Columbia Sportswear Co (COLM) reported a mixed Q4 performance, with sales exceeding expectations but EPS falling short due to higher SG&A costs, including unexpected severance charges, and increased taxes. Sales rose by 3%, surpassing the consensus of 1.9%, driven by strong holiday sales. However, EPS guidance for FY25 is below consensus, projected at $3.80-$4.15 compared to $4.32, with a $0.30 foreign exchange headwind. Citi has adjusted its price target to $80 from $83, citing lower sales and margin forecasts.
The report highlights a challenging macroeconomic environment, with Columbia's sales and margin trends remaining volatile. The company anticipates a 1-3% sales decline in Q1, impacted by timing shifts and tough comparisons, while inventory levels are lean. Management plans to open 12 new full-price stores in the US in FY25, while closing most temporary outlet locations, which could pose a 150bps headwind to sales growth.
Citi's investment thesis remains neutral, noting, "We believe the risk/reward is balanced," as Columbia navigates a competitive landscape with controlled inventories. The valuation is based on a DCF analysis with a 12% discount rate and a 7x terminal multiple, implying a 12x FY25E EBITDA.
Columbia Sportswear was trading at $78.55, down 8.51% from the previous close.