Columbia Sportswear Stock Rallies On Project CONNECT & More

Columbia Sportswear Company (NASDAQ:COLM) has probably all that it takes to catch investors’ attention. The company’s solid focus on growth efforts is evident from its splendid past record, which has helped its shares rally 31.5% over the past year, better than the industry’s growth of 19.5%.

So, let’s delve deeper into the factors that are set to continue driving this Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Here’s What’s Working in Columbia Sportswear’s Favor

The company is progressing well with the Project CONNECT program, which focuses on connecting consumers, wholesale customers and international distributors with its manufacturing partners and employees around the globe. Markedly, the program is expected to boost net income, enhance revenues, capture cost of sales efficiencies, improve gross margins, and enhance marketing efforts and lower SG&A costs. The company is optimistic about generating substantial financial value from this project in 2019 and beyond.

Further, Columbia Sportswear is committed toward expanding and enhancing its global direct-to-consumer (DTC) business through accelerated investments. We note that during the fourth quarter of 2018, DTC channels sales grew nearly 23% while it improved 22% in 2018. Notably, the DTC channel contributed 42% to the company’s revenues in 2018, up from 40% in 2017. Management expects this channel to continue performing well in the forthcoming periods.

Additionally, we commend Columbia Sportswear’s solid international presence, which provides it with a solid business foundation and enables it to seek new opportunities to enhance profitability. Sales from the international markets improved 12% in the fourth quarter, backed by strength in Europe-direct, Japan, China, Canada and Korea businesses. In fact, many other textile-apparel players like lululemon (NASDAQ:LULU) , Ralph Lauren (NYSE:RL) and Guess? (NYSE:GES) are benefiting from strong international operations.

Coming back to Columbia Sportswear, the aforementioned strategies and focus on enhancing brands helped it sustain spectacular record in the fourth quarter of 2018. During the quarter, top and bottom lines improved year over year and surpassed the Zacks Consensus Estimate. While the top line marked its eighth straight quarter of beat, the bottom line delivered positive surprise for 24 quarters in a row now.

The company expects consistent growth in 2019, on the back of strong brands and sales channels. That said, net sales are expected to be $2.97-$3.03 billion, up nearly 6-8% year on year. Notably, the company expects higher sales during the spring and fall season. Further, earnings per share for 2019 are anticipated to be $4.30-$4.45, marking an improvement from $4.01 delivered in 2018.

Additionally, management expects to continue with investments to create demand, drive brand awareness and enhance digital capabilities. It will also continue exploring growth opportunities in the DTC business and improve support processes. All said, we expect Columbia Sportswear to contain its superb momentum.

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