Columbia Sales Dip, But International Growth Surpasses U.S. Struggles

Date of Call: Feb 3, 2026

Financials Results

• Revenue: $1.1B, down 2% YOY
• EPS: $0.33 per diluted share (implied from guidance, not explicitly stated in results)
• Gross Margin: 51.6%, expanded 50 basis points YOY
• Operating Margin: Not explicitly stated in results; guidance for 2026 is 6.2% to 6.9%

Guidance:

• Full year 2026 net sales growth expected in the range of 1% to 3%.
• Full year 2026 operating margin expected to expand to 6.2% to 6.9%.
• Full year 2026 diluted earnings per share expected in the range of $3.20 to $3.65.
• Q1 2026 sales anticipated to be down approximately 2.5% to 4%, with diluted EPS of $0.29 to $0.37.
• Gross margin expected to contract 70 to 50 basis points to 49.8% to 50%.
• Foreign currency expected to be a slight tailwind, contributing 50 to 100 basis points to top line.
• U.S. wholesale business expected to return to growth in the second half.

Business Commentary:

Sales Performance and Geographical Trends:

• Columbia Sportswear reported net sales of $1.1 billion for Q4 2025, a 2% decrease year-over-year. However, international net sales increased by 10%, with notable growth in China, Japan, Korea, and distributor markets.
• The decline in U.S. sales was due to unseasonably warm weather and earlier-than-planned shipments, while international growth was driven by strong wholesale and e-commerce performance, particularly in China and distributor markets.

Inventory and Supply Chain Management:

• The company reported that inventories were healthy and essentially flat as they exited 2025, despite increased tariff costs.
• This was achieved by curtailling fall '25 inventory purchases as a precautionary measure upon U.S. tariff announcements and optimizing spending.

Marketing and Brand Strategy:

• Columbia's Engineered for Whatever campaign, launched in August 2025, drove robust consumer engagement and increased unaided brand awareness and branded search.
• The campaign's success was due to differentiated marketing and new product collections that resonated with younger consumers, indicating the effectiveness of the ACCELERATE Growth Strategy.

Financial Outlook and Tariff Mitigation:

• For 2026, Columbia expects net sales growth of 1% to 3%, with a projected operating margin expansion despite ongoing headwinds from incremental U.S. tariffs.
• The company is mitigating the impact of tariffs through price increases, vendor negotiations, and production resource optimization, aiming to restore product margins to historical levels.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated, 'We're pleased to have delivered net sales and profitability exceeding our guidance for the fourth quarter.' He also noted, 'I'm encouraged with continued growth internationally' and that 'the Columbia ACCELERATE Growth Strategy is resonating with consumers.' Management expressed being 'very encouraged' with order books and 'excited about the possibilities for the business.'

Q&A:

• Question from Robert Drbul (BTIG): Could you talk about how the business has developed from December, January into February, and your updated thoughts on the order book and trends?
  Response: Bookings have been strong; the company was conservative in the early sales period for Spring '26 due to tariff uncertainty. Current weather is great, inventory is low, and there is excitement around new product acceptance and marketing impact.

• Question from Robert Drbul (BTIG): On brand advertising and marketing spend, are you at the right level, and can you provide more metrics on brand equity progress?
  Response: Management believes they could spend more but are currently in the right spot; marketing spend was 5.9% in '25 and is planned to be maintained at ~6.4% in '26. They have seen measurable increases in brand awareness and branded search.

• Question from Laurent Vasilescu (BNP Paribas): Regarding Eddie Bauer's potential store closures, is there any overlap, and can you quantify the potential opportunity?
  Response: There is some store overlap; Columbia expects to gain share as Eddie Bauer exits centers, though the exact amount is uncertain. Eddie Bauer is positioned below Columbia's pricing.

• Question from Laurent Vasilescu (BNP Paribas): On gross margin, can you walk through the cadence of the ~$100M in unmitigated tariff costs for fiscal year '26?
  Response: Tariff impact is higher in the front part of the year, especially Q1, as price increases on fall/winter goods did not occur until later. Mitigation via price increases will have a greater effect in the latter part of the year.

• Question from Peter McGoldrick (Stifel): What is the health of the U.S. market pulling out one-time items, and what is embedded in the outlook for U.S. growth?
  Response: The annual outlook includes a softer first half and stronger second half for the U.S. wholesale business, with expectations for return to growth in the second half. Q4 '25 U.S. wholesale decline was driven by shipment timing and inventory curtailment.

• Question from Peter McGoldrick (Stifel): On tariff mitigation, can you detail the strategy and pathway to offset tariffs at the gross profit dollar line?
  Response: Primary mitigation is high single-digit price increases for spring and fall '26; additional actions include tariff cost sharing with vendors and some production re-sourcing. The goal is to restore product margins to historical levels long-term.

• Question from Mitchel Kummetz (Seaport Research): Given current inventory and order book levels, is there opportunity for the order book to improve over the next few months?
  Response: Retailers are still cautious on tariff elasticity; there might be a small lift (1-2%) as they reassess. Footwear order deadlines are later, so there is more opportunity there. The order book is open through March.

• Question from Mitchel Kummetz (Seaport Research): On the operating margin guide, is there something unique like licensing line items affecting the reconciliation?
  Response: The primary year-over-year non-recurring item is the $29M impairment charge taken in '25 on prAna and Mountain Hard Wear, which did not recur in '26, impacting the comparison.

