Columbia Sportswear Sinks 17% After Hours On Weak 3Q Earnings

Shares of Columbia Sportswear plunged 16.9% in the extended trading session on Thursday as the company lagged analysts’ third-quarter expectations and issued a disappointing outlook for the fourth quarter.

Columbia Sportswear’s (COLM) 3Q sales declined 22.7% year-over-year to $701.1 million, significantly lagging the Street consensus of $767.1 million. A 28% decline in the wholesale business and a 10% fall in direct-to-consumer sales had an adverse impact on 3Q revenue.

Direct-to-consumer sales declined as a 55% growth in e-commerce sales was not enough to offset the weakness in brick-and-mortar stores. The company’s 3Q EPS fell 46.3% to $0.94 and missed analysts’ estimate of $1.16 due to weak margins and dismal sales.

Coming to 4Q guidance, Columbia Sportswear expects its net sales to decline in the range of 8% to 11% to $850 million to $880 million. It anticipates EPS between $1.07 to $1.32 in 4Q20 compared to $1.67 in 4Q19. (See COLM stock analysis on TipRanks)

Following the print, Guggenheim Securities analyst Robert Drbul reiterated a Buy rating for Columbia Sportswear with a $105 price target saying “COLM remains committed to growing its omni-channel customer experience and rolled out its new X1 platform this quarter. We believe COLM’s continued focus on digital development contributed to 55% YoY e-commerce growth during the quarter and new customer purchases grew 65% YoY. We think the company is poised to benefit from retailers chasing into high-demand inventory, such as COLM’s new product innovations.”

“While the quarter fell short of expectations, we believe secular tailwinds (increasing outdoor activity, casualization, and cold weather) are in place to drive growth in 1H21E and continue sequential profitability gains. We believe COLM is one of the best positioned in our coverage to benefit from these trends,” added Drbul.

With shares down 3.9% year-to-date, the average analyst price target of $97.60 indicates a modest upside potential of 1.4% in the coming months. The Street has a cautiously optimistic outlook on Columbia Sportswear with a Moderate Buy consensus based on 2 Buys versus 4 Holds.