Columbia Sportswear posts 1% sales growth in Q3, focusing on brand revitalization and navigating tariff impacts ahead of 2025 challenges.

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Younger and more active consumers and highlights the growth potential of the Columbia Sportswear brand in the US, we're working to restore growth and revitalize the Columbia brand through our Accelerate Growth strategy. The third quarter was an important milestone in this journey. In August, we launched our new global brand platform Engineered for Whatever, which celebrates the extremes of outdoor adventures and hearkens back to the brands even irreverent spirit of the 80s and 90s. It revives the humor and gritty gear testing that made Columbia a beloved brand around the world. The early response to this campaign has been overwhelmingly positive with millions of consumers already engaged since launch. We intend to build upon this momentum with an always on marketing strategy including a robust pipeline of differentiated activities planned for the months ahead. Revitalizing the brand in the US will take time, but I'm encouraged by the brand energy that we're just beginning to create. Turning to the topic of tariffs, we estimate the 2025 direct impact of the incremental tariff rates will be approximately 35 to 40 million prior to any mitigation actions. Please note that we did not make meaningful price changes to our fall 25 product line and still expect to absorb much of the incremental tariff costs this year. Applying the new tariff rates on an annualized basis, we estimate the unmitigated impact would be approximately 160 million for 2026. We continue to take actions to mitigate the financial impact through a combination of price increases, vendor negotiations, resourcing production and other mitigation tactics. We will balance these actions with our growth strategies seeking to minimize the impact to consumer demand. For spring 26, we increased US pricing by a high single digit percent and we are maintaining similar price increases for the fall when combined with our other mitigation tactics. Our goal in 2026 is to offset the dollar impact of higher tariffs. Longer term, our goal is to restore our product margin percentages to historic levels. I will now quickly review third quarter financial performance. Net sales increased 1% year over year to 943 million. This was ahead of our outlook driven by earlier than planned shipments of fall 25 wholesale orders. Overall, wholesale net sales increased 5% while direct to consumer was down 5%. Gross margin declined 20 basis points to 50% as higher tariff expenses and foreign exchange headwinds were partially offset by lower clearance and promotional activity. SG&A expense increased 5% including investments in demand creation to launch Columbia's new brand platform engineered for whatever during the third quarter we incurred 29 million in non cash impairment charges related to Prana and Mountain hardware. The impairment was largely attributable to the impact of tariffs and I remain confident in both brands growth strategies. We are committed to unlocking their full potential, including the impairments which impacted earnings by 46 cents third quarter diluted earnings per share were 95 cents. Looking at net sales by geography, US net sales decreased 4%. The US wholesale business was flat as earlier timing of fall wholesale shipments offset the impact of lower fall wholesale orders. USDTC net sales declined high single digit percent in the quarter. Brick and mortar was down high single digit percent reflecting the closure of temporary clearance locations and lower sales productivity partially offset by contributions from new stores. We exited the quarter with eight temporary clearance locations compared to 42 exiting third quarter last year. E Commerce was down low double digit percent primarily reflecting soft traffic and demand trends. Results were partially impacted by ongoing efforts to refine and evolve our online promotions and marketing investments. Overall US Columbia brand fall 25 sell through has started slowly as we await the arrival of cold weather. The sell through challenges we are facing reinforce our focus on re energizing the Columbia brand through the accelerate growth strategy. While overall trends are tough, we are encouraged by initial sell through of new product lines such as the Amaze puff jacket and Rock pants. For my review of third quarter year over year net sales growth in international geographies, I will reference constant currency growth rates to illustrate underlying performance in each market lap net sales increased 6%. China net sales increased mid single digit percent. Sales in the quarter were impacted by a warm September which reduced demand for fall season products. Our team in China continues to do an exceptional job bringing young active consumers into the brand by by celebrating iconic styles like the Interchange jacket and premium localized product offerings like the transit and Hike 365 collections. During the quarter, Columbia hosted Hike Party 2.0, a well attended hiking and music event. In addition to thousands of participants, over 100 Columbia brand influencers were in attendance. Their online content generated millions of impressions. I'm pleased to announce that Columbia China received an award from the prestigious ROI Festival as one of the most creative and influential businesses in the Asia region. The ROI Festival is known as the Oscars of the marketing and creativity industries in China. Great Job China Team Japan Net sales decreased low single digit percent as DTC growth was offset by later shipments of fall 25 wholesale orders which shifted into the fourth quarter. Our team in Japan continues to deliver a compelling mix of