $92 million.
Sales by Product Category & Brand
Net sales in the Apparel, Accessories and Equipment category ascended by 6% to $900.5 million, while the same for Footwear fell 5% to $269.1 million.
The SOREL, prAna and Mountain Hardwear brands registered sales decline of 13%, 6% and 12%, respectively. Columbia net sales gained 8%.
Other Financial Updates
Columbia Sportswear ended the quarter with cash and short-term investments of $431 million and shareholders’ equity of $1,935.8 million. The company had no borrowings its balance sheet as of Dec 31, 2022.
During the 12 months ended Dec 31, the company used cash from operating activities of $25.2 million, while capital expenditures were $58.5 million.
For 2023, COLM expects operating cash flow to be more than $500 million. Capital expenditures are envisioned in the band of $70-$90 million.
During the 12 months that ended Dec 31, the company repurchased 3,235,327 shares for $286.9 million. On Dec 31, 2022, the company had $529.4 million available under its share buyback authorization. Management announced a quarterly cash dividend of 30 cents per share, which is payable on Mar 21, 2023, to shareholders of record as of Mar 10.
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Management’s guidance for first-half and full-year 2023 considers estimates as of Feb 2, 2023.
The guidance also considers the impact of economic conditions, like inflation, supply-chain headwinds, limitations and expenses, geopolitical tensions, changing consumer behavior and increased marketplace inventories.
For 2023, Columbia Sportswear expects net sales to grow 3-6% to the $3.57-$3.67 billion band. The company expects foreign currency translation to hurt net sales growth by roughly 30 bps in 2023. Management expects the gross margin to expand nearly 60 bps to nearly 50%.
SG&A expenses are anticipated to rise faster than net sales growth. As a percentage of net sales, SG&A expenses are anticipated in the range of 38.3-39% compared with 37.7% recorded in 2022.
For 2023, the operating income is expected in the band of $413-$448 million, with the operating margin expected at 11.6-12.2%. In 2022, the company reported an operating margin of 11.3%.
Management envisions earnings per share (EPS) in the range of $5.15-$5.22 for 2023. The company expects foreign currency translation to hurt earnings by 5 cents.
For the first half of 2023, management expects net sales growth of mid-single-digit percent relative to the first half of 2022. During this time, the gross margin is expected to expand at a modest rate below the 2023 gross margin outlook. Management expects first-quarter 2023 gross margin to be down year over year. The first-half EPS is envisioned in the band of 75-90 cents.
COLM’s shares increased 26.4% in the past three months compared with the industry’s 15.6% growth.
Eye These Solid Picks Too
Here we have highlighted three better-ranked stocks, namely, Oxford Industries OXM, Hanesbrands HBI and Ralph Lauren RL.
Oxford Industries, which designs, sources, markets and distributes lifestyle products and other brands, carries a Zacks Rank #2 (Buy). Oxford Industries has a trailing four-quarter earnings surprise of 18.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for OXM’s current financial-year sales and EPS suggests growth of 23.3% and 34.4%, respectively, from the year-ago corresponding figures.
Hanesbrands currently carries a Zacks Rank #2. HBI has a trailing four-quarter earnings surprise of 2.2%, on average.
The Zacks Consensus Estimate for Hanesbrands’ current financial-year sales and earnings suggests decline of 8.5% and 46.5%, respectively, from the year-ago period's reported numbers.
Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 28.7%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s next financial-year sales suggests growth of 0.3%, from the year-ago reported figures.
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