Columbia Sportswear Well Positioned For Growth With Its Diversified Revenue Stream

Wedbush’s Christopher Svezia believes Columbia Sportswear Company COLM has several growth levers that are still to be fully tapped, including the core Columbia brand.

Svezia initiated coverage of the company with an Outperform rating and price target of $67.

Well Positioned

The analyst believes growth platforms for the company include prAna, Mountain Hardware, Sorel and regional opportunities in China and Europe.

“The company is also outperforming much of the peer group and is in a position to gain market share while leveraging recent SAP investments across the organization,” Svezia mentioned, while adding that Columbia Sportswear was expected to grow its sales HSD and EPS 13-15 percent over time, while also being able to sustain a robust balance sheet and capital return.

“COLM has several levers that should support HSD sales growth including mid- to high-single-digit growth for the Columbia brand and double-digit growth for several of its sub brands,” Svezia mentioned.

The company has also largely been a “cold weather brand” but has diversified its revenue stream over the past few years, which the analyst believes would drive double digit growth.

Management has also made strategic investments in inventory management systems, which continue to benefit margins, while controlling opex relative to sales growth.

“COLM outperformed many of its peers in a very difficult operating environment last winter, generating both sales and profit growth while most others have posted declines that continue into FY16,” the analyst added.

Columbia Sportswear guided to FY 2016 EPS of $2.55-$2.65, ahead of the expectations.