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Columbia Sportswear Grapples with Headwinds: Time to Sell?

Apparel retailer Columbia Sportswear CompanyCOLM is currently going through difficult times. 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 decent gain of 24.6% so far this year, outperforming the Zacks categorized Textile-Apparel Manufacturing industry which has witnessed a decline of 4.7%. However, the trend is expected to reverse in the near future.

What's Wrong with the Stock?

Notably the Portland, OR-based retailer has lowered its full-year 2016 earnings guidance when it reported weak results in third-quarter 2016. The company now expects 2016 earnings to be in the range of $2.55-$2.65 compared with a range of $2.60-$2.70 expected previously. Operating profit is now anticipated to be in the range of $250-$259 million compared with a range of 254 million to $263 million expected earlier. Further, the company has been experiencing downward estimate revisions in the past 60 days. The Zacks Consensus Estimate for fiscal 2016 and 2017 declined by 1.9% and 2%, respectively.

Though the company delivered an earnings beat, it reported lower-than-expected sales in third-quarter 2016 owing to lower sales in the U.S. and Canada. Moreover, the company's Global Apparel, Accessories & Equipment segment underperformed mainly due soft performance of the Columbia brand.

COLUMBIA SPORTS Price, Consensus and EPS Surprise

COLUMBIA SPORTS Price, Consensus and EPS Surprise | COLUMBIA SPORTS Quote

Cold and harsh weather in metropolitan areas and snow sports regions are required for a good start to the outerwear season prior to Black Friday. However, an unseasonably warm October and late arrival of winter prevented the company from gaining the benefit of early orders. Hence, soft sales are anticipated to hinder the fourth-quarter results as well.

Further, this Zacks Rank #4 (Sell) company is facing macroeconomic challenges in Russia. Additionally, slow growth in the China business is hampering the overall sales growth of the company. Columbia and prAna brands are also suffering setbacks in Korea as there is a general shift of consumer preference away from outdoor sector apparel in the region. The company anticipates the industry wide glut to persist and makes a recovery very unlikely, at least in 2017.

Stocks to Consider

Some better-ranked stocks in the broader consumer discretionary sector arePerry Ellis International Inc. PERY , Tailored brands Inc. TLRD and Francesca's Holdings Corporation FRAN .

Tailored Brands and Francesca's both sport a Zacks Rank #1 (Strong Buy) and has an expected earnings growth of 17.5% and 13.8%, respectively. You can see the complete list of today's Zacks #1 Rank stocks here.

Perry Ellis carries a Zacks Rank #2 (Buy) has an average earnings surprise of 19.5% in the trailing four quarters.

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COLUMBIA SPORTS (COLM): Free Stock Analysis Report

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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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