Columbia Sportswear Company COLM is working to revitalize its brand and capture a younger, more active audience through its new ACCELERATE growth strategy. The company is targeting key areas like product innovation, enhanced consumer experiences and improved brand positioning to drive growth. Despite these upsides, the brand faces challenges, including rising operational costs and pressures in its domestic U.S. market. However, its cost-saving initiatives are impressive.
Columbia Sportswear has launched a new growth strategy called ACCELERATE, designed to elevate the brand and attract younger, more active consumers. This strategy focuses on several consumer-centric shifts, including refining the company’s segmentation framework to better identify growth opportunities. While continuing to serve its loyal customer base with outdoor essentials, the company aims to target the largest and fastest-growing segment of the outdoor market: younger, active consumers. Management is enhancing consumers’ perception of the brand through a refreshed creative strategy that brings its unique brand personality to life. The third focus of Columbia Sportswear’s strategy is centered around product innovation.
On its last earnings call, management highlighted that it is driving product innovation and brand growth by expanding its premium Titanium product line and launching new collections like the Amaze Puff insulated jacket and Rock Pant for Fall 2025. The company is also enhancing its Omni-MAX footwear collection, offering lightweight, ultra-comfortable performance.
To strengthen brand visibility, COLM is increasing targeted marketing investments to 6.5% of sales in 2025, up from 5.9% in 2024, while collaborating with strategic retail partners to enhance in-store experiences. In its direct-to-consumer (DTC) business, Columbia Sportswear is optimizing Columbia.com for a seamless online shopping experience and expanding its brick-and-mortar footprint with select high-traffic branded stores in North America, reinforcing its premium market positioning.
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Columbia Sportswear is on track to enhance operational efficiency and protect profits through its multi-year Profit Improvement Program. The company realized cost savings of $90 million in 2024 through its Profit Improvement Program. The program is structured around four key areas of focus, each designed to optimize resources and streamline operations.
Management aims at generating operational cost savings, with a sharp focus on eliminating expenses associated with excess inventory, as well as enhancing efficiency across the supply chain and distribution network. The company targets organizational cost savings through a workforce reduction plan. Management is also committed to operating model improvements, focusing on streamlining decision-making processes and enhancing operating efficiency to drive strategic priorities. Finally, the cost-saving initiative encompasses efforts to cut indirect or non-inventory spending through strategic sourcing and vendor rationalization.
Despite growth across several international markets, Columbia Sportswear’s U.S. net sales declined by 1% in the fourth quarter of 2024. The U.S. wholesale business saw a low-single-digit percentage decrease, driven by a lower Fall 2024 order book and challenging trends in the outdoor category. U.S. DTC net sales also fell by a low-single-digit percentage, with a decline in e-commerce sales partially offset by modest growth in brick-and-mortar stores.
Columbia Sportswear has been battling rising selling, general and administration (SG&A) expenses for a while now. In the fourth quarter, the company’s SG&A expenses were up 6% to $430.6 million from $404.8 million reported in the year-ago quarter. As a percentage of sales, the same increased 110 basis points (bps) to 39.3%. The most significant changes in SG&A expenses were increased DTC and incentive compensation costs. For 2025, SG&A expenses, as a percentage of net sales, are anticipated to be in the range of 43.4-44.1%, up from the 42.9% reported in 2024. The increase in such costs can be attributed to higher marketing spending, elevated incentive compensation and DTC store expansion.
Columbia Sportswear is actively pursuing growth through its ACCELERATE strategy. While the company is making notable strides in cost-saving initiatives and expanding its global presence, it faces ongoing challenges, including rising operational costs. As management continues to adapt and execute its strategy, its ability to overcome these hurdles will determine its long-term success in a competitive market. At present, COLM carries a Zacks Rank #3 (Hold).
The company’s shares have dropped 7% in the past three months compared with the industry’s decline of 12.5%.
Some better-ranked stocks are Boot Barn Holdings, Inc. BOOT, Deckers Outdoor Corporation DECK and lululemon athletica inc. LULU.
Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and revenues indicates growth of 21.4% and 14.9%, respectively, from the fiscal 2024 reported levels. BOOT delivered a trailing four-quarter average earnings surprise of 7.2%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21.2% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.
lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It has a Zacks Rank of 2 at present. LULU delivered a 6.7% earnings surprise in the last reported quarter.
The consensus estimate for lululemon’s fiscal 2025 earnings and revenues indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 reported levels.
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