COLM Q3 Deep Dive: International Growth and Brand Revitalization Offset U.S. Headwinds

Outerwear manufacturer Columbia Sportswear (NASDAQ:COLM) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 1.3% year on year to $943.4 million. On the other hand, next quarter’s revenue guidance of $1.02 billion was less impressive, coming in 4.1% below analysts’ estimates. Its GAAP profit of $0.95 per share was 19.5% below analysts’ consensus estimates.

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StockStory’s Take

Columbia Sportswear’s third quarter results were met with disappointment by the market, reflecting challenges in the U.S. and margin compression despite a slight revenue increase. Management pointed to continued strength in international markets, notably Europe and China, as offsetting weaker domestic demand. CEO Tim Boyle explained, “Our strong financial performance in these [international] markets demonstrates our ability to effectively reach younger and more active consumers.” However, persistent softness in U.S. direct-to-consumer sales and higher tariff-related costs weighed on profitability.

Looking ahead, Columbia Sportswear’s updated guidance is shaped by efforts to mitigate higher tariffs, measured price increases, and the ongoing rollout of its ACCELERATE Growth Strategy. CEO Tim Boyle emphasized, “We will balance these actions with our growth strategy, seeking to minimize the impact to consumer demand.” Management signaled that 2026 will require careful navigation of cost pressures and achieving leverage in SG&A spending, while relying on new product launches and marketing investments to reinvigorate the brand both in the U.S. and abroad.

Key Insights from Management’s Remarks

Management attributed third quarter performance to strong international sales, earlier-than-expected wholesale shipments, and the strategic launch of a new brand campaign. Profitability, however, was pressured by higher tariffs and continued investment in demand generation.

• International sales momentum: Columbia’s Europe direct business achieved double-digit sales growth, and China posted mid-single-digit gains, driven by local marketing campaigns and targeted product launches.
• U.S. market challenges: Domestic net sales declined, with U.S. direct-to-consumer (DTC) performance impacted by fewer temporary clearance stores and softer online demand. Management is prioritizing revitalization efforts through the ACCELERATE Growth Strategy.
• Tariff impact and mitigation: Higher tariffs significantly pressured gross margins. Management estimated direct tariff costs at $35-$40 million for 2025 and outlined a combination of price increases and vendor negotiations to offset these effects in the coming year.
• Brand platform relaunch: The new “Engineered for Whatever” campaign engaged millions and aims to recapture the brand’s legacy while differentiating Columbia in a crowded outdoor apparel market. Early signs show increased consumer engagement and organic brand search.
• Product pipeline progress: The Amaze Puff jacket and ROC pants saw strong initial sell-through, while limited edition reissues like the Bugaboot 1 quickly sold out online. These launches are seen as early indicators of the ACCELERATE strategy’s potential to drive growth.

Drivers of Future Performance

Columbia Sportswear’s outlook is shaped by international growth, ongoing tariff-related pressures, and the ability to drive U.S. brand revitalization through new product and marketing investments.

• Tariffs and pricing strategy: Management expects incremental tariffs to remain a significant headwind into 2026. To mitigate this, the company is implementing high single-digit U.S. price increases for both spring and fall collections, while negotiating with suppliers and resourcing production to offset costs. The potential for reduced demand remains a risk as consumers react to higher prices.
• SG&A leverage and margin recovery: Sustained investments in marketing and brand-building are intended to boost long-term growth, but have led to SG&A expense deleverage. Management outlined efforts to improve efficiency, including cost-reduction programs and targeted spending, with an eventual goal to restore operating margins closer to historic levels.
• Product innovation and market expansion: The company is counting on continued international momentum and the success of new product launches, such as expanded Amaze Puff offerings and a broader SOREL assortment, to drive revenue. Management believes that differentiated product offerings and refreshed brand positioning will be critical to re-accelerating U.S. sales.

Catalysts in Upcoming Quarters

In the coming quarters, we will be closely monitoring (1) the pace and impact of new product launches under the ACCELERATE Growth Strategy, (2) the effectiveness of tariff mitigation measures and the acceptance of higher prices by U.S. consumers, and (3) the sustainability of international sales momentum, especially in Europe and China. The ability to achieve SG&A leverage and margin improvement will also serve as a key indicator of execution.

Columbia Sportswear currently trades at $49.58, down from $51.46 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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