Columbia Sportswear Q4 Earnings Call Highlights

Columbia Sportswear (NASDAQ:COLM) reported fourth-quarter 2025 results that exceeded management’s guidance range, citing better-than-expected demand in the U.S. that more than offset unseasonably warm weather in many direct international markets. Executives also outlined an initial 2026 outlook that calls for modest sales growth and operating margin expansion despite ongoing pressure from incremental U.S. tariffs.

Leadership changes and 2025 context

Chairman and CEO Tim Boyle opened the call by noting the quarter was the first earnings call for newly appointed co-presidents Joe Boyle and Peter Bragdon, as well as Chief Administrative Officer and General Counsel Rochelle Luther. Boyle said the role changes, announced in November, were part of succession planning.

For the full year 2025, management said net sales rose 1% to $3.4 billion, with strength in international markets largely offset by continued headwinds in the U.S. Boyle said operating margin contracted and earnings declined, citing the impact of “unmitigated tariffs,” brand impairments, and increased marketing spend.

The company highlighted several 2025 themes, including broad-based international growth, early traction for its Columbia brand “Accelerate Growth Strategy,” and the “Engineered for Whatever” marketing platform launched in August. Management also said inventories were “healthy and essentially flat” exiting 2025, inclusive of increased tariff costs in the U.S., and that SG&A growth slowed as spending was optimized to support increased marketing.

Boyle also pointed to capital returns, including $201 million in share repurchases and $66 million in dividends, and said the company ended the year with $791 million in cash and equivalents and no debt.

Fourth-quarter results: Sales down, margins up

In the fourth quarter, net sales declined 2% year over year to $1.1 billion. Management attributed the decrease to a 7% drop in wholesale net sales, partially offset by a 1% increase in direct-to-consumer (DTC) sales. Executives reiterated that earlier-than-planned shipments of Fall 2025 orders shifted some wholesale sales into earlier periods.

Gross margin expanded 50 basis points to 51.6%, driven by what management described as “cleaner inventories,” which reduced promotions, clearance activity, and inventory loss provisions. These benefits more than offset the impact of incremental U.S. tariffs.

SG&A expense rose 3%, reflecting higher DTC expenses and non-recurring costs tied to a profit improvement program, partially offset by cost-reduction efforts. Management said the quarter’s operating income and diluted earnings per share came in above guidance.

Regional performance: U.S. declines, international growth

By geography, U.S. net sales fell 8%. Management said U.S. wholesale was down “high teens%,” reflecting earlier shipment timing from a lower order book, with some impact from inventory supply constraints after Columbia curtailed Fall 2025 inventory purchases following U.S. tariff announcements. U.S. DTC sales declined “low single-digit%,” with brick-and-mortar also down low single digits due in part to the closure of temporary clearance locations and lower mall traffic. The company said it exited the quarter with eight temporary clearance locations, versus 28 a year earlier.

Internationally, management described broad-based growth, discussing performance on a constant-currency basis:

• LAAP net sales increased 10%, with China up low double digits driven by wholesale and e-commerce growth. Japan grew high single digits, supported by wholesale shipment timing. Korea rose low single digits, with management citing share gains and improved digital conversion and marketing efficiency.
• LAAP distributor markets delivered “high teens%” growth, which management tied to a strong Spring 2026 order book.
• EMEA net sales increased 3%. Europe direct sales increased slightly as brick-and-mortar growth offset lower wholesale sales, while warm weather weighed on cold-weather product demand. EMEA distributor sales increased low teens, reflecting Spring 2026 orders.
• Canada increased 3%, driven by improved store productivity and wholesale growth.

Brand commentary: Columbia marketing and mixed emerging brands

On a brand basis, Columbia brand net sales decreased 1%, as international growth was offset by U.S. declines tied to wholesale shipment timing, fewer temporary clearance stores, and softer mall traffic. Boyle called the Amaze Puff collection the top product story for Fall 2025, and said many Amaze consumers in U.S. e-commerce were first-time purchasers of the brand.

