Columbia Sportswear (COLM)

Outerwear manufacturer Columbia Sportswear (NASDAQ:COLM) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 2.4% year on year to $1.07 billion. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $753 million was less impressive, coming in 4% below expectations. Its GAAP profit of $1.73 per share was 43% above analysts’ consensus estimates.

Company Overview

Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ:COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.

Thanks to social media and the internet, not only are styles changing more frequently today than in decades past but also consumers are shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some apparel and accessories companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Columbia Sportswear's primary competitors include The North Face (owned by VF Corporation NYSE:VFC), Jack Wolfskin (owned by Callaway Golf Company NYSE:ELY), Arc'teryx (owned by Amer Sports OTC:AGPDY), and private companies REI Co-op and Patagonia.

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Columbia Sportswear’s 6.3% annualized revenue growth over the last five years was weak. This fell short of our benchmark for the consumer discretionary sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Columbia Sportswear’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.3% annually.

Columbia Sportswear also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales were flat. Because this number is better than its normal revenue growth, we can see that foreign exchange rates have been a headwind for Columbia Sportswear.

This quarter, Columbia Sportswear’s revenue fell by 2.4% year on year to $1.07 billion but beat Wall Street’s estimates by 3.6%. Company management is currently guiding for a 3.3% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Columbia Sportswear’s operating margin has been trending down over the last 12 months and averaged 7.1% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

In Q4, Columbia Sportswear generated an operating margin profit margin of 10.9%, down 1.6 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Columbia Sportswear’s EPS grew at a weak 15% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t improve.

In Q4, Columbia Sportswear reported EPS of $1.73, down from $1.80 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Columbia Sportswear’s full-year EPS of $3.24 to shrink by 5.6%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Columbia Sportswear has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 10.6%, lousy for a consumer discretionary business.

Columbia Sportswear’s free cash flow clocked in at $663 million in Q4, equivalent to a 61.9% margin. This result was good as its margin was 11.8 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Columbia Sportswear historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 17.3%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Columbia Sportswear’s ROIC has decreased significantly over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Columbia Sportswear is a profitable, well-capitalized company with $790.8 million of cash and $477.7 million of debt on its balance sheet. This $313.1 million net cash position is 10.5% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see Columbia Sportswear beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS guidance for next quarter missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 5.3% to $60.50 immediately after reporting.

Updated: February 3, 2026 at 5:06 PM EST

Before deciding whether to buy Columbia Sportswear or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We cheer for all companies serving everyday consumers, but in the case of Columbia Sportswear, we’ll be cheering from the sidelines. First off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, Columbia Sportswear’s constant currency sales performance has disappointed, and its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

Columbia Sportswear’s P/E ratio based on the next 12 months is 19.3x. This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $59.33 on the company (compared to the current share price of $60.50).