COLUMBIA SPORTSWEAR CO Q4 FY2024 earnings call

• International business shows momentum and North America is returning to growth. - The Profit Improvement Program delivered $90 million in cost savings, targeting $125 million to $150 million in annual cost savings by 2026. - Introduced the ACCELERATE Growth Strategy with refreshed marketing, enhanced product innovation (e.g., premium Titanium line, Omni-MAX footwear), and store expansions. - Fourth quarter financials: Net sales increased 3% to $1.1 billion, gross margin expanded 50 basis points to 51.1%, SG&A expenses increased 6%.

Columbia: Fourth quarter net sales increased 3% year-over-year to $1.1 billion, with net sales up 6% for the quarter. Key innovations like Omni-Heat Infinity were prominent. Mountain Hardwear: Fourth quarter net sales increased 5% led by e-commerce growth. prAna: Fourth quarter net sales decreased 2%, but expected to return to growth in 2025. SOREL: Fourth quarter net sales decreased 16%, expected to stabilize in 2025 with reinvigoration efforts.

• 2025 net sales outlook: 1% to 3% growth, with foreign currency expected to be a ~140 basis point headwind and most temporary clearance locations closed in the first half. - Gross margin expected to expand 80 basis points to approximately 51% due to healthier inventory and favorable input costs. - Operating margin expected to be 7.7% to 8.3%, diluted earnings per share in the range of $3.80 to $4.15.

• Marketplace challenges in North America impacting sales. - SG&A deleverage due to demand creation investments and ongoing cost pressures. - Uncertainty in quantifying additional cost savings from the expanded review of the cost structure.

Q: Expand on order book difference between spring and fall seasons and China commentary.

A: Tim Boyle mentions China and Europe as fastest growing markets, order book up for spring and fall, China has focused product approach and strong leadership driving results.

Q: Follow-up on U.S. D2C business, reconciliation of growth despite closing temp stores.

A: Tim Boyle states closure of temp locations, focus on columbia.com for premium positioning, and opening full-price stores in high traffic malls.

Q: On marketing traction with new direction bringing younger consumers.

A: Tim Boyle says they're on the cusp, with digital presentations launching spring, testing positive so far.

Q: Profit recovery and long-term profitability view.

A: Jim Swanson says working to get operating margins back to appropriate levels, aiming for double-digit and upper quartile relative to peers.

Q: Fourth quarter margin disconnect, promotional impact.

A: Jim Swanson notes higher promotional revenue in holiday period and SG&A severance costs as drivers.

Q: 1Q sales lightness and 2Q growth rationale.

A: Jim Swanson mentions lapping cold winter last year, normalized order delivery, and columbia.com pressure.

Q: Marketing ramp and key metrics.

A: Tim Boyle and Jim Swanson discuss targeting younger consumers with new products and marketing, focusing on conversion rate and membership loyalty program.

Q: SOREL stabilization drivers.

A: Tim Boyle mentions collaborations, improved women's and men's offerings.

Q: Full order book lightness, pull-forward of demand, free cash flow.

A: Jim Swanson explains fall order book lower due to prior season sell-through, no pull-forward, and working capital impact on cash flow.

Q: Gross margin guidance, product costs, quarter expansion.

A: Jim Swanson says lower product costs from input costs, Q2 gross margin highest due to full price sales proportion.