Columbia Sportswear (NASDAQ:COLM) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://investor.columbia.com/news-events/ir-calendar/detail/5842/columbia-sportswear-1st-quarter-2026-earnings-release
Summary
Columbia Sportswear Co reported first-quarter net sales of $779 million, roughly flat year-over-year, with international business growing 16% and US sales declining by 10%.
The company highlighted the success of its Accelerate Growth strategy, leading to increased fall 2026 orders and strong international performance, particularly in Europe and EMEA distributor markets.
Gross margin contracted by 20 basis points to 50.7%, influenced by a 310 basis point impact from unmitigated tariffs, although there were some price increases to offset this.
The company’s marketing efforts, including partnerships and campaigns, have been focused on engaging younger consumers, with notable success in social media reach.
Columbia Sportswear Co maintained its full-year outlook for net sales growth of 1-3% and revised its gross margin guidance to 50.3-50.5%, expecting operating margin to be between 6.7% and 7.5%.
Full Transcript
OPERATOR
Greetings. Welcome to The Columbia Sportswear First Quarter 2026 Financial Results Conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Matt Tucker. You may begin.
Matt Tucker (Moderator)
Good afternoon and thanks for joining us to discuss Columbia Sportswear Company’s first quarter results. In addition to the earnings release, we furnished an 8-K containing a detailed CFO commentary and financial review presentation explaining our results. This document is also available on our investor relations website, investor.columbia.com with me today on the call are Chairman and Chief Executive Officer Tim Boyle, Co Presidents Joe Boyle and Peter Bragdon, Executive Vice President and Chief Financial Officer Jim Swanson and Executive Vice President, Chief Administrative Officer and General Counsel Rochelle Luther. This conference call will contain forward looking statements regarding Columbia’s expectations, anticipations or beliefs about the future. These statements are expressed in good faith and are believed to have reasonable basis. However, each forward looking statement is subject to many risks and uncertainties and actual results may differ materially from what is projected. Many of these risks and uncertainties are described in Columbia’s SEC filings. We caution the forward looking statements are inherently less reliable than historical information. We do not undertake any duty to update any of the forward looking statements after the date of this conference call to conform the forward looking statements to actual results or to changes in our expectations. I’d also like to point out that during the call we may reference certain non GAAP financial measures including constant currency net sales. For further information about non GAAP financial measures and results, including a reconciliation of GAAP to non GAAP measures and an explanation of management’s rationale for referencing these non GAAP measures, please refer to the Supplemental Financial Information section and financial tables included in our earnings release and the appendix of our CFO commentary and financial review. Following our prepared remarks, we will host a Q and A period during which we will limit each caller to two questions so we can get to everyone by the end of the hour. Now I’ll turn the call over to Tim.
Tim Boyle (Chairman and Chief Executive Officer)
Thanks Matt and good afternoon. In the first quarter we’re pleased to have again delivered net sales and profitability exceeding our quarterly guidance driven by early spring 202026 wholesale shipments and better than expected demand in Europe and the US as well as disciplined expense management. Our international business, which represents over 40% of our sales, continues to lead our growth up 16% year over year, while our U.S. business remained challenged this quarter and declined 10%. The decrease was largely anticipated based on a decline in our advanced spring 2026 wholesale orders. This also reflected our decision last year to reduce the supply of certain winter products as a precautionary measure in response to US Tariff announcements. Cleaner inventories also drove less clearance sales. That said, I’m encouraged by signs of growing momentum in the U.S. including an increased fall 2026 order book, which we expect to enable the wholesale business to return to growth in the second half. It’s increasingly clear to me that the Columbia accelerate growth strategy is resonating with consumers. A major highlight for the Columbia brand in Q1 was the Winter Olympics, where the US curling team thrilled fans at home and around the world, capturing a historic silver medal in mixed doubles, all while competing in distinctive and iconic Columbia kits. This generated billions of views around the world for one of the most watched Olympic events, along with more than 25 million views of Columbia’s US curling jerseys on social media. Additionally, longtime Columbia and Team USA freestyle skiing athlete Alex Ferreira reached the pinnacle of