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Columbia Sportswear Worth Trying On

Ryan Fuhrmann, CFA
July 30, 2007

The second quarter is usually a slow one for Columbia Sportswear (Nasdaq: COLM  ) , as it is stuck in the middle between the ultra-important spring selling and the also-significant fall and winter period. However, management did its best to liven things up by boosting its expectations for the balance of the year and declaring a $0.14 dividend.

Strong international sales helped to counteract the negative domestic growth that resulted from higher than expected order cancellations in the U.S.' challenging retail market. Both the sportswear category and Sorel brand contributed solid growth, posting 11% and 28% increases, respectively. However, the outerwear segment and Montrail brand didn't fare so well, and both dropped 8%. The end result was a modest 3% increase in total sales, though successful cost-cutting moves led to a doubling of diluted earnings.

Management expects the strong bottom-line trends to continue, as it upped fiscal 2007 guidance to $3.69, placing the forward P/E at just over 17. While that's a reasonable multiple in the consumer goods world, archrival Nike (NYSE: NKE  ) is trading at under 15 times forward expectations.

A P/E multiple is clearly only one of many metrics with which to compare firms. Nike and Columbia actually share many other aspects, including Oregon-based headquarters, a similar product focus, though Columbia is less geared toward footwear, strong