Columbia Sportswear Downgraded As Store Closures Impact Sales Growth Outlook

Columbia Sportswear Co. was downgraded to hold from buy at Canaccord Genuity on Friday based on a slowdown at U.S. wholesale channels. Columbia Sportswear's price target was cut to $60 from $64. Canaccord upgraded Columbia Sportswear in September 2016 on the belief the company could achieve mid-to-high single-digit sales growth this year. However retail bankruptcies and store closures along with "still-cautious" fall ordering has softened the company's outlook, the note said. Columbia Sportswear Chief Executive Tim Boyle acknowledged that the closures, bankruptcies, liquidations and "ongoing efforts by U.S. retailers to rationalize their store fleets and square footage" are challenges in a late-Thursday earnings release statement. Long-term goals could also be in jeopardy since the "U.S. challenges appear structural." Columbia Sportwear reported first-quarter earnings late Thursday that beat expectations. Net income was $36.0 million, or 51 cents per share, up from $31.8 million, or 45 cents per share, last year. The FactSet consensus was 41 cents. Sales were $543.8 million, up from $525.1 million last year and ahead of the $535.0 FactSet consensus. The company expects 2017 sales growth of 3%, and EPS after non-controlling interest of about $2.72 to $2.82 per share. The FactSet consensus is $2.80. Columbia Sportswear shares are down 6.4% in Friday trading and down 7% for the past year. The S&P 500 index is up 15% for the last 12 months.

Copyright © 2017 MarketWatch, Inc.