Columbia Sportswear Company (COLM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals. Strong bookings, optimistic management, and effective marketing are positive, but tariff impacts, flat growth projections, and vague responses on key issues are concerning. The market cap suggests moderate volatility. Overall, the sentiment is neutral.
Key Financial Performance
Net Sales (Full Year 2025) Increased 1% to $3.4 billion year-over-year. Growth in international markets was mostly offset by headwinds in the U.S.
Net Sales (Q4 2025) Decreased 2% year-over-year to $1.1 billion. Driven by a 7% decrease in wholesale net sales, partially offset by a 1% increase in direct-to-consumer sales. Earlier-than-planned shipments of fall '25 orders shifted some wholesale sales to earlier in the year.
Gross Margin (Q4 2025) Expanded 50 basis points to 51.6%. Driven by cleaner inventories that contributed to lower promotions, clearance activities, and lower inventory loss provisions, which more than offset the impact of incremental U.S. tariffs.
SG&A Expense (Q4 2025) Increased 3%. Reflecting higher DTC expenses and other nonrecurring SG&A expenses associated with the profit improvement program, partially offset by cost reduction efforts.
U.S. Net Sales (Q4 2025) Decreased 8%. U.S. wholesale business was down high teens percent due to earlier shipment of fall wholesale orders and inventory supply constraints. U.S. DTC net sales declined low single-digit percent due to lower mall traffic and closure of temporary clearance locations.
International Net Sales (Q4 2025) LAAP net sales increased 10%, China net sales increased low double-digit percent, Japan net sales increased high single-digit percent, Korea net sales increased low single-digit percent, EMEA net sales increased 3%, and Canada net sales increased 3%. Growth was driven by wholesale and e-commerce growth, despite challenges like warm weather in some regions.
Operating Margin (Full Year 2025) Contracted due to unmitigated tariffs, brand impairments, and increased marketing spend.
Cash and Equivalents (End of 2025) $791 million with no debt. Reflects a strong balance sheet.
Shareholder Returns (2025) $201 million in share repurchases and $66 million in dividends.
SOREL Net Sales (Q4 2025) Decreased 18%. Due to earlier shipment of fall wholesale orders and less clearance activity. Full-price demand exceeded supply for key styles.
prAna Net Sales (Q4 2025) Increased 6%. Driven by DTC growth and strong momentum for updated product offerings supported by advanced marketing.
Mountain Hard Wear Net Sales (Q4 2025) Decreased 5%. Due to lower clearance and promotional activity compared to the prior year. Underlying business trends were healthy with strength in outerwear and fleece.
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Operating Highlights
Amaze Puff collection: Achieved outstanding success for Fall '25, attracting younger consumers. Introduced a seasonally appropriate Amaze collection for Spring '26.
ROC Pant program: Launched the ROC Lite series for Spring '26, featuring innovative designs like the ROC BAND stretch waistband for comfort.
OutDry Extreme: Introduced as a key highlight for Spring '26, offering industry-leading waterproofness and sustainability with recycled textiles.
International sales growth: Strong and broad-based growth, driven by wholesale and DTC channels. LAAP net sales increased 10%, EMEA net sales increased 3%, and Canada net sales increased 3%.
China market: Achieved low double-digit growth, driven by wholesale and e-commerce, with strong engagement from localized campaigns.
Korea market: Gained market share in a soft outdoor category, with improved digital sales and marketing efficiency.
SG&A expense management: Slowed SG&A growth rate, optimizing spending to increase marketing investments and drive demand.
Inventory management: Maintained healthy and flat inventories despite increased U.S. tariff costs.
ACCELERATE Growth Strategy: Focused on attracting younger consumers with new product collections and differentiated marketing campaigns like 'Engineered for Whatever' and 'Expedition Impossible'.
Marketing activations: Executed campaigns such as 'Nature Calls' and partnerships with USA Curling, enhancing brand engagement and visibility.
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Risk or Challenges
U.S. Business Challenges: The U.S. business remains challenged with continued headwinds, including a decrease in net sales by 8% and a high teens percent decline in the U.S. wholesale business. Factors include earlier shipment of fall orders, inventory supply constraints due to tariff announcements, and lower mall traffic.
Tariff Costs: Incremental U.S. tariffs have led to increased costs, contributing to gross margin contraction and operating margin challenges. Efforts to mitigate these costs include price increases and vendor negotiations, but the financial impact remains significant.
