Columbia Sportswear Up 31% In A Year: Check Out The Reasons

Columbia Sportswear Company (NASDAQ:COLM) is an appropriate investment option as the company’s shares have outperformed the industry and the overall Consumer Discretionary sector in the past year. This Zacks Rank #1 (Strong Buy) stock has rallied approximately 30.9% compared with the industry’s growth of 11.2% and against the sector’s decline of 4.6%.

That said, let’s delve into the factors that make Columbia Sportswear a promising bet.

Growth Catalysts

Columbia Sportswear is progressing well with its Project CONNECT program, which is likely to drive sales and earnings alongside strengthening the company’s financial position. The project was announced last year with the intention of enhancing the company’s performance by working on its four core strategies.

Project CONNECT focuses on connecting consumers, wholesale customers and international distributors with its manufacturing partners and employees around the globe. Markedly, the program is expected to deliver low-double-digit percentage growth in net income, increase revenues, capture cost of sales efficiencies, improve gross margin, and enhance marketing efforts and lower SG&A costs. Additionally, the company is optimistic about generating substantial financial value from this project in 2019 and beyond.

Further, the company boasts a strong international presence, which provides the company a solid business foundation and enables it to seek new opportunities to boost profitability. In fact, the company’s advancement in the EMEA region has been impressive lately, especially owing to the Europe-direct business and greater sales to EMEA distributors. Sales from the international markets remained strong in the third quarter, while it was up 6% year to date. Results were backed by strength in Europe-direct, Japan and Korea businesses, partly negated by softness in China and international distributor businesses. As a result of this downside in China, the company is making efforts to improve customers’ experience by store renovations and other store upgrades in the region.

Moving on, Columbia Sportswear’s direct-to-consumer (DTC) and wholesale businesses has been depicting steady growth. Notably, Columbia Sportswear’s DTC business constituted 40% of the company’s total revenues in 2017, wherein DTC sales increased at a high-single-digit rate year over year. Within the DTC business, both the brick-and-mortar and e-commerce businesses were strong and surpassed the company’s expectations in the first half. Encouragingly, management expects DTC revenue growth to outpace growth at wholesale channels in 2018.

To top these, the company has been striving to bolster its brands across channels through demand creation. It has also been striving to boost digital operations, solidify global DTC networks and make customer-centric investments.

Wrapping Up

Columbia Sportswear’s robust strategies have aided the company’s top and bottom-line performances. In fact, solid growth endeavours combined with continued business momentum encouraged management to raise outlook for 2018. All said, we expect the company to continue with its splendid growth story.

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