Can Columbia Sportswear's (COLM) Initiatives Lift The Stock?

The apparel industry is characterized with intense competition, as companies keep upgrading and expanding their assortments through innovation and acquisitions. However, rising consumer confidence, backed by improving economic conditions has been favoring luxury spending. In addition to spending on necessary items such as grocery, food and beverage products, consumers are also increasingly purchasing apparel items and personal care products.

Such an industry trend has been favoring Columbia Sportswear Company (NASDAQ:COLM) , engaged in the sourcing and distribution of outdoor apparel and accessories. Notably, the company’s earnings have outpaced the Zacks Consensus Estimate for 18 straight quarters, with a trailing four-quarter average of 12.3%. Moreover, the company carries a VGM Score of A and has a long-term earnings growth rate of 9.5%.

Let’s now take a detailed look at some of the factors which have been impacting the performance of this Zacks Rank #3 (Hold) company.

SORELBrand Rising Steadily

One of primary growth drivers of Columbia Sportswear is the sturdy performance of its SOREL brand. It has displayed a growth of 50% in the first half of 2017, aided by the successful launch of the expanded spring assortment. Moreover, the company expects continued growth from the brand through its constant upgradation and effective management strategies.

Project CONNECT

The company is on track with its four-phased operating model assessment project, named Project CONNECT that began in June 2017. The project is likely to help Columbia Sportswear operate as a customer-centric organization. Also the project is expected to create improved connectivity amongst customers, distributors, manufacturing partners and employees around the globe.

Other Initiatives Impacting Performance

Owing to increased consumer interests in outdoor activities and travelling, demand for athletic wear has been rising. This has encouraged Columbia Sportswear to engage in brand development, aided by superior proprietary technologies that define and differentiate the company.

Columbia Sportswear’s launch of in-house European, Columbia and SOREL brand e-commerce businesses across ten different countries also remain encouraging as it aligns with the rising trend of online purchasing. The company also has a solid international presence and operates in more than 100 nations.

Shares Going Down

Shares of Columbia Sportswear have gained 1.4% in the past six months, lower than the industry’s rise of 8.2%. The dismal performance is primarily due to challenges in the company’s U.S. wholesale front. Additionally, the company has also been facing macroeconomic headwinds in Korea causing set backs in its Columbia and prAna brands.

Nevertheless, Columbia Sportswear is well on track with its brand enhancing efforts to offset such ongoing headwinds and improve share price performance in the forthcoming periods. It also expects to continue gaining from positive market conditions prevailing in the active apparel wear category.

Looking for More? Check These 3 Trending Picks

Investors may also want to consider few better-ranked stocks from the same sector. Central Garden & Pet Company (NASDAQ:CENT) sports a Zacks Rank #1 (Strong Buy), while Guess? Inc (NYSE:GES) and lululemon athletica inc (NASDAQ:LULU) carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

CentralGarden& Pet delivered an average positive earnings surprise of 122.1% over the trailing four quarters. It has a long-term earnings growth rate of 10%.

Guess? delivered an average positive earnings surprise of 20.6% over the trailing four quarters. It has a long-term earnings growth rate of 17.5%.

lululemon delivered an average positive earnings surprise of 8.5% over the trailing four quarters. It has a long-term earnings growth rate of 11.9%.

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