Unseasonably Warm Weather: Warm weather in key international markets dampened consumer demand for seasonal products, impacting sales performance in regions like Europe and China.
SG&A Expense Growth: SG&A expenses increased by 3%, driven by higher direct-to-consumer expenses and nonrecurring costs associated with profit improvement programs. This growth has contributed to operating margin contraction.
Decline in Emerging Brands: Emerging brands like SOREL and Mountain Hard Wear experienced declines in net sales, with SOREL down 18% due to earlier shipments and less clearance activity. This reflects challenges in maintaining growth for these brands.
Soft Consumer Traffic: E-commerce and brick-and-mortar sales in the U.S. faced challenges due to soft consumer traffic and reduced promotional activities, impacting overall sales performance.
Regulatory and Environmental Compliance: Regulatory deadlines, such as those related to PFAS inventories, have impacted year-over-year comparisons and created additional operational challenges.
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Guidance & Outlook
Net Sales Growth: The company expects net sales growth in the range of 1% to 3% for 2026, with foreign currency expected to contribute 50 to 100 basis points to the top line. Second half global wholesale net sales are projected to increase up to mid-single-digit percent, with U.S. wholesale business expected to return to growth in the second half.
Gross Margin: Gross margin is expected to contract by 70 to 50 basis points to 49.8% to 50%, primarily due to incremental unmitigated tariff costs. The company aims to offset the dollar impact of higher tariffs through price increases, vendor negotiations, and resourcing production.
Operating Margin: Operating margin for 2026 is projected to be in the range of 6.2% to 6.9%, reflecting SG&A leverage and cost reduction actions.
Earnings Per Share: Diluted earnings per share for 2026 are expected to range between $3.20 and $3.65, including a $0.10 positive impact from foreign currency exchange rates.
First Quarter 2026 Outlook: Sales are anticipated to decline by approximately 2.5% to 4%, resulting in SG&A deleverage and a decline in gross margin. Earnings per share for Q1 2026 are expected to range between $0.29 and $0.37.
Product and Brand Initiatives: The company plans to launch new product collections for Spring '26, including the Amaze collection, ROC Lite series, and OutDry Extreme technology. These initiatives aim to drive consumer engagement and brand differentiation.
Marketing and Consumer Engagement: The company will continue to invest in marketing campaigns, such as the Engineered for Whatever platform, to enhance brand momentum and consumer engagement.
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Shareholder Return Plan
Dividends Paid: $66 million in dividends were returned to shareholders in 2025.
Share Repurchases: $201 million in share repurchases were conducted in 2025.
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Key Q&A
Q:How has the business developed over December, January, and February, and what are the updated thoughts on the order book?
A:The business has shown strong bookings, with 85% of the Spring '26 order book complete. Management was cautious entering the sales period due to tariff uncertainties and took a conservative approach to winter products and spring business. Current trends are positive, with low U.S. inventory and strong acceptance of the Amaze collection and other products.
Q:What are the thoughts on brand advertising and marketing spend for 2025 and 2026?
A:Management believes the current marketing spend is efficient and effective, with a slight decrease planned from 6.5% in 2025 to 6.4% in 2026. Incremental investments have allowed for a louder voice in the marketplace, and the ACCELERATE strategy remains a focus.
Q:What is the impact of Eddie Bauer potentially closing 200 stores in North America?
A:Management noted that Eddie Bauer has relied on its existing reputation without significant marketing efforts. While there is some overlap in store locations, Columbia expects to gain some business from Eddie Bauer's customer base, though the exact impact is uncertain.
Q:What is the cadence of the $100 million unmitigated tariff costs for fiscal year 2026?
A:The unmitigated tariff costs are expected to have a disproportionate impact on gross margin in the first quarter, as price increases were not applied to fall/winter goods. Price increases for spring and fall '26 are expected to offset some of these costs later in the year.
Q:What is the outlook for the U.S. market and the shape of guidance for the year?
A:The U.S. market is expected to have a softer first half and a stronger second half. The fall order book is over 80% complete, and management is optimistic about wholesale and retail performance improvements.
Q:What are the key factors in the tariff mitigation strategy and gross margin outlook?
A:The primary mitigation factor is high single-digit price increases for spring and fall '26. Additional measures include tariff cost sharing with factory groups and resourcing production to achieve lower tariff rates. Management is focused on expanding gross margins and driving operating margin leverage.
