Columbia Sportswear Co.’s stock experienced a significant drop of more than 10% during the extended session on Thursday. The apparel maker expressed concerns about the upcoming year, noting that retailers are being cautious with their orders and sales have been affected by a warm winter in the United States.
In the fourth quarter, Columbia’s sales fell 9% to $1.06 billion, falling short of the FactSet consensus of $1.08 billion. Additionally, the company did not meet profit expectations for the quarter.
The CEO of Columbia, Tim Boyle, stated that retailers are placing orders cautiously due to economic and geopolitical uncertainty, leading to a challenging year ahead. To address this decline in profits, the company has initiated a “multi-year profit improvement program” that aims to achieve $125 million to $150 million in annual savings by 2026.
Despite these challenges, Columbia was able to reduce its excess inventory and maintain a strong balance sheet. At the end of the year, the company had $765 million in cash and short-term investments with no borrowings.
In the fourth quarter, Columbia earned $93.3 million, or $1.55 per share, compared to $125.7 million, or $2.02 per share, in the previous year. This fell short of analysts’ expectations of $1.96 per share.
For the upcoming year, Columbia expects a sales drop of 2% to 4%, resulting in net sales of $3.35 billion to $3.42 billion. In comparison, net sales in 2023 were $3.49 billion. The FactSet consensus estimates 2024 net sales to be $3.5 billion.
Columbia also provided guidance for per-share earnings between $3.45 and $3.85, which is below the FactSet consensus of $4.51 per share.
Over the past 12 months, shares of Columbia have experienced a decline of nearly 16%, while the S&P 500 index has seen gains of around 20% in the same period.
