Ordinarily thought of as an outdoor apparelier, Columbia Sportswear (Nasdaq: COLM) turned out to be more of an out-of-the-country clothier in the first quarter. Results released yesterday evening showed Columbia once again beating analyst estimates for both sales and profits. Sales rose 3% to $297.4 million, and profits fell 21% to $0.56 per share.

How'd it do that?
In three words: "Asia" and "Latin America." With sales down 3% in Europe and flatlined here at home, Columbia leaned heavily on its "Latin America and Asia Pacific" division to save the day -- and this unit delivered in spades. Sales spiked 20% within this motley geographical "unit," helped by favorable exchange rates. (Those exchange rates, by the way, boosted sales by revenue in Europe as well, but not enough to actually grow those sales.)

Columbia achieved its strongest growth in outerwear, where sales grew 16% year over year. Conversely, it did worst in sportswear (down 1%) and footwear (down 3%). These trends speak well of Columbia's competitiveness with rival outerwear makers such as VF (NYSE: VFC), but perhaps less well of its performance relative to Timberland (NYSE: TBL), Nike (NYSE: NKE), and Wolverine (NYSE: WWW) in footwear, and Quiksilver (NYSE: ZQK) and Under Armour (NYSE: UA) in sportswear. We'll need to monitor these companies' performance as well, however, to confirm whether Columbia's sales decline is an industrywide trend or a true shift in market share.

Stocking up on inventory
The big question for retailers these days is finding out how much inventory they have on hand. Soft consumer spending can leave many companies loaded with stuff they can't sell. What's going on with inventories at Columbia? Well, CEO Tim Boyle confirmed my suspicion that much of Columbia's 14% rise in inventories was "to support the company's planned 2008 retail store openings." But Boyle also attributed part of the run-up in inventories to an "expanded replenishment program." Although he didn't say so specifically, I have to believe that translates to a simple failure to match inventory growth to sales growth.

Margins
As if market share and inventory trends weren't enough, now we have a new issue to monitor: Boyle predicted that higher average selling prices, retail contributions, and favorable exchange rates will combine to boost the gross margin about 50 basis points this year. However, new marketing initiatives, plus the cost of opening new retail stores, will obliterate those gains and drop the operating margin all the way down to 11.7% by year's end.  As a result, Columbia believes it will earn just $3.15 to $3.20 per share this year, down 20% from 2007 levels and far below current analyst estimates. So why's the stock up today? Search me. Maybe someone in Tokyo or Santiago knows.

What did we expect out of Columbia last quarter, and what did we get? Find out in:

Columbia is a Motley Fool Hidden Gems selection. VF has been recommended by Income Investor, and Under Armour is a pick of the Rule Breakers team. Any of these services are free for 30 days.

Fool contributor Rich Smith does not own shares of any company named above. The Fool owns shares of Under Armour and has a disclosure policy.