Columbia Sportswear Company Reports First Quarter 2024 Financial Results; Updates Full Year 2024 Financial Outlook

Columbia Sportswear Company (NASDAQ: COLM, the "Company"), a multi-brand global leading innovator in outdoor, active and lifestyle products including apparel, footwear, accessories, and equipment, today announced first quarter 2024 financial results for the period ended March 31, 2024.

Net sales decreased 6 percent to $770.0 million, compared to first quarter 2023.
Operating income decreased 21 percent to $44.7 million, or 5.8 percent of net sales, compared to first quarter 2023 operating income of $56.4 million, or 6.9 percent of net sales.
Diluted earnings per share decreased 4 percent to $0.71, compared to first quarter 2023 diluted earnings per share of $0.74.
Exited the quarter with $787.7 million of cash, cash equivalents and short-term investments, and no borrowings.
Exited the quarter with $607.4 million of inventories, a decrease of 37 percent compared to March 31, 2023.
The Company repurchased $50.2 million of common stock during the quarter.

Full Year 2024 Financial Outlook

The following forward-looking statements reflect our expectations as of April 25, 2024 and are subject to significant risks and business uncertainties, including those factors described under “Forward-Looking Statements” below. Additional disclosures and financial outlook details can be found in the Full Year 2024 Financial Outlook section below and the CFO Commentary and Financial Review presentation.

Net sales of $3.35 to $3.42 billion (unchanged), representing a net sales decline of 4.0 to 2.0 percent (unchanged) compared to 2023.
Operating income of $259 to $291 million (prior $256 to $288 million), representing operating margin of 7.7 to 8.5 percent (prior 7.6 to 8.4 percent).
Diluted earnings per share of $3.65 to $4.05 (prior $3.45 to $3.85).

Chairman, President and Chief Executive Officer Tim Boyle commented, “2024 has started out broadly in line with our expectations. We are making good progress against our top priorities. Inventory exiting the quarter was down 37 percent year-over-year, and our Profit Improvement Plan is on track to achieve our savings targets. Based on year-to-date results, we are reiterating our net sales outlook while modestly increasing our diluted EPS range.

“Our brand growth acceleration strategies across the portfolio are underway. As warmer weather takes hold, consumers are being introduced to our newest cooling products and technologies, including Columbia Omni-Shade Broad Spectrum Air Flow, and our newest footwear system, Omni-MAX.

“Our financial position remains strong, with approximately $788 million in cash and short-term investments, and no borrowings at quarter end. I’m confident in our team, our strategies, and our ability to achieve the significant long-term growth opportunities we see across the business. We are committed to investing in our strategic priorities to:

accelerate profitable growth;
create iconic products that are differentiated, functional and innovative;
drive brand engagement through increased, focused demand creation investments;
enhance consumer experiences by investing in capabilities to delight and retain consumers;
amplify marketplace excellence, with digitally-led, omni-channel, global distribution; and
empower talent that is driven by our core values, through a diverse and inclusive workforce."

CFO's Commentary and Financial Review Presentation Available Online

For a detailed review of the Company's first quarter 2024 financial results, please refer to the CFO Commentary and Financial Review presentation furnished to the Securities and Exchange Commission (the "SEC") on a Current Report on Form 8-K and published on the Investor Relations section of the Company's website at http://investor.columbia.com/financial-results at approximately 4:15 p.m. ET today. Analysts and investors are encouraged to review this commentary prior to participating in our conference call.

First Quarter 2024 Financial Results

(All comparisons are between the first quarter 2024 and the first quarter 2023, unless otherwise noted.)

Net sales decreased 6 percent (6 percent constant-currency) to $770.0 million from $820.6 million for the comparable period in 2023. The decline in net sales primarily reflects lower wholesale net sales in the United States and Canada, driven by retailer cautiousness, a difficult competitive environment, and generally soft consumer demand.

Gross margin increased 190 basis points to 50.6 percent of sales compared to 48.7 percent of net sales for the comparable period in 2023. Gross margin expansion primarily reflects lower inbound freight costs and favorable region and channel net sales mix, which more than offset the gross margin impact of inventory reduction efforts in our direct-to-consumer ("DTC") brick and mortar business.

SG&A expenses were relatively flat at $349.3 million, or 45.4 percent of net sales, compared to $347.4 million, or 42.3 percent of net sales, for the comparable period in 2023. The largest changes in SG&A expenses primarily reflect higher DTC expenses, partially offset by lower supply chain costs and decreased variable demand creation expenses.

Operating income decreased 21 percent to $44.7 million, or 5.8 percent of net sales, compared to operating income of $56.4 million, or 6.9 percent of net sales, for the comparable period in 2023.

