Operator: Good day, everyone, and welcome to the Columbia Sportswear Third Quarter 2026 Financial Results. At this time, all participants are placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Matt Tucker. Sir, the floor is yours.
Matt Tucker: Good afternoon, and thanks for joining us to discuss Columbia Sportswear Company's third quarter results. In addition to the earnings release, we furnished an 8-K containing a detailed CFO commentary and financial review presentation explaining our results. This document is also available on our investor relations website, investor.columbia.com.
Matt Tucker: With me today on the call are Chairman and Chief Executive Officer Tim Boyle, Co-Presidents Joe Boyle and Peter Bragdon, Executive Vice President and Chief Financial Officer Jim Swanson, and Executive Vice President, Chief Administrative Officer, and General Counsel Richelle Luther. This conference call will contain forward-looking statements regarding Columbia's expectations, anticipations, or beliefs about the future. These statements are expressed in good faith and are believed to have a reasonable basis. However, each forward-looking statement is subject to many risks and uncertainties, and actual results may differ materially from what is projected.
Matt Tucker: Many of these risks and uncertainties are described in Columbia's SEC filings. We caution that forward-looking statements are inherently less reliable than historical information. We do not undertake any duty to update any of the forward-looking statements after the date of this conference call to conform the forward-looking statements to actual results or to changes in our expectations. I would also like to point out that during the call, we may reference certain non-GAAP financial measures, including constant currency net sales.
Matt Tucker: For further information about non-GAAP financial measures and results, including a reconciliation of GAAP to non-GAAP measures and an explanation of management's rationale for referencing these non-GAAP measures, please refer to the supplemental financial information section and financial tables included in our earnings release and the appendix of our CFO commentary and financial review.
Matt Tucker: Following our prepared remarks, we will host a Q&A period, during which we will limit each caller to 2 questions so we can get to everyone by the end of the hour. Now, I will turn the call over to Tim.
Tim Boyle: Thanks, Matt. Good afternoon. For Q3, we are pleased to report results that exceeded our quarterly revenue and earnings guidance. Our better-than-expected revenue growth primarily reflected a portion of delayed fall 2026 wholesale orders shipping earlier than expected, coupled with improved underlying business trends in the US. Our operating margin also exceeded expectations. Gross margin upside was driven by higher full price realization and favorable US DTC freight costs, despite elevated fuel prices.
Tim Boyle: SG&A expenses were lower than planned, declining year-over-year and demonstrating healthy operating leverage on disciplined spend management. Our business outside the US and Canada, which represents roughly 35% of global net sales, continues to lead our growth and maintained its strong momentum with sales up 9% versus the prior year. Our US business declined 1%, but would have grown if not for the supply chain-related delays impacting the timing of wholesale shipments.
Tim Boyle: We are particularly pleased with the momentum we saw in DTC e-commerce, which provides the pinnacle expression of our brands. US e-comm grew mid-single digit percent in the quarter, including high single digit percent growth for the Columbia brand. This momentum accelerated through the quarter, including strong early sell-through of fall 2026 products.
Tim Boyle: Importantly, it also came with reduced promotions, consistent with our strategy of repositioning e-comm as a more full price channel. Our US brick and mortar sales grew modestly. Stronger productivity more than offset continued traffic headwinds at our outlet doors amid a challenging macro environment. Overall, we are highly encouraged by our Q3 performance in the US. Trends for the Columbia brand are stabilizing, and we are seeing continued tangible signs of progress with the Accelerate growth strategy.
Tim Boyle: We are seeing this progress not only in the quality of our US e-comm business, but also the consumers we are attracting. Over the past two quarters, growth of new consumers has accelerated, and Q3 represented the strongest growth in new consumers since 2023. An increased share of our e-comm sales can be attributed to purchases by our target, dynamic active, and professional elite consumer groups.
Tim Boyle: This momentum in e-comm reflects the combined progress we are making in elevating our brand, product, marketing, and marketplace to Accelerate, not any single factor, product, or marketing campaign. We have been building that foundation since launching our Engineered for Whatever marketing platform last August and relaunching columbia.com last September. Earlier this year, we began amplifying our mid-funnel marketing engine with more targeted marketing, increased influencer partnerships, and creative activations.
Tim Boyle: Our full funnel marketing strategy is reaching our target consumers and materially improving the sell-through of our featured products. Together, these efforts provide strong indications that the strategy is gaining traction and increases our confidence that we are on the right track. A key theme underlying our Q3 performance is the momentum we are building in fleece. We are thrilled with the sell-through we are seeing across multiple franchises.
Tim Boyle: A major highlight within this category has been our Helvetia fleece, a style that first launched in 1991. This fall, we offered the Helvetia in several new bold colorways and prints, bringing new energy to an iconic legacy product, which appealed to younger targeted consumers. Additionally, to celebrate Helvetia's heritage and lean into the current '90s nostalgia, we launched our Fax-4-Fleece campaign in early September.
Tim Boyle: Featuring a 1991-era fax machine, we challenged consumers through social media channels to be among the first 91 people to send us a fax, if they could actually find a fax machine, in order to receive a free fleece. The energy and engagement created by this campaign for both the Helvetia and the Columbia brand was incredible. To our surprise, we received over 8,000 faxes, far exceeding our expectations.
Tim Boyle: This energy has extended beyond the Fax-4-Fleece campaign. Our new MTR fleece, a more premium style launched this fall, has seen strong early demand. Columbia fleece has even been positively trending on TikTok as of late. Earlier this month, we launched a special edition of our Helvetia featuring the iconic PDX airport color carpet. It sold out within minutes online, and consumers lined up around the block at our Portland flagship store.