localized product offerings and global franchises like Omnimax, which was the top selling footwear style in the quarter. Korea, net sales were flat year over year Our team in Korea is making progress stabilizing the business and revitalizing the marketplace. The team's focus on accelerating digital sales, elevating the brand presentation in DTC and re energizing marketing is building a healthy foundation for growth. During the quarter, the Korea team launched the Engineered for Whatever campaign with localized creative content that resonated with the Korean consumer. LAAP distributor Marcus delivered mid teens percent growth. Healthy growth across both our distributor regions underscores the enduring strength of the Columbia brand in these markets. Our distributor teams are successfully engaging young active consumers through localized marketing activities and elevated brand retail experiences that showcase our best products and innovations. EMEA net sales increased 10% Europe direct net sales increased low double digit percent with strength across both DTC and wholesale. We're thrilled that our European team continues to deliver above market performance driven by the expansion of our DTC business and growing wholesale through strategic retail partners and brand authenticators. We have immense market share opportunities in Europe and our team has been unlocking this potential each and every season. Our EMEA distributor business was down slightly as healthy order book growth was offset by earlier shipments of of fall 25 orders which shifted into the second quarter. Canada net sales increased 7% in the quarter driven by earlier shipment of fall 25 wholesale orders, partially offset by a decline in DTC sales reflecting a soft consumer environment. Looking at third quarter performance by brand Columbia net sales increased 1% as international growth, offsetting ongoing challenges in the US as we've discussed in prior calls, elevating the style of Columbia's product is an important aspect of the accelerate growth strategy. This fall we took a major step forward with the introduction of the new Amaze Puff women's insulated jacket and men's and women's Rock Pant. We supported these launches with elevated in store presentations, enhanced photo and video assets and breakthrough influencer campaigns. I'm encouraged by early sell through and I believe we are well positioned to continue growing these franchises in the seasons ahead. Columbia is also celebrating iconic styles with the re release of its first ever footwear product, the Bugaboot 1. The original Bugaboot was the result of landmark collaboration between Columbia founder Gert Boyle, myself and legendary footwear designer Peter Moore who created the original nike Dunk and Jordan 1 silhouettes. The re released Bugaboo 1 honors the original 1993 design with its iconic retro style and pairs it with our latest innovations such as Omni Grip Traction and Techlite cushioning. This limited edition boot was only available at select specialty retailers and online at columbia.com selling out in hours on the website.. During the quarter, we launched our newly redesigned Columbia.com website. This freshly enhanced site mirrors our evolving brand, allowing us to tell compelling stories about our products while offering unique and personalized experiences for our consumers. We've significantly enhanced product discovery with search and merchandising features, upgraded product photography and our irreverent voice. The feedback from our consumers has been very positive and we are already witnessing early signs of increased engagement. On the Ambassador front, Columbia announced a new partnership with rising global icon Robert Irwin. Son of legendary wildlife conservationist Steve Irwin, Robert continues the legacy of his dad as a passionate wildlife warrior. He also has a deep connection with the Columbia brand. Robert's mother is from Oregon and he still remembers meeting Gert Boyle when he visited our headquarters as a young child. Through his work as a TV presenter, producer, author and photographer, Robert aims to act as a global advocate for the natural world. We are also cheering him as he takes the stage in the current season of Dancing with the Stars. We are absolutely thrilled to be officially joining forces with Robert and look forward to sharing his adventures in the outdoors with Columbia Gear. As part of our Engineered for Whatever launch, we have executed several unique brand activations this fall that are getting people talking about Columbia again in the US Advertising takeovers across digital, social and Thursday Night Football on Amazon remind consumers of Columbia's irreverent roots and superior product quality. This new advertising spotlights outlandish outdoor product tests and celebrity cameos is in situations featuring crocodiles, human snowballs and even the Grim Reaper. These stories are being shared online, in store and out of home, and we're seeing increases in organic brand search since the launch. We recently activated a breakthrough guerrilla marketing stunt in New York City. We launched a scavenger hunt inviting New Yorkers to find our extreme mannequins hidden in hundreds of locations across the city. Picture a mannequin wrestling a bear in Bryant park or an angler catching a shark in the Hudson River. Each mannequin had a QR code that consumers could scan to enter to win an outdoor adventure for two. Over 3,000 New Yorkers participated in our scavenger hunt and we created buzz in the city, reaching over 3 million New Yorkers across earned media and social media. In this crowded and competitive environment engineered for whatever stands out, we're showing people that our products are made to handle the extreme and unpredictable with a healthy.