Come tomorrow, Motley Fool Hidden Gems pick Columbia Sportswear (NASDAQ:COLM) will report to us on the year that was, in its Q4 and full-year 2005 earnings release.

Wall Street Wisdom:

  • General consensus. Hidden Gems members may be psyched to hear the news, but Wall Street's Wise Men aren't. This generally rose-colored-glasses-wearing crowd isn't at all enthusiastic about Columbia, with only five of 20 analysts rating the stock a "buy," and the rest saying "hold" or "sell."
  • Revenues. One reason -- the analysts believe sales grew barely 1% over last year's Q4.
  • Earnings. Add to that the fact that analysts think profits plunged in the quarter past -- down 14% to $0.83 per share -- and the reason for the doom and gloom is obvious.

Margin watch:
Now take a look at the company's recent performance on margins. Here you'll see why we love to use "rolling" margin stats: The results aren't as choppy as a straight quarter-by-quarter tally, making the trends over time much easier to discern. Unfortunately for Columbia shareholders, to date, the trends have all been heading down, down, downer.

Mrg. %

6/04

9/04

12/04

3/05

6/05

9/05

Grs.

46.2%

46.0%

45.5%

45.1%

44.5%

44.0%

Op.

19.6%

19.2%

19.3%

18.7%

17.9%

16.8%

Net

12.5%

12.5%

12.7%

12.3%

11.8%

11.7%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Taking inventory:
Last quarter was the first in a long time that Columbia saw its sales numbers slip. To add inventories to injury, the company also reported a 15% rise in the volume of stuff in its warehouses despite the 1% slump in sales. This is a trend the company can't afford to let continue tomorrow. So even if sales rise a bit, as expected, watch those inventory levels closely; make sure the company isn't swamping itself in unwanted goods that it will need to unload at cut-rate prices in the future. That would only exacerbate an already unpleasant margin story.

Competitors:
Take your pick -- there are a lot of clothiers out there. Two of Columbia's toughest competitors, though, are better known for their shoes: Nike (NYSE:NKE) and Timberland (NYSE:TBL).

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Fool contributorRich Smithdoes not own shares of any company named above.