Columbia Sportswear (NASDAQ:COLM) is reporting third-quarter results that exceed analyst expectations. But before getting excited, check out the details.

Analysts were looking for sales of $402.1 million. They came in at $409.8 million. Sounds great, right? Sales for the same quarter a year ago were $415.8 million. The numbers really get nasty when you look at operating income, which fell 12.5% from the same quarter last year; operating margins declined to 22.5% from 25.3% in the same quarter last year.

The current problems were not unexpected. When the company, a Motley Fool Hidden Gems selection, was announcing strong results for the first quarter, it also said its backlog was weak. Right up front, it said it was in for a tough hike this year. Consolidated backlog is up 0.5% from where it was a year ago; Columbia Sportswear announced that the spring backlog increased 5.8% from the same time last year. Still, the company is sticking with its 2005 guidance that calls for a 5% increase in revenue and a 9% to 10% fall in net income.

One lurking problem is inventories. They rose 14.8% in the third quarter on declining sales, which bears watching because any sharp discounting to move merchandise could lower earnings further. This increase piques my interest because sales are not expected to increase in line with inventory increases, and backlog hasn't increased by that much -- which leads me to believe the company's previous demand estimates came up short (and it's playing catch-up to meet future demand), or it simply overshot demand. Although not encouraging, as it would seem to indicate Columbia Sportswear's finger is not quite on the pulse of its markets, of the two options, the former would be more attractive, as the prospect of discounting stands to take the wind out of its fairly robust profit margins.

As prospects go for favorable year-over-year comparisons, that strong first quarter this year will make 2006's first quarter comparisons very hard: The company expects sales to climb only 4% and net income to slump 17%.

For those looking for a ray of hope, Columbia Sportswear has authorized an additional $200 million to repurchase its shares (in addition to the $35.9 million left from a previous authorization). Obviously, the company sees promise in its stock, which has lost about a quarter of its value.

The stock is trading for 13.3 times current-year earnings estimates. That looks like a good value if analysts are correct and the company can grow earnings by 14% a year for the next five years. But, look at equally challenged competitor Timberland (NYSE:TBL). It trades for 11.6 times this year's projections and is expected to grow earnings 13% annually. So, for now, Columbia isn't the cheapest apparel and footwear stock around -- although a healthy Nike (NYSE:NKE) sells for a premium 15.9 times 2005 estimates, yet is expected to compound earnings at a modest 13.5% a year.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.