Columbia Sportswear Company
) rose more than 5% since it reported its first quarter 2014
results on Apr 29. This leading apparel and footwear designer
reported strong first quarter 2014 results wherein both earnings
and sales beat expectations and raised the outlook for fiscal
First quarter earnings of 63 cents increased a significant 80%
from the year-ago adjusted earnings of 35 cents backed by strong
sales. Quarterly earnings also surpassed the Zacks Consensus
Estimate of 32 cents per share by 96.9%.
Net sales of this retailer increased 22% to $424.1 million and
came ahead of the Zacks Consensus Estimate of $398 million,
driven by strong demand for Columbia and Sorel brands, especially
across U.S. wholesale and direct-to-consumer channels, and the
successful launch of the China joint venture. The company also
witnessed solid demand for its Fall 2014 products in many key
markets globally. However, results were partly offset due to
unfavorable currency fluctuations.
Gross margin inflated 28.6% to $197 million during the
quarter, owing to higher sales. Operating income increased
significantly to $35.5 million as higher sales were partly offset
by higher selling, general and administrative expenses and lower
Segment Detail on Regional Basis
Despite currency headwinds, first quarter U.S. net sales
increased 20% as severe cold weather increased consumer demand
for cold-weather footwear and apparel, thus resulting in
increased consumer traffic and strong conversion rates.
Net sales in Canada increased 13%, owing to prolonged cold
weather driving strong wholesale re-orders and enabling
direct-to-consumer business. However, sales were impacted by
unfavorable currency impact.
Latin America/Asia Pacific (LAAP):
The company witnessed net sales growth of 41% in the region,
coming from sales at the company's new China joint venture, which
offset currency headwinds.
Europe/Middle East/Africa (EMEA):
Sales in this region declined 4% but were benefited by changes in
foreign currency exchange rates.
Other Financial Update
During the quarter, the company's board authorized a quarterly
dividend of 28 cents a share to be paid on May 29, 2014 to
shareholders of record as of May 15, 2014.
Columbia Sportswear also announced its plan to acquire prAna
Lifestyle Apparel Brand for $190 million. The acquisition is
expected to be complete in the second quarter of 2014 and
expected to be accretive in fiscal year 2015. PrAna is a
lifestyle brand and will complement the Columbia's existing
portfolio of authentic, active outdoor brands, which include
Columbia, Mountain Hardwear, Sorel and Montrail.
Following better-than-expected first quarter results, the
company has raised its fiscal 2014 outlook. Columbia Sportswear's
net sales for 2014 are now expected to grow 16% to 18% compared
with 2013 levels, as against the previous expectation of 15% to
17% growth. Net sales growth expectation for 2014 excludes the
impact of the pending prAna acquisition. However, more than half
of that growth is expected to come from the new China joint
venture and the remainder from the company's global
direct-to-consumer and wholesale businesses.
Compared to the prior year, management envisions its full-year
operating income to grow 25%, which results in operating margin
of approximately 8.25%, higher than the prior forecast of 8%.
The company also continues to expect North American
direct-to-consumer sales to grow at a double-digit rate in 2014.
It also plans to open an additional 17 stores comprising 11
outlets, 6 Columbia-branded stores and 2 Sorel pop-up stores in
order to help manage excess inventories more profitably while
protecting brand integrity in the wholesale channels.
The Zacks Consensus Estimate for earnings is pegged at $3.40
Other Stocks to Consider
Columbia Sportswear carries a Zacks Rank #1 (Strong Buy).
Other stocks in the textile apparel sector that warrant a look
), both with a Zacks Rank #2 (Buy). Another retailer
Bon-Ton Stores, Inc.
) is also worth considering, carrying a Zacks Rank #1.
BON-TON STORES (BONT): Get Free Report
COLUMBIA SPORTS (COLM): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
V F CORP (VFC): Free Stock Analysis Report
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