his sport, claiming the gold medal in the men’s halfpipe. Alex’s performance and victory further demonstrate that Columbia’s products meet the highest standards of elite winter athletes, and he has continued to inspire fans and drive energy for the Columbia brand since returning home. He’s been celebrating at events such as the recent US Ski and Snowboard Nationals in Aspen, Colorado. The Columbia brand also garnered outsized attention at another sporting event of major importance in Q1, crashing the tailgate party at the Big Game in Santa Clara with Nature Calls, the only beer that uses bear scat in the brewing process. Columbia sent two bear ambassadors to the game and they made their presence known, appearing four times on the stadium’s Jumbotron and even making it on the live TV broadcast. This impact was enhanced by influencer partnerships with sports personalities around the event. Social media content from the game itself generated over 9 million views on social media alongside hundreds of news articles. We’re excited that the return to our irreverent roots also continues to see recognition from the media and outdoor community. The Engineered for Whatever campaign was recently awarded a Gold Clio Award, one of the most respected international awards in advertising, marketing and communication for the launch of our Expedition Impossible Challenge, the that we spoke to you about last quarter, which has generated over 10 million organic views on social media. Congrats to the team and stay tuned for more exciting things ahead. Our engineering excellence was also reinforced in Q1 with several product awards from multiple media outlets among many examples, a highlight included our women’s Arcadia 2 jacket and our men’s watertight 2 jacket, both being featured in the New York Times Wirecutter Guide for Best Everyday Rain Jackets, a testament to the durability, performance and value we build into every design. Our newer product collections and marketing activations launched under the Accelerate Growth strategy and engineered for Whatever campaign, are increasingly resonating with consumers. This is evidenced by improvements in organic search interest, direct site traffic and customer acquisition rate for the first quarter. Another first quarter highlight for the Columbia brand is the momentum we see building in PFG performance fishing gear. As a reminder, we have a long and deep heritage with PFG as pioneers of the fishing, apparel and footwear category. As a brand known for high performance, authenticity and fun, PFG is inspiring the next generation of anglers, supported by investments in sales and marketing, including an always on social media strategy, a refreshing ground game and the addition of new fishing athletes and ambassadors to the PFG roster. A key product highlight in the quarter was the Bahama Shirt, long known for keeping anglers cool and comfortable and also widely known as the unofficial uniform of country music superstar Luke Combs. This year we’re celebrating the Bahamas 30th anniversary and expect sales of the Bahamas to grow by double digit percent for the spring 2026 season. The celebration will continue beyond Q1 with additional marketing investments and and collaborations with authentic artists and influencers to drive energy for this iconic style. Another PFG highlight on the footwear side is the Dry Tortuga Boot which saw sales more than triple in Q1. We believe it’s the most rugged, durable and comfortable fishing boot on the market and delivers attractive styling that’s a standout in the fishing category. Looking ahead, we’re excited about the potential for PFG to build on this recent momentum and take share in this growing market, particularly with younger consumers who are increasingly adopting the sport and lifestyle of fishing. Now I’ll provide an update on our fall 2026 order book, which is another indicator of the traction we’re gaining with our Accelerate strategy. Since our last update, the order book continued to trend positively, reinforcing our expectations for mid single digit percent wholesale growth globally in the second half. While the overall growth is encouraging, the dimensions of that growth provide further signals of progress under the Accelerate strategy. As a reminder, we launched Accelerate roughly two years ago and given product development timelines, we’re now increasingly seeing the new products created under this strategy hit the market, driving growth in the order book and representing an increasing share of Columbia brand Sales in addition to US growth in the fall 2026 order book, we’re excited to see double digit percent sales growth in Columbia’s women’s business and in footwear at a product level. On a global basis, we’re seeing outsized growth in our most premium and innovative products and platforms, including double digit percent growth or better in our Titanium product and our Omniheat Arctic technology, as well as meaningfully scaling of our new mtr fleece. Our two major product launches from fall 25, the Amaze and ROC lines will continue to scale with orders up more than double versus the prior year. We’re