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Columbia Sportswear (COLM) Q4 Earnings Beat, Sales Miss

Shares of Columbia Sportswear CompanyCOLM declined 1% after the company reported mixed fourth-quarter 2016 numbers, with earnings beating the Zacks Consensus Estimate while revenues missed the same.

The company recorded earnings per share of $1.20 which outpaced the Zacks Consensus Estimate of $1.10 by 9.1%. Further, earnings surpassed year-ago results by 33.3%. Profits surged backed by higher sales and gross margins during the quarter.

Revenues and Operating Profits

Quarterly revenues gained 3% to $717.4 million owing to higher sales in almost all the geographic regions. Sales gained 2% in constant currency during the quarter. However, net sales came in below the Zacks Consensus Estimate of $755.1 million.

Columbia Sportswear Company Price, Consensus and EPS Surprise

Columbia Sportswear Company Price, Consensus and EPS Surprise | Columbia Sportswear Company Quote

Cost of sales fell 7% to $379.8 million. Gross profit gained 6.5% to $337.6 million driven by higher revenues and lower cost of sales. Gross margin inflated 180 basis points (bps) to 47.1%. The company reported net operating profit of $100.4 million, up 22% from the year-ago quarter due to lower selling, general and administrative expenses.

Regional Segments

U.S. : Net sales gained 2% to $455.4 million, reflecting growth from the Columbia brand.

Latin America/Asia Pacific ( LAAP) : Net sales inched up 1% (down 3% at constant dollar) to $151.9 million on the back of net sales growth in Japan and China.

Canada : Net sales grew 3% (up 1% at constant dollar) to $112.7 million.

Europe/Middle East/Africa ( EMEA) : Net sales increased 20% (increased 8% at constant dollar) to $70.1 million, backed by an improvement in the company's Europe-direct business, partly offset by lower sales to EMEA distributors.

Category Segments

Global Apparel, Accessories & Equipment net sales increased 4% to $535.8 million, and Footwear net sales decreased 1% (2% constant-currency) to $181.6 million.

Brands

Columbia brand's net sales increased 4 percent to $552.3 million. Global SOREL brand net sales decreased 1% (2% constant-currency) to $103.8 million. Global prAna brand net sales increased 2% to $28.2 million, and global Mountain Hardwear brand net sales slumped 11% (12% on constant-currency basis) to $31.3 million.

Other Financial Updates

Columbia Sportswear ended the quarter with cash and short-term investments of $551.4 million compared with $219.7 million in the year-ago period.

Long-term debt amounted to $42.6 million compared with $40.7 million in the previous quarter.

Full Year 2016 Results

Earnings per share of $2.72 outpaced the Zacks Consensus Estimate of $2.62 by 9.1%. Earnings also surpassed year-ago results by 11%. Quarterly revenues gained 2% to $2.3 billion. Sales gained 2% in constant currency during the quarter. Further, net sales came in below the Zacks Consensus Estimate of $2.42 billion.

Guidance

Columbia Sportswear issued 2017 guidance. Management anticipates 2017 net sales growth of 4% compared with 2016 levels. Net sales are weighted more heavily toward the Fall season. Currency is expected to affect sales by less than 1%.

The company anticipates gross margin for 2016 to improve by 25 bps and selling, general and administrative costs to rise at a rate marginally above the expected sales growth. Moreover, tax rate is estimated to be 25%.

Operating profit is likely to increase 5% in the band of $260-$270 million.

Earnings per share for 2017 are projected in the band of $2.72-$2.82, flat to up 3.6% from 2016 level.

Bottom Line

Currency headwinds, soft sales in the U.S. and Canada along with a lackluster performance of the Columbia brand are plaguing the company at the moment.

Shares of the company have showcased a decline of 3.1% in the last three months, underperforming the Zacks categorized Consumer Discretionary sector which has witnessed a gain of 6.6%.

Currently, Columbia Sportswear has a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader consumer discretionary sector are Adidas AG Inc. ADDYY , Rocky brands Inc. RCKY and Francesca's Holdings Corporation FRAN .

All these stocks carry a Zacks Rank #2 (Buy) and has an expected earnings growth of 17.5% and 13.8% and 19.5%, respectively. You can see the complete list of today's Zacks #1 Rank stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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