Q:What is the potential for improvement in the order book over the next 2-3 months?
A:Management expects a small lift in the order book as retailers reassess their carryover inventory and consumer flexibility regarding tariffs. Footwear orders have later deadlines, offering additional opportunities.
Q:What is the outlook for U.S. wholesale and direct-to-consumer (DTC) business?
A:U.S. wholesale is expected to grow low to mid-single digits in the second half of the year. The DTC business has a modest number of new store openings planned, with closures offsetting openings in the U.S.
Q:How did sell-through compare to sell-in for fall '25, and what does it indicate for fall '26?
A:Sell-through was better than sell-in for fall '25, leading to confidence in the fall '26 order book. Retailers are cautious about price elasticity, resulting in slightly lower unit orders despite high single-digit price increases.
Q:What is the regional breakdown of the fall '26 order book growth?
A:International businesses are expected to outpace U.S. growth, with strong performance in China, Europe, and distributor markets. The U.S. is projected to grow at a low to mid-single-digit rate, with all four brands showing growth.
Q:What does better conversion of fall '25 U.S. wholesale orders mean?
A:Better conversion refers to improved cancel rates, reorder rates, and replenishment metrics. This was driven by curtailed inventory purchases and strong sell-through of new product collections and marketing campaigns.
Q:What is the expected growth for U.S. wholesale in the second half, and are there plans for new DTC stores?
A:U.S. wholesale is expected to grow low to mid-single digits in the second half. The DTC business has a modest number of new store openings planned, with closures offsetting openings in the U.S.
Q:How did sell-through compare to sell-in for fall '25, and what does it indicate for fall '26?
A:Sell-through was better than sell-in for fall '25, leading to confidence in the fall '26 order book. Retailers are cautious about price elasticity, resulting in slightly lower unit orders despite high single-digit price increases.
Q:Review of Unclear Management Responses
A:Management avoided providing specific metrics or detailed data on the potential impact of Eddie Bauer's store closures, the exact breakdown of regional growth in the fall '26 order book, and the elasticity of consumer demand in response to price increases. Additionally, responses to questions about the cadence of tariff costs and the potential for order book improvement were somewhat vague, lacking precise figures or timelines.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Chairman Chief
Conference Instructions
Greetings Columbia
Instructions conference
Results Conference
conference host
host afternoon
hour Chairman
investorcolumbiacom conference
COLM Transcript
Columbia Sportswear Company (COLM) Q4 2025 Earnings Call Transcript
Unknown2-3
The earnings call presents mixed signals. Strong bookings, optimistic management, and effective marketing are positive, but tariff impacts, flat growth projections, and vague responses on key issues are concerning. The market cap suggests moderate volatility. Overall, the sentiment is neutral.
Columbia Sportswear Company (COLM) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call reveals a mixed outlook: positive aspects include international market growth, brand investments, and a well-received marketing campaign. However, challenges like tariff impacts, soft U.S. direct-to-consumer performance, and unclear management responses create uncertainties. The strategic focus on cost reduction and product expansion is promising, but the downward adjustment in guidance and potential pricing unpredictability due to tariffs offset this. Given the market cap, the stock is likely to experience minor fluctuations, leading to a neutral sentiment prediction.
Columbia Sportswear Company (COLM) Q2 2025 Earnings Call Transcript
Unknown8-1
Despite international growth and cost-saving plans, the U.S. market struggles with tariffs and demand softness, leading to guidance cuts. The Q&A reveals concerns about margin contraction and inventory issues, with management providing cautious responses. These factors, combined with the negative impact of tariffs and weak U.S. performance, suggest a negative stock price movement.
Columbia Sportswear Company (NASDAQ:COLM) Q1 2025 Earnings Call Transcript
Unknown5-2
The earnings call revealed mixed financial performance, with modest EPS growth and slight revenue increases, but weak U.S. sales and declines in key brands like Mountain Hardware and SOREL. The international sales growth is a positive, but the lack of share repurchase program, unclear guidance, and concerns about tariff impacts and consumer behavior create uncertainties. The Q&A section highlighted management's inability to provide clear guidance and their evasion of specific questions, contributing to a negative sentiment. Given the market cap, a negative stock price movement of -2% to -8% is anticipated.
COLM Slides
COLM Report
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