Columbia Sportswear beat third-quarter earning expectations with its strongest quarter to date, raising its full-year financial outlook.
The company reported third-quarter net income of $100.2 million, an increase of 14 percent. Third-quarter earnings per share were $1.44 for the quarter ending Sept. 30, beating analysts’ expectations of $1.27.
As a result, Columbia Sportswear upped its full-year financial outlook, with 2018 net income expected to be between $240 million and $244 million, compared with its previous estimate of $223 million to $230 million. That’s an 11 to 11.5 percent growth rate, compared with the previous estimate of 9 to 10.5 percent.
“These results and updated outlook demonstrate that our shift to become a more brand-led and consumer-focused organization is working,” president and chief executive officer Tim Boyle said in a statement, calling it “the strongest quarterly and year-to-date results in our company’s history.”
The company, he said, will continue to invest, including in its digital channels and direct-to-consumer operations.
The stock closed up 1.73 percent Thursday to $87.70, and continued to rise after the market close.
Christopher Svezia, senior vice president of equity research at Wedbush Securities, said the apparel company is on a yearlong high. “And it’s not just attributable to one single thing; it’s pretty broad based on both revenues and earnings,” he said.
The factors include the company’s success in its apparel, fishing gear and footwear lines; strong sales internationally, including in Europe, South Korea and China, and increased profits from the company’s direct-to-consumer model in North America, he said.
In fact, Svezia said the concerns over trade wars and decreased spending in China aren’t really an issue.
“So far, we haven’t heard or seen any issues about China from other companies who have reported,” Svezia said, including Kering and Moncler, both of which reported this week.
“Their product resonates really well with the consumer,” said Michael Kawamoto, a research associate at D.A. Davidson & Co., who expects the momentum to continue.
The closure of Sports Authority in 2016 and numerous department stores in 2017 was an added headwind for Columbia Sportswear, as it scrambled to reorganize distribution channels, Kawamoto said.
But the analyst said the impact was only near-term. “You have less of that now,” he said. “So you have a cleaner inventory environment and inventory picture.”
In addition, the company’s attention to its digital presence is another growth driver. Svezia estimates that digital sales make up about 10 percent of Columbia’s total sales. And with the continued rise of ath-leisure and social media, making people want to show off their summer apparel year-round, the company has successfully been able to “broaden their seasonality of products,” he said.
“It used to be apparel that one would buy in warmer climates,” he said. “Now people are wearing [the clothes] for casual events, for going out.”