Will Columbia Sportswear Co. pull off another Wall Street beat in Q4?
The outdoor footwear-and-apparel maker upstaged market watchers’ estimates in October, when it reported Q3 net income growth of 39 percent, to a $91.1 million, and a 14 percent increase in revenue, to $767.6 million.
The gains were driven by double-digit sales growth at each of its brands, which include Sorel, Montrail and the Columbia label.
While analysts continue to like the firm’s business strategy, ahead of Q4, they express caution regarding the warmer winter’s impact on sales of seasonal product — a substantial portion of Columbia’s business.
Nomura Securities Inc. analyst Robert Drbul continued to be upbeat on the stock but reduced his Q4 earnings per share estimates for the company, from 80 cents per share to 78 cents per share, citing weather concerns.
“We believe Columbia, our 2016 Small-Cap Growth pick, is one of the few in our universe with significant long-term top-line growth and operating margin expansion opportunities…” Drbul wrote. “We do note some risk to the company’s direct-to-consumer plan for Q4, largely due to weather.”
Similarly, Citi Research analyst Kate McShane maintained a bullish posturing on Columbia while adjusting her EPS estimates, to 80 from 95 cents, “to reflect a more challenging near-term U.S. retail environment.”
“Despite concerns over an unseasonably warm Q4/winter, we continue to view Columbia as well positioned in a more challenging environment, with strength in the Columbia brand as well as an increased effort to better flow through product than it did in winter 2011/12,” McShane wrote. “The increase in company’s outlet stores (85 stores now) should help to mitigate warm weather risk, with higher margin clearance through owned direct-to-consumer versus traditional off-price channels.”
Since it last reported, Columbia has ramped up its efforts across several pillars of its business. In February, the company announced that it would realign running-shoe brand Montrail as a Columbia sub-brand. The company’s trail-running shoes, apparel and accessories will feature Columbia Montrail branding.
Average Q4 estimates for Columbia predict Q4 revenue of $684.6 million and EPS of 76 cents.