Shares of clothing maker Columbia Sportswear (COLM -0.52%) rose sharply out of the gate today, gaining as much as 20% at their peak in the first hour or so of trading. By 10:30 a.m. EST, that gain had been pared to a still-impressive 12%, as investors digested the after-market earnings update Columbia provided on Feb. 4.
The earnings story here is basically threefold. First, year over year results weren't great. Sales dropped 4% in the quarter as roughly 40% growth in online revenue wasn't enough to offset the hit from reduced in-store traffic due to the global pandemic. Earnings, meanwhile, were off by 14%. However, Columbia managed to best Wall Street consensus earnings estimates by 16% on a low-single-digit revenue beat. So while the company is obviously still dealing with notable headwinds, it is doing better than analysts expected.
Which brings up the company's outlook for the future. It is projecting sales growth of as much as 20% in 2021, with earnings expected to more than double over 2020's final tally. Bolstered by that view, management also announced that the dividend was being restored at prepandemic levels and that the board had added $400 million to the company's share repurchase plan. In other words, management sees a bright future ahead as the world adapts to the coronavirus.
Columbia Sportswear is up around 75% (including today's gain) since hitting a low in March of 2020. That said, it's up only around 10% or so over the past 12 months, so in some ways the stock is just getting back to where it was before the pandemic. Industry watchers seem to be pleased with the progress, however, noting that the stock received an analyst upgrade following its earnings release. The retail sector is still dealing with major headwinds, which investors shouldn't forget about. But so far it looks like Columbia Sportswear is navigating the turbulence very well and being rewarded for that success.