COLM Q2 Deep Dive: International Demand Grows as U.S. Headwinds and Tariffs Weigh on Guidance

Outerwear manufacturer Columbia Sportswear (NASDAQ:COLM) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 6.1% year on year to $605.2 million. On the other hand, next quarter’s revenue guidance of $913 million was less impressive, coming in 2.2% below analysts’ estimates. Its GAAP loss of $0.19 per share was 20% above analysts’ consensus estimates.

Is now the time to buy COLM? Find out in our full research report (it’s free).

StockStory’s Take

Columbia Sportswear’s second quarter was met with a significant negative market reaction, as shares declined sharply after results. Management attributed the quarter’s outcome to robust international demand, particularly in Europe and Asia, which offset ongoing softness in the U.S. market. CEO Tim Boyle cited strong omnichannel growth in China, Japan, and Europe, highlighting the effectiveness of localized marketing and new product assortments. However, persistent U.S. challenges—including soft direct-to-consumer sales, weaker e-commerce performance, and a cautious retail environment—were key factors in shaping quarterly results.

Looking ahead, management’s guidance reflects caution as U.S. consumer demand faces pressure from rising tariffs and economic uncertainty. CEO Tim Boyle described the tariff environment as an “unprecedented level of public policy uncertainty” and noted the company will absorb most tariff costs this year. The upcoming brand refresh, marketing campaign, and enhancements to digital channels are expected to support U.S. sales, but Boyle warned, “elevating consumers’ perception of the Columbia brand and ultimately restoring healthy U.S. growth will take time.”

Key Insights from Management’s Remarks

Management pointed to several factors influencing the quarter, including international strength, a cautious U.S. approach, and the impact of tariffs on both operations and guidance.

• International market momentum: Double-digit percentage growth in EMEA (Europe, Middle East, Africa) and LAAP (Latin America and Asia-Pacific) regions was driven by localized product assortments and strong marketing activations, especially in China and Europe, according to CEO Tim Boyle.
• U.S. DTC and e-commerce softness: Direct-to-consumer sales in the U.S. declined, with e-commerce down double digits due to weak spring sell-through and a strategic reduction in online promotions. Management emphasized ongoing investment in a refreshed website and digital marketing to address this weakness.
• Tariff uncertainty and mitigation: The company faces a 10% universal tariff in the U.S., with further increases possible. Management is absorbing most tariff costs in 2025, estimating a $35-$40 million impact, and seeking mitigation through price actions, vendor negotiations, and cost savings.
• Cost savings initiatives: Over $70 million in new annualized cost savings were actioned year-to-date, including a reduction in U.S. corporate headcount. CFO Jim Swanson said these savings will be realized over the next year as part of an ongoing profit improvement plan.
• Organizational realignment: Columbia’s North America business was reorganized to unify wholesale and direct-to-consumer operations. Peter Rauch was named General Manager for North America, tasked with integrating growth strategies and improving market responsiveness.

Drivers of Future Performance

Columbia’s outlook is shaped by persistent U.S. headwinds, continued international growth, and tariff-driven cost pressures that threaten margins.

• U.S. consumer and tariff risks: Management expects higher consumer prices and ongoing tariff uncertainty to dampen U.S. demand and prompt cautious inventory intake by retailers. Most tariff costs will be absorbed in the near term, with price increases and vendor negotiations explored as longer-term mitigation.
• International expansion sustaining growth: Strong momentum in China, Japan, and Europe is expected to continue, supported by local marketing initiatives, new flagship stores, and premium product lines such as Omni-MAX footwear. Management sees significant market share opportunities outside the U.S.
• Brand and digital investments: The launch of a global marketing campaign, website redesign, and enhanced in-store experiences are intended to reinvigorate the Columbia brand, particularly in the U.S. However, management cautions that restoring domestic growth will require time for these investments to gain traction.

Catalysts in Upcoming Quarters

Over the coming quarters, the StockStory team will focus on (1) execution of the new global marketing campaign and its impact on U.S. sales trends, (2) progress in offsetting tariff-related margin headwinds through price actions and cost initiatives, and (3) continued international sales momentum, especially in China and Europe. The ability to stabilize U.S. direct-to-consumer and e-commerce sales will also be an important signpost.

Columbia Sportswear currently trades at $50.69, down from $56.55 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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