Citi maintains a "Neutral" rating on Columbia Sportswear Co (COLM), with a target price of $81, reflecting a cautious outlook amid challenging market conditions. The stock was trading at $84.39 as of October 21. Citi anticipates Columbia's Q3 EPS to fall short of consensus, projecting $1.29 against a consensus of $1.38, and expects sales to decline by 7.3% versus a consensus of 4.4%. The warm September weather has exacerbated the already tough environment in the outdoor/athletic sector, impacting sales. Citi also foresees management guiding towards the lower end of its FY24 EPS guidance of $3.65-$4.05, down from a previous estimate of $3.92 to $3.77.
The report highlights a significant deceleration in Columbia's e-commerce traffic, with Similarweb data showing a drop to -22.3% in Q3 from -8.3% in Q2. However, international markets like Europe and China remain strong, with positive growth in both regions. Citi notes, "The US business has been choppy, hurt by a challenging backdrop for athletic/outdoor apparel/shoes and cautious wholesale partners." Despite these challenges, Columbia's inventory management appears stable, with expectations for continued inventory reductions in Q3 and Q4.