Columbia Sportswear Company
) third-quarter 2013 earnings dropped 16.5% to $1.57 from $1.88
per share in the year-ago quarter, owing to higher effective tax
rate that hurt the bottom-line by 6 cents. However, the quarterly
earnings surpassed the Zacks Consensus Estimate of $1.43 per
share by 9.8%.
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Net sales of this leading apparel and footwear designer slipped
4% to $523.1million. However, it came ahead of the Zacks
Consensus Estimate of $513 million.
The better-than-expected results are driven by Columbia
Sportswear's strong direct-to-consumer sales and its continuous
efforts to effectively streamline its wholesale segment
Gross profit declined 4.7% to $232.3 million due to lower sales.
Gross margin contracted 30 basis points to 44.4% during the
quarter. Operating income collapsed by 12.4% to $76.9 million,
while operating margin shriveled 140 basis points to 14.7%.
Compared to the year-ago quarter, net sales in U.S. fell 7% to
$323.1 million in the reported quarter. In the Europe/Middle
East/Africa (EMEA) region, net sales surged 29% to $78.1 million
due to the positive effect from changes in foreign currency
Additionally, negative changes in foreign currency pushed net
sales down by 15% to $72.0 million in the Latin America and Asia
Pacific segment and by 4% to $49.9 million in Canada.
Apparel, Accessories & Equipment net sales were almost in
line with the previous-year quarter sales, falling marginally.
Footwear net sales were $94.5 million, down 18% from the
comparable prior-year quarter.
Brand wise Segregation
Net sales of the Columbia brand fell by 1% to $431.5 million,
Sorel brand declined by 23% to $47.4 million and Mountain
Hardwear brand waned 9% to $40.6 million on a year-over-year
Other Financial Updates
Columbia Sportswear gracefully ended the quarter with cash and
short-term investments balance of $303.2 million, up from $96.3
million last year. Total shareholders' equity stood at $1,212.0
million, excluding non-controlling interest of $7.8 million
compared to $1,127.7 million last year.
Inventories fell 13.8% to $410.1 million on the back of lower
purchases, better management and more promising advance deals.
The company expects to generate growth, banking on its new
Chinese joint venture, its wholesale business augmentation in
North America and Europe and its plans to expand operations in
the main global markets. Columbia Sportswear is also making
significant efforts to enhance its direct-to-consumer sales.
Taking cue from the encouraging statements, the directors of the
company announced a 14% hike in dividend to 25 cents from 22
cents a share to be paid on Dec 2, 2013 to stakeholders of record
as of Nov 14, 2013.
Columbia Sportswear's net sales for the fourth quarter and 2013
are expected to fall up to 2% and 1.5%, respectively.
Compared to the prior year, management envisions its full-year
gross margin to increase about 50 basis points.
Adjusted operating margin for fiscal 2013 is estimated at 8.1%
and that for the final quarter it is expected to contract by 120
basis points. Including one-time items, operating margin for the
full year will come in at approximately 7.3%, while that of the
fourth quarter would decline 220 basis points.
Other Stocks to Consider
Columbia Sportswear carries a Zacks Rank #4 (Sell). However, some
other companies in the textile apparel sector that warrant a look
) with a Zacks Rank #1 (Strong Buy) and
Ralph Lauren Corporation
), both carrying a Zacks Rank #2 (Buy).