COLUMBIA SPORTSWEAR CO Q3 FY2024 earnings call

• Introduced ACCELERATE growth strategy focusing on consumer segmentation, brand perception elevation, product innovation, U.S. marketplace position, and integrated marketing. • Third quarter net sales $932 million, down 5% YOY; gross margin expanded 150 basis points to 50.2%; SG&A up 3%. • International performance: L A AP up 18%, China up low 20% with strong wholesale and DTC, Japan double-digit, Korea mid-single-digit. • Brand activations: China hiking event, collaboration with Disney and Star Wars, prAna order book positive for Spring 2025.

Columbia Brand: Net sales decreased 1%, with U.S. net sales down 10% (mid-teens wholesale decrease, DTC flat); international regions: L A AP net sales up 18%, China up low 20%, Japan double-digit, Korea mid-single-digit. Mountain Hardwear: Net sales increased 2% driven by DTC growth. prAna: Net sales decreased 7%, but leadership is working on activation, marketing, and talent recruitment. SOREL: Net sales decreased 39% due to lower orders and promotions.

• Reduced net sales outlook to 3%-5% decline for the year. • Gross margin expected to expand 40-90 basis points. • SG&A expected 42.8%-43% of sales, operating margin 7.7%-8.4%. • Slightly raised diluted EPS guidance to $3.70-$4.05. • Spring 2025 wholesale order book shows mid-single-digit growth in first half, with growth across Columbia, prAna, and Mountain Hardwear in U.S. and international markets.

• External risks including outdoor industry and U.S. consumer headwinds, weather, geopolitical conflicts, supply chain disruptions, and upcoming U.S. elections. • Potential impact on consumer demand and operations.

Q: On the ACCELERATE growth strategy, how to reach younger active consumers domestically?

A: Believes younger consumers are already in the brand, plans to use new marketing leadership and creative agency to return to differentiated, humorous brand personality to attract them.

Q: How is the U.S. wholesale channel?

A: Channels in good shape, customers cleaned inventories, waiting for cold weather to supercharge; proper position now with customers having cleaned inventories.

Q: Follow-up on 1H 2025 wholesale growth?

A: Business more balanced, strong improvement in U.S. and international markets, with US Colombia following overarching first half expectation.

Q: On margins and ACCELERATE plan?

A: Margins planned strong, marketing spend to increase and be more efficient; profit improvement program on track to $90 million cost savings.

Q: Catalyst for improved outdoor category spending?

A: Better marketing of superior products, greater emphasis on footwear and underperforming categories.

Q: Exposure to China tariffs?

A: Very small percentage of merchandise sourced from China, strategically moved out, concerns about tariffs but adept at managing globally.

Q: Gross margin expansion in 4Q?

A: Due to cleaner inventory, lower close-out sales, but still promotional environment baked into guidance.

Q: Weather impact on sales?

A: Warm start, waiting for cold weather to spur sell-through; uncertainty around weather impacts guidance.

Q: SOREL brand outlook?

A: Unusual product and brand, looking for green shoots with focus on men's product and female shopper approach.

Q: Wholesale outlook into 1H 2025?

A: Continued improvement with focus on differentiation in PFG fishing product and store appearance.