“Third quarter results reflect ongoing strength in most international markets, offset by continued softness in North America. While warm weather has curbed early season demand for Fall 2024 cold weather products, I am excited about the differentiated innovations we are offering consumers, including Omni-Heat Infinity and Omni-Heat Arctic, as well as the lightweight comfort provided by our Omni-Max footwear platform”, stated Tim Boyle, Chairman, President and Chief Executive Officer at Columbia.

In its third quarter report, Columbia posted a 5% decline in net sales to 931.8 million US dollars from 985.7 million US dollars in the same period last year. This drop reflects lower wholesale orders for the fall season and decreased consumer demand in the US, partly due to warm weather affecting the outdoor category.

Despite the sales decrease, the company’s gross margin improved by 150 basis points to  50.2% of net sales, up from 48.7% in the third quarter of the previous year. Lower inbound freight costs and a favourable shift in the channel and regional sales mix primarily drove this improvement. However, unfavourable foreign exchange hedging rates partially offset the gains, limiting the overall margin expansion.

Columbia’s selling, general, and administrative expenses increased to 361.2 million US dollars, representing 38.8% of net sales, up from 351.6 million US dollars or 35.7% of net sales on a comparable basis. Higher expenses in the direct-to-consumer channels and increased incentive compensation were the main drivers of this increase. However, decreased expenses in the supply chain and demand creation somewhat offset them.

Operating income also declined, with Columbia reporting 112.5 million US dollars, or 12.1% of net sales, compared to 134.6 million US dollars, or 13.7% of net sales, in the same period in 2023. This was accompanied by a rise in net interest income, which increased from 1.9 million US dollars to 5.4 million US dollars due to higher yields on cash, cash equivalents and investment balances.

Net income for the quarter fell to 90.2 million US dollars, or 1.56 US dollars per diluted share, down from 103.5 million US dollars, or 1.70 US dollars per diluted share, as compared to the same period last year. The effective income tax rate for the quarter was 24.4%, up slightly from 24.0%  in the same prior year’s period.

Outlook

For the fourth quarter, Columbia expects net sales between 1.04 and 1.11 billion US dollars. Operating margin is expected to be in the range of 11.8% to 13.6%, an increase from the 10.7% margin in the comparable period in 2023. Lastly, diluted earnings per share are expected to be between 1.68 and 2.03 US dollars, up from 1.55 US dollars compared to the fourth quarter in 2023.

ACCELERATE Growth Strategy

ACCELERATE is a long-term growth strategy designed to strengthen Columbia’s appeal among younger and more active consumers. This multi-year initiative focuses on consumer-driven adjustments to brand, product and marketplace strategies, alongside improvements in operational methods.

Boyle also commented on the expectations for the new growth strategy: “In recent months, the Columbia brand embarked on ACCELERATE… I am confident the ACCELERATE growth strategy will enable brand-right profitable growth, and I am eager to see it come to life in the seasons ahead”.