Management said the “Engineered for Whatever” campaign was executed across consumer touchpoints including trade outlets, Thursday Night Football, social channels, certain wholesale accounts, and U.S. branded stores. Boyle said the campaign coincided with improvements in brand metrics, including increases in unaided brand awareness and branded search, and shifts in brand perceptions related to “irreverence and style.”

For emerging brands, executives noted year-over-year comparisons were affected by heavy promotion of PFAS-related inventories by Sorel and Mountain Hardwear in the prior-year quarter. Performance by brand was described as follows:

• Sorel net sales decreased 18%, driven by earlier wholesale shipment timing and less clearance activity. Management said full-price demand was healthy and demand exceeded supply for key styles.
• Prana net sales increased 6%, driven by DTC and supported by updated product and “enhanced full funnel marketing.”
• Mountain Hardwear net sales decreased 5%, reflecting lower promotional activity compared with elevated prior-year clearance, though management said underlying trends were healthy with strength in outerwear and fleece.

2026 outlook: Modest growth, tariff-driven margin pressure

For 2026, management projected net sales growth of 1% to 3%. The company said a recently weaker U.S. dollar was expected to be a slight tailwind, contributing 50 to 100 basis points to net sales. With more than 80% of Fall 2026 advanced global bookings in hand, the company projected second-half global wholesale net sales growth of up to a mid-single-digit percentage and said it expects U.S. wholesale to return to growth in the second half, though retailers remain cautious as tariff-related price increases begin to reach the market.

Gross margin is expected to contract 70 to 50 basis points to 49.8% to 50%, primarily due to incremental unmitigated tariff costs. Management said it is pursuing mitigation through price increases, vendor negotiations, resourcing production, and other tactics. The company said it increased U.S. pricing by a high single-digit percentage for both Spring 2026 and Fall 2026, with the stated goal of offsetting the dollar impact of higher tariffs in 2026.

SG&A is expected to rise but at a slower rate than sales growth, reflecting cost reductions while maintaining strategic international investments and elevated marketing. Management guided to operating margin of 6.2% to 6.9% and diluted earnings per share of $3.20 to $3.65, including an estimated $0.10 benefit from foreign exchange.

For the first quarter, management forecast sales down approximately 2.5% to 4%, citing year-to-date softness. The company said SG&A deleverage and lower gross margin are expected to result in diluted EPS of $0.29 to $0.37.

During Q&A, executives said marketing spend rose to 6.5% of sales in 2025 from 5.9% the prior year, and the plan for 2026 is to maintain a similar level (described as about 6.4%). Management also said the heaviest gross margin impact from tariffs should be earlier in the year because prices on fall/winter goods did not increase, while pricing actions are expected to have more effect later in 2026.

Management also addressed order-book dynamics, suggesting there may be limited additional upside to bookings, while noting orders run through the end of March and footwear deadlines are later than apparel. Executives said the company expects international growth to outpace the U.S., and described U.S. wholesale growth in the second half as low- to mid-single-digit, with price increases primarily in the U.S. market. The company said planned U.S. store openings and closures are expected to roughly offset as it rationalizes its fleet.

Boyle closed by reiterating confidence in the “Engineered for Whatever” platform and new product launches, including continued expansion of the Amaze collection and product innovation such as OutDry Extreme, as the company pursues “accelerate” initiatives aimed at driving engagement and profitable growth.

About Columbia Sportswear (NASDAQ:COLM)

Columbia Sportswear Company develops, sources, markets and distributes a wide range of outdoor apparel, footwear and accessories designed for activities such as hiking, skiing, snowboarding and trail running. Its product portfolio includes weatherproof jackets and pants featuring proprietary technologies like Omni-Tech® waterproofing and Omni-Heat® thermal reflective lining, as well as activewear, footwear, hats, gloves and accessories under the Columbia® brand and complementary brands.

Founded in 1938 as the Columbia Hat Company in Portland, Oregon, the company initially focused on headwear before expanding into outerwear in the 1970s with the introduction of the Bugaboo® interchange jacket.