Columbia Sportswear Execs: U.S. Consumer Under Increased Pressure

Key Takeaways:

• Columbia Sportswear posted second quarter net sales of $614.4 million, up 2% (1% constant currency), beating the high end of guidance as international strength offset a 4% U.S. decline.
• Executives said U.S. store traffic stepped down in mid- to late April as inflation squeezed consumer spending and flagged growing risk to the second half from that pressure plus supply chain delays.
• A $78 million IEEPA tariff refund lifted reported gross margin to 58.3% and diluted EPS to $0.52, prompting Columbia to raise full-year operating margin and EPS guidance even as its underlying outlook moderated.

Columbia Sportswear executives told analysts the U.S. consumer is under increased pressure, pointing to a step down in store traffic and rising inflation from fuel and food prices as reasons for caution heading into the second half, even as the company’s second quarter results beat its own guidance range.

Net sales increased 2% to $614.4 million, or 1% on a constant currency basis, compared to $605.2 million in the second quarter of 2025. Chairman and Chief Executive Officer Tim Boyle said the quarter’s results were driven by strong growth in international markets, partly offset by continued headwinds in the U.S.

Consumer Under Pressure, Columbia Increasing Promotions in Response

Chief Financial Officer Jim Swanson said DTC brick-and-mortar traffic softened notably beginning in mid- to late April, which he tied to inflationary pressure from rising fuel and food prices. He described the decline as a step function rather than a gradual erosion, with traffic holding relatively steady at the lower level through the rest of the quarter. That softness led to higher discounting and DTC sales that came in below plan.

Looking to the second half, Swanson said the company is seeing more pressure on the consumer and more elasticity around apparel and footwear as discretionary purchases, and that Columbia is dynamically adjusting price to keep volume moving.

He said the promotional response is not a function of excess inventory, which he called pretty clean across the channel, but a reaction to lower traffic and a consumer under strain. Boyle added that elevated global fuel prices tied to the conflict in the Middle East are weighing on discretionary spending and consumer sentiment, particularly among lower- and middle-income shoppers, and that the company now expects that pressure to affect demand in the second half. Boyle also noted that weather remains a bigger swing factor for the business than most economic indicators.

Against that backdrop, Columbia said it now expects all of its anticipated second-half growth to land in the fourth quarter rather than the third, as supply chain disruptions and capacity constraints push a larger share of Fall 2026 shipments later than planned. Swanson pegged the shift at more than $30 million, calling it predominantly North America-focused and tied in part to a rush on shipping capacity following the Supreme Court’s invalidation of the IEEPA tariffs, as importers moved to get product into the U.S. at the lower 10% rate.

Sales by Channel

• Wholesale: $318.4 million, flat year over year (flat constant currency), as growth in international distributors offset an expected decline tied to a lower U.S. Spring 2026 order book.
• DTC: $296 million, up 3% (up 3% constant currency), with DTC.com sales up 9% globally, partially offset by flat brick-and-mortar sales.

Tariff Refund Lifts Reported Results

During the quarter, Columbia began receiving refunds tied to International Emergency Economic Powers Act tariffs it had previously paid, recognizing approximately $78 million in refunds and interest. Of that amount, $62 million was recognized in earnings, including a $60 million benefit to cost of sales and $2 million in interest income, while $15 million was recorded as a reduction to inventory that will benefit cost of sales as that inventory sells through in future periods.

The refund drove reported gross margin up 920 basis points to 58.3% of net sales, including an approximate 980 basis point benefit from the tariff recovery. Excluding the refund, gross margin contracted 50 basis points year over year on continued tariff headwinds and increased promotional activity.

Net income was $26.6 million, or $0.52 per diluted share, compared to a net loss of $10.2 million, or $0.19 per diluted share, a year ago. The tariff recovery benefited diluted EPS by $0.93. Excluding the refund, the company’s loss per share of $0.41 landed roughly at the midpoint of its guidance range.

Columbia exited the quarter with $624.6 million in cash and short-term investments and no debt.

Companywide Sales by Region

• United States: $320.1 million, down 4%, reflecting a high single-digit percent decline in wholesale tied to the lower Spring 2026 order book and soft DTC brick-and-mortar traffic.
• Latin America and Asia Pacific: $125.9 million, up 12% (up 13% constant currency), led by strong growth in China, a rebound in Japan following a challenging first quarter, and healthy distributor orderbook growth.
• Europe, Middle East and Africa: $143.1 million, up 10% (up 8% constant currency), with Europe direct (as distinct from European sales made through its distributers) posting low double-digit percent constant currency growth.
• Canada: $25.2 million, down 7% (down 9% constant currency), primarily on unfavorable wholesale shipment timing and lower Spring 2026 orders.

How the Columbia, Sorel, Prana, Mountain Hardwear Brands Performed

Columbia: $556.2 million, up 1%. International growth more than offset a U.S. decline. Footwear was the standout, up high single-digit percent globally on strength in the Tellurax and Peakfreak hike franchises, the Konos trail running line and the Dry Tortuga fishing shoe. The Tellurax, worn by brand ambassador Robert Irwin in a campaign that drew more than 3.7 million views, sold out during the quarter. Reinvigorated heritage styles, including the 30th anniversary Bahama shirt, also drove sales.

Sorel: $16.3 million, down 14%. The decline reflected later wholesale shipment timing versus the prior year, partly offset by DTC e-commerce growth. Q2 is typically less than 10% of Sorel’s annual business, and the company still expects a stronger fall season. Joe Vernachio, previously President of Mountain Hardwear, returns as President of Sorel.

Prana: $23.3 million, up 14%. Double-digit percent wholesale growth and high single-digit percent DTC e-commerce growth drove the gain, with flat brick-and-mortar sales as lower traffic was offset by better conversion. The brand opened its third full-price store, in La Jolla, Calif., during the quarter.

Mountain Hardwear: $18.5 million, up 6%. Double-digit percent DTC growth was partly offset by a wholesale decline tied to substantially lower closeout sales. A fourth Stüssy collaboration outperformed each prior collection, and the new Kazam ultralight trail backpack became a top ten style by sell-through shortly after launch.

Spring 2027 Order Book

The company said its Spring 2027 wholesale order book, while not yet finalized, points to mid-single-digit percent growth with broad-based contributions across brands, account types and tiers, including growth in the Columbia brand’s U.S. business.

Footwear orders are outpacing apparel within the book. Swanson said the company has roughly 90% of Spring 2027 orders in hand, supporting expectations for low- to mid-single-digit percent wholesale growth in the first half of next year.

Q3 2026 Outlook

• Net sales of $929 million to $943 million, a decline of 1.5% to flat compared with the prior year.
• Diluted EPS of $1.15 to $1.35.

Full-Year 2026 Outlook

The company raised its full-year guidance due to the pass through of the second quarter tariff refund.

Columbia said its underlying sales and margin outlook for the second half has moderated incrementally from 90 days ago due to macroeconomic and supply chain headwinds.

• Net sales growth of 1% to 3% (unchanged).
• Gross margin of 52.1% to 52.3% (up from a prior 50.3% to 50.5%).
• Operating margin of 8.5% to 9.3% (up from a prior 6.7% to 7.5%).
• Diluted EPS of $4.45 to $4.90 (up from a prior $3.55 to $4.00).