Why This Columbia Sportswear Analyst Is No Longer Bullish

Columbia Sportswear Company COLM faces a more challenging near- and medium-term outlook than previously anticipated, according to BofA Securities.

The Columbia Sportswear Analyst: Alexander Perry downgraded Columbia Sportswear from Buy to Neutral and lowered the price target from $100 to $90.

The Columbia Sportswear Thesis: Warmer weather and lower snowfall could hurt holiday outerwear sales, Perry said in the Wednesday downgrade note.

Rival Dicks Sporting Goods Inc DKS also indicated lower sales of cold weather categories in November, while warmer weather is also “delaying major ski resort opening dates by 10 days on avg. vs. last year,” the analyst noted.

“We see gross margin pressure in F4Q and F1H20 as slower sell-through likely results in higher promotional activity given COLM’s elevated inventory levels. We also see lower wholesale reorder volumes for F4Q and lower 2021 wholesale orders vs. expectations as retailer order books are based on current season sell through,” he said.  

“Current weather patterns are similar to 2015 and COLM 2016 revenue decelerated ~9 pts,” Perry said.

BofA reduced its earnings estimates for the fiscal fourth quarter and full year from $1.17 per share to 99 cents and from $3.40 per share to $3.35, respectively.

COLM Price Action: Shares of Columbia Sportswear were down 2.88% at $85.34 at last check Wednesday.