Columbia Sportswear delivers modest growth, still struggles in US

2025 was a year of contrasts for Columbia Sportswear: while the company continued to grow internationally, the US market remained challenging. Global sales rose slightly by 1 percent year-over-year to $3.40 billion. Wholesale markets outside the US provided support, while global DTC sales declined. Operationally, there was a clear dichotomy: gross margin improved by 30 basis points to 50.5 percent, supported by a healthier inventory structure and fewer discounting activities, but partially offset by additional US tariffs, which amounted to $31 million before countermeasures.

Higher costs weigh on profitability

At the earnings level, however, higher costs weighed heavily. A 4 percent increase in SG&A expenses – due in part to new stores, higher variable DTC costs and impairments on underperforming US stores – pushed the operating margin down 190 basis points to 6.1 percent. Additional write-downs of $29 million on the prAna and Mountain Hardwear brands further weighed on earnings, causing diluted EPS to decline by 15 percent to $3.24.

Overall, the figures for the past fiscal year underscore the progress made in the margins of the core business, but at the same time show that cost control and the stabilization of the US business remain key areas of focus. At the brand level, the core Columbia brand accordingly took center stage, while the secondary brands were managed more strongly from a profitability and demand perspective.

Strategic relaunch: Campaign gains momentum

CEO Tim Boyle clearly positioned the development as part of the brand’s strategic relaunch. With its ”Engineered for Whatever” campaign, Columbia Sportswear is deliberately drawing on the spirit of the 1980s and 1990s to revitalize the brand and appeal to younger target groups (as outlined in our FY25 Q3 report). Boyle emphasized that this new brand platform has gained noticeable momentum both internally and externally and is already having an impact on international business. During the earnings call, the CEO underscored that brand building and sharpening the brand’s positioning remain key levers for achieving sustainable growth in the US in the medium term. Nevertheless, macroeconomic factors, weather effects and continued cautious consumer sentiment will have a negative impact in the short term.

Q4: Margin progress meets earnings pressure

Against this backdrop, the fourth quarter also reflected the ongoing operational tension. Revenue declined by 2 percent to $1.07 billion in the final quarter compared with Q4 FY24. The gross margin improved by 50 basis points to 51.6 percent, supported by more disciplined inventory management and lower promotional intensity, despite continued headwinds from additional US tariffs.

However, the negative factors outweighed the positive ones at the earnings level: the operating margin fell by 160 basis points to 10.9 percent, as lower sales and a lack of cost leverage in SG&A expenses more than offset margin improvement at the gross level. Accordingly, diluted EPS was $1.73, down 4 percent from the previous year. At the same time, Columbia Sportswear remains in a solid financial position, with $790.8 million in cash and no debt. Q4 thus underscores Boyle’s assessment: the strategic course has been set, but in the short term, the operating environment remains challenging and leaves little room for earnings momentum.

Core brand Columbia stable, Sorel under pressure

This is confirmed by a look at brand performance in the fourth quarter: While core brand Columbia remained stable overall with a slight decline in sales of 1 percent and was able to partially offset international weakness in the US business, Sorel came under significant pressure, with a decline of 18 percent. prAna, on the other hand, performed well in the quarter, growing by 6 percent, while Mountain Hardwear continued to fall short of expectations, with a decline of 5 percent – despite its strategic importance in the performance segment.

A familiar story: Divided regional performance

Regionally, the fourth quarter of fiscal year 2025 tells the now familiar Columbia Sportswear story – with clearly defined roles. The core US market remains the problem child: with sales down 8 percent to $626 million compared with Q4 FY24, both the wholesale business, weighed down by earlier delivery dates and lower orders, and the DTC business, which failed to gain momentum despite a stable store presence, weakened.

Internationally, business ran noticeably more smoothly. Latin America and Asia-Pacific (LAAP) grew by 8 percent to $203 million, driven by strong wholesale growth in Japan and continued robust demand in China, even during a subdued winter. EMEA performed solidly, with an 8 percent increase to $174 million, and European direct-to-consumer business and distributors performing particularly well, while wholesale suffered from timing effects. The smallest region, Canada, rounded off the picture with a 2 percent increase in sales to $67 million, supported by more productive stores and new locations. All in all, Q4 remained a clearly internationally driven quarter – with strong tailwinds outside the US and a domestic market still waiting for its restart.

Outlook for 2026: Not a boom year, but a year of transition

The company will probably have to wait a little longer for this new start, as forecasts for 2026 suggest that this will be a year not of great leaps forward but of clean lines and controlled steps. Management continues to expect growth from outside the US, driven by Europe, China and international distributors, while the US market continues to suffer from macroeconomic headwinds and cautious consumer sentiment.

At the same time, the focus of the business is shifting: direct-to-consumer is gaining importance, footwear is developing more dynamically than apparel, and the younger brands in the portfolio are expected to make an above-average contribution. This is therefore not an outlook for a breakthrough year, but rather one of preparation, as CEO Boyle makes clear: “We are focused on building a stronger, more relevant brand globally while managing through a challenging US environment. Our priorities are disciplined execution, healthier inventories, and investing where we see the best long-term returns.”

Subdued expectations in figures

The bottom line is that Columbia Sportswear is planning for moderate sales growth of around 1 to 3 percent to approximately $3.43 to $3.50 billion in 2026. The operating margin is expected to recover slightly and land in the range of around 6.2 to 6.9 percent, while earnings per share are expected to have some room for improvement at $3.20 to $3.65. This is offset by a slight decline in gross margin, which remains under pressure from tariffs and cost inflation, but is expected to be cushioned by fewer promotions and healthier inventory levels.