Interest income, net was $9.2 million, compared to $3.3 million for the comparable period in 2023, reflecting higher yields on increased levels of cash, cash equivalents, and short-term investments.

Income tax expense of $11.8 million resulted in an effective income tax rate of 21.9 percent, compared to income tax expense of $14.4 million, or an effective income tax rate of 23.7 percent, for the comparable period in 2023.

Net income decreased 8 percent to $42.3 million, or $0.71 per diluted share, compared to net income of $46.2 million, or $0.74 per diluted share, for the comparable period in 2023.

Balance Sheet as of March 31, 2024

Cash, cash equivalents, and short-term investments totaled $787.7 million, compared to $460.6 million as of March 31, 2023.

The Company had no borrowings as of either March 31, 2024 or March 31, 2023.

Inventories decreased 37 percent to $607.4 million, compared to $959.2 million as of March 31, 2023.

Cash Flow for the Three Months Ended March 31, 2024

Net cash provided by operating activities was $106.8 million, compared to $78.0 million for the same period in 2023.

Capital expenditures totaled $14.8 million, compared to $14.0 million for the same period in 2023.

Share Repurchases for the Three Months Ended March 31, 2024

The Company repurchased 631,468 shares of common stock for an aggregate of $50.2 million, or an average price per share of $79.45.

At March 31, 2024, $295.2 million remained available under our stock repurchase authorization, which does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time.

Quarterly Cash Dividend

The Board of Directors approved a regular quarterly cash dividend of $0.30 per share, payable on May 30, 2024 to shareholders of record on May 16, 2024.

Full Year 2024 Financial Outlook

(Additional financial outlook details can be found in the CFO Commentary and Financial Review presentation.)

The Company's full year 2024 and second quarter 2024 Financial Outlook are each forward-looking in nature, and the following forward-looking statements reflect our expectations as of April 25, 2024 and are subject to significant risks and business uncertainties, including those factors described under “Forward-Looking Statements” below. These risks and uncertainties limit our ability to accurately forecast results.

Net sales are expected to decrease 4.0 to 2.0 percent (unchanged), resulting in net sales of $3.35 to $3.42 billion (unchanged), compared to $3.49 billion in 2023.

Gross margin is expected to expand 80 to 120 basis points (prior 100 to 150 basis points) to 50.4 to 50.8 percent of net sales (prior 50.6 to 51.1 percent) from 49.6 percent of net sales in 2023.

SG&A expenses, as a percent of net sales, are expected to be 43.0 to 43.4 percent (prior 43.2 to 43.5 percent), compared to SG&A expense as a percent of net sales of 40.6 percent in 2023.

Operating income is expected to be $259 to $291 million (prior $256 to $288 million), resulting in operating margin of 7.7 to 8.5 percent (prior 7.6 to 8.4 percent), compared to operating margin of 8.9 percent in 2023.

Interest income, net is expected to be approximately $28 million (prior $19 million).

Effective income tax rate is expected to be 24.0 to 25.0 percent (unchanged).

Net income is expected to be $217 to $240 million (prior $207 to $231 million), resulting in diluted earnings per share of $3.65 to $4.05 (prior $3.45 to $3.85). This diluted earnings per share range is based on estimated weighted average diluted shares outstanding of 59.3 million (prior 60.1 million).

Foreign Currency

Foreign currency translation is anticipated to decrease 2024 net sales growth by approximately 20 basis points (prior 60 basis points increase).
Foreign currency is expected to have an approximately $0.04 negative impact on diluted earnings per share (prior $0.03 positive impact) due primarily to negative foreign currency transactional effects from hedging of inventory production.

Cash Flows

Operating cash flow is expected to be at least $350 million (prior at least $300 million).

Capital expenditures are planned to be in the range of $60 to $80 million (unchanged).

Second Quarter 2024 Financial Outlook

Net sales are expected to be $557 to $576 million, representing a decline of 10 to 7 percent from $620.9 million for the comparable period in 2023.
Operating loss is expected to be $42 to $27 million, resulting in operating margin of (7.6) to (4.7) percent, compared to operating margin of 1.0 percent in the comparable period in 2023.
Diluted earnings (loss) per share is expected to be $(0.46) to $(0.26), compared to $0.14 for the comparable period in 2023.

Conference Call

The Company will hold its first quarter 2024 conference call at 5:00 p.m. ET today. Dial (888) 506-0062 to participate. The call will also be webcast live on the Investor Relations section of the Company's website at http://investor.columbia.com.

Second Quarter 2024 Reporting Date

The Company plans to report second quarter 2024 financial results on Thursday, July 25, 2024 at approximately 4:00 p.m. ET.