Columbia Sportswear lowers FY23 outlook

Columbia Sportswear Company’s net sales increased 7 percent or 9 percent constant-currency to 620.9 million dollars for the second quarter.

However, the company has lowered its full year outlook reflecting impact of economic conditions, including inflationary pressures; supply chain expenses; marketplace inventories; changes in consumer behaviour as well as geopolitical tensions.

Commenting on the results, Columbia Sportswear’s chairman, president and CEO Tim Boyle said: “Second quarter financial results reflect a dynamic environment, with varying trends across our global omni-channel business. During the quarter, we experienced continued strength across many international markets, including China, while the U.S. environment proved more challenging.”

Highlights of Columbia Sportswear's Q2 and H1 results

The company said in a release that the increase in second quarter net sales reflects growth in the Europe, Middle East and Africa (EMEA) and Latin America Asia Pacific (LAAP) regions, primarily driven by earlier fall 2023 distributor shipments and increased China sales, partially offset by declines in Canada and the U.S., which were primarily driven by a lower portion of spring 2023 orders shipped in the second quarter.

The company’s gross margin for the quarter expanded 140 basis points to 50.6 percent of net sales, operating income decreased 29 percent to 6.2 million dollars and net income increased 17 percent to 8.4 million dollars or 14 cents per diluted share.

Net sales increased 8 percent or 10 percent constant-currency to 1,441.5 million dollars for the first six months.

Gross margin was flat compared to 49.5 percent of net sales for the comparable period in 2022. Operating income decreased 32 percent to 62.7 million dollars, while net income decreased 26 percent to 54.6 million dollars or 88 cents per diluted share.

Columbia Sportswear lowers outlook

The company said, for 2023 fiscal year net sales are expected to increase 2 to 3.5 percent compared to the prior outlook of between 3 to 6 percent to 3.53 to 3.59 billion dollars.

Gross margin is expected to expand approximately 40 basis points versus prior 60 basis points to approximately 49.8 percent of net sales.

Operating income is expected to be 348 to 368 million dollars against prior outlook of 413 to 432 million dollars, resulting in operating margin of 9.8 to 10.3 percent.

Net income is expected to be 272 to 288 million dollars against prior estimate of 322 to 336 million dollars, resulting in diluted earnings per share of 4.40 dollars to 4.65 dollars versus prior estimate of 5.15 dollars to 5.40 dollars.

For the third quarter, net sales are expected to be 995 to 1,010 million dollars, representing growth of 4 to 6 percent.

Operating income is expected to be 132 to 138 million dollars, resulting in operating margin of 13.2 to 13.6 percent, and diluted earnings per share is expected to be 1.60 dollars to 1.70 dollars.

The company’s board of directors approved a regular quarterly cash dividend of 30 cents per share, payable on September 5, 2023 to shareholders of record on August 22, 2023.