Columbia Sportswear Company (COLM) Q3 2026 earnings review
Columbia Sportswear raises its profit plan, but inventory cuts cash
Columbia Sportswear Company, the maker of Columbia, SOREL and prAna outdoor gear, beat its third-quarter plan as international growth and U.S. online sales offset a slow U.S. wholesale business. Revenue rose 2% from a year ago, and profit per share excluding last year's brand write-down grew 18% by our math on lower overhead costs. Chief executive Tim Boyle lifted the bottom of the full-year earnings plan, but the company cut its operating cash flow forecast by 20% as inventories rose.
| Net sales | $962.6M +2% from a year ago |
|---|---|
| Profit per share, excluding last year's write-down | $1.66 +18% from a year ago by our math |
| Full-year sales and earnings outlook | Low end raised middle of the range: +2.5% sales growth |
| Full-year operating cash flow outlook | Cut $60M to $230–250M on early spring inventory |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because improvements in U.S. direct sales and the Spring 2027 order book were offset by weaker cash generation. Wholesale orders for the first half of 2027 now point to mid-single-digit growth in the U.S. and globally, easing the top-line concern. On the other side, inventories rose 11% and management cut the full-year cash flow plan for a second straight quarter.
The question now is whether the inventory build and the fourth-quarter sales plan reflect genuine retail demand or another shipping bottleneck. Either U.S. shoppers buy the delayed fall goods and Spring 2027 orders turn into cash, or unsold winter gear stays on the balance sheet at year-end. Fourth-quarter U.S. sales and year-end inventory levels will settle it.
🐂 Bull Case
U.S. Direct Sales and Spring Orders Show Brand Traction
Columbia's biggest problem has been its U.S. home market, where sales fell 8% in the first half of the year. To fix this, chief executive Tim Boyle launched ACCELERATE, a multi-year plan to win younger shoppers with new styles, a revamped website and the Engineered for Whatever marketing campaign. "We are particularly encouraged by the momentum building in our Columbia brand U.S. DTC E-Commerce business, which represents the pinnacle expression of our brand," Boyle said.
Total U.S. revenue still dipped 1% from a year ago because wholesale orders shipped late, but direct-to-consumer (DTC) sales in the U.S. grew low-single digits. Online U.S. sales rose mid-single digits, and physical store sales grew low-single digits as better store productivity offset weak foot traffic. For the first half of 2027, the outdoor apparel maker expects wholesale sales to grow in the mid-single-digit percent range both in the U.S. and globally.
What to watch: whether U.S. wholesale growth in the fourth quarter and first half of 2027 comes from higher unit volume rather than price hikes. The release did not repeat last quarter's comment that Spring 2027 orders grew in units as well as dollars.
International Markets and Footwear Carry the Top Line
While the U.S. business works through its turnaround, international markets and footwear are carrying the company. By our math, sales outside the U.S. grew 6.3% from a year ago to $421.7 million, or 44% of total revenue. Footwear also outpaced clothing, rising 5% to $218.7 million against 1% growth in apparel, accessories and equipment.
- Latin America and Asia Pacific (LAAP): up 11% to $159.5 million, with China up low-20% and Korea up mid-teens
- Europe, Middle East and Africa (EMEA): up 7% to $175.3 million, led by high-30% distributor growth
- SOREL footwear brand: up 2% to $82.8 million, reversing a 14% drop in the second quarter
This breadth matters because international sales grew even after Asian distributor shipments were pulled forward into the second quarter. SOREL's return to growth on higher fall wholesale orders also eases a standing concern that the smaller brands would drag down the group.
What to watch: SOREL's fourth-quarter revenue against last year's $79.7 million. A second quarter of growth during the peak winter boot season would confirm the brand's turnaround.
Cost Discipline Lifted Third-Quarter Operating Margin
Columbia beat its third-quarter profit plan because it shipped some delayed fall orders early and held down overhead costs. Selling, general and administrative (SG&A) expenses — overhead, store operating costs and marketing — fell 1% from a year ago to $375.6 million, dropping 1.4 percentage points of revenue to 39.0%.
