Columbia Q2 2026: International Offsets Soft U.S., Margin Gains From Profit Program

What happened

Columbia Sportswear reported second-quarter 2026 net sales of $650 million, up 7.4% year-over-year, as robust 12% growth in LAAP and 9% growth in EMEA overshadowed a 2% decline in U.S. wholesale. Operating loss narrowed to $15 million from $23.6 million a year ago, benefiting from the Profit Improvement Program and lower SG&A, though gross margin was flat at 49.5% due to tariff-related cost increases. Management updated full-year 2026 guidance, raising diluted EPS expectations to $4.10–$4.40 on projected sales growth of 2–4%, while flagging uncertainty around fall sell-in orders. The company repurchased $75 million in shares and paid a quarterly dividend of $0.33, maintaining its fortress balance sheet with no debt. Despite the operational improvement, the stock traded flat as investors weighed persistent U.S. softness and a cautious holiday demand outlook.

Implication

The Q2 results affirm that Columbia’s ACCELERATE strategy is taking hold internationally, though U.S. recovery remains elusive, keeping the stock at a discount. The updated EPS guidance of $4.10–$4.40 supports a forward P/E of about 12x, well below peers, offering a margin of safety given the debt-free balance sheet. Aggressive buybacks reduce the share count by 2% annually, compounding returns even in a low-growth environment. The key risk is that prolonged U.S. softness eventually spills into international markets or forces deeper promotions, eroding margins. We maintain our BUY rating but emphasize that a catalyst—such as a U.S. wholesale inflection or tariff relief—is needed to unlock significant upside; monitor the holiday season order book closely.

Thesis delta

Our BUY thesis is intact, supported by international growth and share repurchases, but the timeline for U.S. recovery has extended. We are not downgrading, but we are reducing conviction to ‘moderate’ and raising the bar on back-half performance metrics to sustain the rating.