• Question from Tracy Kogan (Citigroup): How does the mid-single-digit growth order book break out by region and the U.S., and what does it look like in units with price increases?
  Response: International businesses are expected to outperform the U.S.; U.S. wholesale growth is expected to be low to mid-single-digit. All brands are expected to grow, with emerging brands growing faster than Columbia. Price increases are primarily in the U.S.

• Question from Mauricio Serna Vega (UBS): Could you explain better conversion of fall 2025 U.S. wholesale orders mentioned in the CFO presentation?
  Response: Better conversion was driven by lower cancel rates, higher reorder rates, and strong sell-through due to product demand and the Engineered for Whatever campaign. It also resulted from curtailing inventory purchases, leading to demand exceeding supply in some cases.

• Question from Mauricio Serna Vega (UBS): What growth do you expect in U.S. wholesale for the second half, and are there new store openings planned for U.S. DTC?
  Response: U.S. wholesale growth is expected to be low single-digit to mid-single-digit in the second half. New U.S. store openings are modest and will roughly offset closures as the company rationalizes its fleet.

• Question from Tom Nikic (Needham): How did sell-through compare to sell-in for U.S. wholesale in the fall, and does the improved order book imply better sell-through?
  Response: Sell-through was quite good despite slightly lower sell-in, indicating confidence in the fall '26 order book. Inventory in the marketplace is clean, and the order book was largely taken before current warm weather impacted demand.

• Question from Tom Nikic (Needham): With U.S. wholesale order book up and high single-digit pricing, units are down slightly. Is this retailer caution, and what's the upside potential?
  Response: Retailers are cautious on price elasticity, leading to lower units. Weather is the most impactful variable; upside potential exists if consumer demand remains resilient and inventories stay lean.

Contradiction Point 1

Gross Margin Outlook and Mitigation Strategy

Guidance shifts from confidence in pricing offsetting tariffs to acknowledging margin contraction.

How will the $100 million impact from unmitigated tariffs affect gross margins across fiscal 2026's upcoming quarters? - Laurent Vasilescu (BNP Paribas)

2025Q4: Gross margin is expected to contract 70-50 bps to 49.8%-50% for the full year... There is room in the margin guide for consumer reaction uncertainty. - [Jim Swanson](CFO)

How confident are you in offsetting the $160M unaddressed tariff impact next year with high single-digit price increases? - John Kernan ([EB] [TD])

20251031-2025 Q3: Price increases, vendor negotiations, and resourcing production will mitigate the dollar impact of tariffs. Confidence is high. - [Timothy Boyle](CEO) and [Jim Swanson](CFO)

Contradiction Point 2

U.S. Wholesale Performance and Expectations

Expectations for U.S. wholesale growth shift from uncertainty to specific, optimistic guidance.

Will U.S. wholesale return to growth in the second half, and how will U.S. DTC store openings and their cadence progress? - Mauricio Serna Vega (UBS Investment Bank)

2025Q4: U.S. wholesale for Fall 2026 is up low single to mid-single digits. - [Jim Swanson](CFO)

What was the H1 2026 wholesale revenue increase magnitude in the U.S. and its price elasticity? - Laurent Vasilescu (BNP Paribas)

20251031-2025 Q3: More detail will be provided in February. - [Timothy Boyle](CEO) and [Jim Swanson](CFO)

Contradiction Point 3

Gross Margin Guidance and Tariff Mitigation Strategy

Guidance on gross margin contraction and tariff offsets appears inconsistent.

How will the $100 million impact from unmitigated tariffs affect gross margin over the next few quarters in fiscal 2026? - Laurent Vasilescu (BNP Paribas)

2025Q4: Gross margin is expected to contract 70-50 bps to 49.8%-50% for the full year... The company is offsetting with high single-digit price increases for Spring and Fall 2026, tariff cost sharing with vendors, and production resourcing. - [Jim Swanson](CFO)

What's the outlook for gross margin and SG&A in Q4 and future quarters considering tariffs and pricing? - Tom Nikic (Needham & Company)

2025Q3: The primary lever for future margin improvement is offsetting incremental tariffs through pricing. - [Jim Swanson](CFO)

Contradiction Point 4

U.S. Wholesale Performance Outlook

Expectations for U.S. wholesale order book growth contradict between quarters.

Will U.S. wholesale return to growth in the second half, and what is the outlook for U.S. DTC store openings and cadence? - Mauricio Serna Vega (UBS Investment Bank)

2025Q4: U.S. wholesale for Fall 2026 is up low single to mid-single digits. - [Jim Swanson](CFO)

Why was the full-year revenue guide reduced by 1% and can you explain the 2026 wholesale growth drivers and demand elasticity with high single-digit price increases? - Laurent Vasilescu (BNP Paribas)

2025Q3: For 1H 2026, Timothy Boyle noted flat-to-up wholesale growth is driven by stronger international performance, while the U.S. faces challenges due to price increases and retailer caution. - [Timothy Boyle](CEO)

Contradiction Point 5

Tariff Impact & Mitigation Strategy

Contradiction on the company's plan to absorb tariff costs and the associated financial impact.

How will the $100 million impact from unmitigated tariffs affect gross margin across upcoming quarters in fiscal 2026? - Laurent Vasilescu (BNP Paribas)

2025Q4: The company is offsetting with high single-digit price increases... There is room in the margin guide for consumer reaction uncertainty. - [Jim Swanson](CFO)

How will these costs trend through fiscal 2026? - John David Kernan (TD Cowen)

2025Q2: The company is absorbing the lion's share of the tariff impact in FY 2025 ($35M-$40M). For FY 2026, the company is not planning any finished product imports from China... - [Jim Swanson](CFO)