Reported operating margin rose 4.3 percentage points to 11.4%, well above the 8.1% to 9.5% plan. That headline figure flatters the result because last year included a $29.0 million write-down on the prAna and Mountain Hardwear brands. Excluding that one-off charge by our math, operating margin still rose 1.2 percentage points from 10.2% a year ago, and profit per share grew 18% from $1.41 to $1.66.
What to watch: fourth-quarter SG&A expenses as a share of sales. Part of the third-quarter savings came from shifting planned marketing spend into later periods, so costs will step back up during the holiday quarter.
🐻 Bear Case
Early Factory Production Cuts the Cash Flow Plan by 20%
Boyle raised the bottom of the full-year sales and earnings outlook after the third-quarter beat. In the same release, the company cut its full-year operating cash flow plan by $60 million at the middle of the range, down 20% from $290–310 million to $230–250 million. It is the second straight quarter that management raised the earnings outlook while cutting the cash flow plan.
The company said the cash reduction is "due to earlier production of Spring 2027 inventory, which is expected to increase our year-end inventory balance". Inventories at the end of September rose 11% from a year ago to $889.2 million, reversing a 6% decline in the second quarter. Delayed fall receipts sitting in transit and early spring manufacturing both tied up cash, leaving $280.5 million of cash used in operations over the first nine months.
Because the group used $280.5 million of operating cash through September, reaching the $240 million full-year midpoint requires generating about $521 million of cash in the fourth quarter alone by our math. That leaves little room for shipping delays or weak holiday sell-through.
What to watch: year-end inventory growth against the 3.5% to 7.0% fourth-quarter sales plan. If inventory grows faster than sales at year-end, the cash build is more than just early spring timing.
Full-Year Operating Margin Still Erodes Without Tariff Refunds
Earlier this year, Columbia received $79 million in refunds for International Emergency Economic Powers Act (IEEPA) tariffs that were struck down in court. The company is sharing part of that windfall with its suppliers. Third-quarter gross margin slipped 0.2 percentage points to 49.8% due to "accommodations to our factory partners, partially offset by the current-period benefit of International Emergency Economic Powers Act (“IEEPA”) tariff refunds previously received".
Despite the third-quarter earnings beat, management trimmed the top end of its full-year operating income plan from $325 million to $320 million, leaving the operating margin midpoint at 8.9%. That full-year margin includes a 1.8 percentage point boost from tariff refunds ($0.97 per share). Without the one-time refund by our math, full-year operating margin is 7.1% — no closer to management's long-term double-digit goal.
What to watch: full-year 2027 gross margin outlook when issued next quarter. Once the last $8 million of deferred tariff refunds flows out of inventory in the fourth quarter, margins will have to stand on regular pricing and costs.
Risks This Quarter Didn't Answer
Several standing risks around the smaller brands, trade policy and input costs either worsened or received no new numbers in the third-quarter release.
- Smaller outdoor brands: Mountain Hardwear sales fell 17% to $23.3 million on lower fall wholesale orders and fewer closeout sales, while prAna dipped 1% to $30.2 million.
- Factory accommodation costs: management still does not disclose the dollar amount paid to factory partners, making it impossible to separate underlying gross margin from the tariff refund math.
- Tariffs and 2027 input costs: the outlook assumes current U.S. tariff rates hold through year-end, and the release gave no update on how higher oil prices will affect Fall 2027 manufacturing costs.
💲 Other KPIs
Weighted average diluted shares fell 6.6% from a year ago. After pausing buybacks in the second quarter, the sportswear maker spent $50.0 million in the third quarter to repurchase about 844,000 shares at an average price of $59.25 by our math, bringing nine-month buybacks to $200.0 million.
