Analyst Downgrades Columbia Sportswear Ahead Of Q3 Earnings Next Week: What's Going On?

Seaport Global analyst Mitch Kummetz downgraded Columbia Sportswear Co COLM to Neutral from Buy.

The analyst is bearish on the stock as they "don't like the near-term setup," given a slow start to the fall & winter season, expected continued warm weather (strong El Nino conditions), and likely weak fall 2024 orders as full-price sell-through typically drives future sell-in. 

Kummetz estimates revenue of $995.4 million (vs. consensus $994.8 million) and EPS of $1.70 (vs. $1.65 street view) for Q3 2023. 

The analyst sees slightly more risk in the fourth-quarter (Q4) of fiscal 2023 and implied the company's guidance for sales and OM to be down Y/Y, based on cautious reorder and replenishment expectations. 

Consequently, the analyst lowered Q4 estimates for revenue and EPS to more than $1 billion (from $1,115.6 billion, vs. consensus: $1,120.6 billion) and $1.93 (from $2.09 prior vs. $1.99 street view), respectively. 

For 2023, Kummetz estimates revenue of more than $3.5 billion and EPS of $4.50 (vs. street view of $4.52). 

Also, the analyst says in case fall 2024 prebooks are weak, sales are expected to fall below the annual 9%-11% growth (in line with COLM's FY25 plan), and SOREL will probably miss the 20%-22% expected annual growth.

Notably, the company guided for revenue and EPS of $995 million to $1,010 million and $1.60 to $1.70, respectively, for Q3 FY23. Also, COLM sees net sales of $3.53 billion to $3.59 billion and EPS of $4.40 to $4.65 for FY23.

COLM expects to release Q3 2023 results on Oct. 26, 2023.

Price Action: COLM shares are trading lower by 1.27% at $72.08 on the last check Friday.