Columbia Sportswear (COLM – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst John Kernan from TD Cowen maintained a Hold rating on the stock and has a $89.00 price target.
John Kernan has given his Hold rating due to a combination of factors affecting Columbia Sportswear. The company faces competitive pressures in both footwear and apparel segments, alongside rising inflationary costs in selling, general, and administrative expenses. Although Columbia’s brand positioning remains stable and its outerwear preference is strong, the sector sentiment is cautious due to broader consumer concerns and potential tariff issues related to Vietnam, a significant sourcing location.
Columbia’s initial guidance for FY25E fell short of consensus expectations, with modest sales growth and EPS projections partly due to increased SG&A expenses. The company’s gross margin is near its historical peak, making further margin improvement reliant on accelerating top-line growth. Additionally, Columbia’s cost structure, particularly outside of brand building and direct-to-consumer investments, requires enhancement as the EBIT margin has declined since FY19, influenced by the wholesale channel’s economic challenges and a shift in contribution margin from the U.S. to international markets.