Accounts payable — bills owed to suppliers for inventory — rose 47.2% from a year ago to $359.6 million as factories started producing Spring 2027 goods early. Accounts receivable — money owed by wholesale retail customers — grew 7.2% to $654.4 million on late-quarter fall shipments.
🔮 Guidance
Raised at the low end. The middle of the range moved up $15 million to $3.48 billion, or 2.5% growth, after holding at $3.465 billion for three straight quarters. Foreign currency is now expected to add 0.5 to 0.7 percentage points to full-year sales, up from 0.3 to 0.5 points previously.
Unchanged. The plan still calls for gross margin to rise 1.6 to 1.8 percentage points from 50.5% in 2025, entirely driven by a 1.8 point net benefit from IEEPA tariff refunds. By our math, the full-year target and nine-month results leave fourth-quarter gross margin at about 51.9%, up 0.3 points from a year ago as the last $8 million of deferred refunds flows through.
Narrowed. The middle of the range stays at 43.9% of sales, down 0.3 percentage points from 44.2% in 2025. Higher store operating costs and employee bonus accruals are offset by overhead savings from last year's cost-cutting program, while marketing spend stays at 6.5% of sales.
Narrowed, with the dollar midpoint up $2.5 million to $310 million and the margin midpoint unchanged at 8.9%. Excluding the 1.8 percentage point benefit from tariff refunds, the plan puts full-year operating margin at 7.1% by our math, compared with 6.1% reported in 2025.
Raised at the low end. The middle of the range rose $0.10 to $4.78, the third raise this year (+$0.35 in Q1, +$0.90 in Q2 on the tariff refund, +$0.10 in Q3). The outlook includes $0.97 per share from tariff refunds and $0.10 from foreign exchange, leaving clean EPS at $3.81 by our math.
Cut. The middle of the range fell $60 million, or 20%, after a $15 million cut last quarter, putting full-year cash flow 15% below 2025's $282.9 million. Management blamed earlier production of Spring 2027 inventory, which will leave year-end inventories higher than previously planned.
Cut by $5 million after holding at $65–75 million for four quarters. With $40.8 million spent in the first nine months, the plan leaves about $24 million of spending for the fourth quarter.
Narrowed inside the previously implied range. The $1,126.5 million midpoint calls for 5.3% growth from last year's $1,070.2 million, helped by delayed Fall 2026 wholesale orders shifting from Q3 into Q4. Columbia has beaten its quarterly sales midpoint by an average of 3.1% over the last five quarters; if the pattern holds, Q4 sales would reach $1,162 million by our math.
New. The 11.4% midpoint matches Q3's 11.4% margin and is up 0.5 percentage points from 10.9% in the fourth quarter of 2025, helped by the last $8 million of tariff refunds flowing through cost of sales.
New. The $1.975 midpoint represents 14.2% growth from $1.73 a year ago and assumes a 24.5% tax rate.
Raised to the upper half of the prior range. Last quarter management indicated low-to-mid-single-digit growth with 90% of orders booked; the completed Spring 2027 order book now points to mid-single-digit wholesale growth in both the U.S. and global markets.
❓ Key Questions
Did Spring 2027 wholesale units grow alongside dollars?
Last quarter management said the Spring 2027 order book was growing in both units and dollars. The third-quarter release confirmed mid-single-digit dollar growth for first-half 2027 wholesale sales but dropped any mention of unit volumes.
How much did factory partner accommodations cost in Q3?
Gross margin fell 0.2 percentage points because payments to factory partners outweighed the tariff refund benefit. Without the exact dollar figure for these accommodations, investors cannot see how underlying product margins performed.
Why cut operating cash flow by $60 million now?
Columbia already cited early Spring 2027 inventory production when it cut the cash flow outlook by $15 million in July. Cutting another $60 million in October raises the question of how much year-end inventory will grow.
What is causing the 17% drop at Mountain Hardwear?
While SOREL returned to growth and prAna stabilized, Mountain Hardwear revenue fell 17% on lower fall wholesale orders and fewer closeout sales, just one year after its intangible assets were written down.