also thrilled to have a maze featured in triple the number of Dick’s sporting his location this fall as compared to last year Turning to the Current Operating Environment While we remain focused on execution and what we can control, the operating environment remains highly dynamic with major external events affecting our business and since we last spoke three months ago, particularly involving tariffs in the US and the conflict in the Middle East. First let me address the tariff situation. Following the US Supreme Court’s tariff ruling in late February, the US administration implemented a 10% universal tariff under Section 122, which is set to expire in July. Our prior full year Guide Year Outlook, which was issued prior to the Court’s ruling, included unmitigated incremental tariff impacts of approximately 300 basis points on our gross margin. We are now expecting a slight improvement based on the 10% universal tariffs extending through July and the assumption that the US Administration will implement new tariffs at or near IPA tariff rates following the expiration of the section 122 rates. We now expect an approximate 200 basis point unmitigated headwind from tariffs to our full year gross margin outlook. As a reminder, we made the decision last year to absorb nearly all of the fall 25 impact of incremental tariffs and not raise prices. The Court’s ruling also required the refund that is the tariffs already paid. As of the date they were terminated, we had paid a total of approximately $80 million in IEEPA tariffs, approximately 55 million of which has been recognized through cost of sales, with the remainder residing in inventory on our balance sheet as of the end of the first quarter. We have already taken action by submitting our refund claims, and we fully intend to pursue every avenue available to secure the refunds that we are owed. We have not yet recognized any benefit of refunds in our financial statements, nor have we updated our financial outlook for such refunds. Turning now to the ongoing conflict of the Middle east which broke out in late February. First, my thoughts go out to any of our customers, employees, business partners and their loved ones who may be directly impacted by this conflict. Their safety and security is always our first and primary concern. As far as our business is concerned, this conflict has already triggered order cancellations and forecasted order reductions for certain Middle east distributor markets. While these impacts have not meaningfully changed our full year financial outlook to date, the prolonged nature of the conflict poses further risks. Macroeconomic and supply chain risks are among the areas that could have a more profound effect. These risks, including the potential softening of consumer demand driven by the ongoing surge in energy prices and the resulting inflationary pressures on consumers wallets. Increased oil prices are expected to put pressure on our product input costs with the exposure beginning and in our spring 27 season. Further, the conflict’s impact on global supply chains could result in late arriving inventory, increased freight and logistics costs and potential order cancellations. Due to the high degree of uncertainty associated with the ongoing conflict and resulting impact on the global economy and supply chains, we are not able to incorporate these risks and into our updated 202026 financial outlook. Despite these external factors, I am confident in our ability to navigate these risks given our highly experienced leadership team, flexible and resilient global supply chain fortress balance sheet and high quality products that provide a strong value proposition to the consumer. Turning back to our first quarter financial performance, net sales were roughly flat year over year at 779 million reflecting a balanced performance across channels with both DTC and wholesale coming in flat to the prior year. Gross margin contracted 20 basis points to 50.7% driven by 310 basis points in incremental unmitigated tariff costs partly offset by mitigation actions including targeted price increases. SGA expenses increased nearly 1% reflecting higher DTC expenses, partially offset by lower enterprise technology and supply chain personnel expenses, reflecting cost reductions actions which were taken last year. This overall performance resulted in diluted earnings per share above our guidance range. Inventories remain healthy and are relatively flat versus the prior year in dollar terms, with units down approximately 11% year over year. We remain steadfast in our commitment to driving shareholder value returning meaningful cash to shareholders, including $150 million in share repurchases during the first quarter which resulted in the retirement of 2.5 million shares, an opportunistic acceleration of activity related relative to recent periods. We continue to maintain our fortress balance sheet, exiting the quarter with 535 million in cash and short term investments and no debt. Looking at net sales by geography. US net sales decreased 10% but performed better …
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