Tim Boyle: Earlier this week, we launched our latest campaign with our Don't Panic Room contest. Similar to our highly successful Expedition Impossible campaign, we are challenging consumers to submit videos, this time highlighting their survival skills. The winner will receive the actual Don't Panic Room bunker. It has been modified as a shipping container, and it is filled with essentials needed to survive anything that Mother Nature throws at you.
Tim Boyle: The Don't Panic Room includes spacious living quarters, non-perishable supplies, and most importantly, plenty of Columbia gear. We are seeing the momentum created by our innovative products and marketing translate into stronger marketplace positioning. The Amaze Puff, launched in fall 2025, continues to resonate with our target female consumers and retail partners alike. After largely selling out last fall, it is among our top sellers and biggest growth drivers for fall 2026, with an expanded variety of styles and colorways.
Tim Boyle: That product story will have prominent visibility within elevated retail spaces. For example, in Q4, the Amaze is being featured in dozens of DICK'S Sporting Goods, House of Sport stores, and in Macy's flagship Herald Square door in New York City. Beyond the Amaze Puff, we are highly encouraged by the momentum in products primarily designed for and marketed to our younger target consumers, and especially women.
Tim Boyle: Among newer products, the Amaze sweats, introduced this year, are already among our top-selling women's pants. We are seeing momentum in established and refreshed styles as well. This includes the men's ROC pant, a legacy style that we redesigned and relaunched last year, targeting the dynamic active consumer. The Sienna Hill jacket, a legacy women's style, also sold through exceptionally well in Q3, supported by strong mid-funnel marketing. We are also excited by the momentum we see building in PFG, or Performance Fishing Gear.
Tim Boyle: The PFG team is doing a phenomenal job of connecting with its target consumers and communities. We have renewed our focus on brand-enhancing specialty accounts and engaged in over 40 events and activations year-to-date, with several more planned throughout year-end. In Q3, we continued bringing energy to the 30th anniversary of our iconic Bahama shirt, including a collaboration with country music superstar Luke Combs that drove strong engagement for the brand.
Tim Boyle: In June, we launched the Terminal Tech performance apparel line. It features our proprietary Omni-Shade and Omni-Wick innovations, providing all-day sun protection, breathability, and comfort on the water. Terminal Tech largely sold out during Q3, and it is a key driver of our growth in PFG's spring 2027 order book. Another key growth driver for PFG in Q3 and spring 2027 is the Dry Tortugas boot.
Tim Boyle: It contributed to another solid quarter of growth for Columbia brand footwear, which was up mid-single digits percent in Q3 overall. Importantly, this growth was led by more premium styles featuring our proprietary Omni-MAX technology, such as the Peakfreak and the Tellurix families in hike and the Konos in trail running.
Tim Boyle: A major highlight for our footwear business in Q3 was the continued success of our sponsored athletes on the trail, further demonstrating that our trail running product is capable of performing at the highest levels of the sport. in August, Columbia athlete Gabriel Rueda placed 20th at the UTMB finals in Chamonix, France. The 108-mile race around Mont Blanc is considered to be the world's most prestigious and competitive trail running event.
Tim Boyle: Last month, longtime athlete Yassine Diboun claimed a spot on the podium in the Mammoth 200 in California, where he took third place in his first career 200-miler. Competing for over 60 hours, his Columbia Konos Trillium footwear propelled him through the rugged terrain, while his Columbia apparel kept him protected and comfortable through a wide variety of challenging conditions.
Tim Boyle: Big congrats to our athletes and product teams who continue to demonstrate that Columbia truly owns the trail. Turning back to Q3 financial performance, net sales increased 2% to $963 million, driven by growth in international markets, partially offset by a modest decline in the US. From a channel perspective, our DTC business grew 5% globally, including 9% growth in e-comm and 4% growth in brick-and-mortar. Our wholesale business was relatively flat versus the prior year.
Tim Boyle: This primarily reflected double-digit percent growth in Asia direct wholesale and EMEA region distributors, offset by unfavorable shipment timing from supply chain delays impacting the US and Europe direct wholesale. That said, these delays had less impact on Q3 net sales than we anticipated when we provided guidance three months ago.
Tim Boyle: Also, delivery timing was the primary driver of upside versus our Q3 revenue guidance, followed by stronger-than-expected US DTC performance. Q3 gross margin declined 20 basis points to 49.8% on a reported basis. This includes a 50 basis point headwind from accommodations to our factory partners, net of tariff refunds recognized in the quarter.
Tim Boyle: Excluding this impact, underlying gross margins expanded 30 basis points, primarily due to lower DTC freight costs. SG&A expenses declined 1%, primarily reflecting lower corporate overhead costs on disciplined expense management and some shift of planned marketing spend to Q4.
Tim Boyle: This was partly offset by higher incentive compensation accruals and DTC expenses. The result was SG&A leverage of 140 basis points compared to the prior year, leading to the operating margins of 11.4%. As a reminder, our Q3 2025 operating income included $29 million in one-time impairment charges. Excluding this prior year impact, our underlying operating margin expanded by 120 basis points.
Tim Boyle: This overall performance resulted in reported EPS of $1.66 compared to $0.95 in the prior year. Inventories increased 11% versus the prior year in dollar terms, with units up 10%. This growth primarily reflects higher in-transit inventory from delayed fall 2026 receipts. Overall inventory composition remains healthy. We continue to maintain our fortress balance sheet, exiting the quarter with $230 million in cash and short-term investments and no debt.
Tim Boyle: Looking at net sales by geography, US net sales decreased 1%, reflecting later wholesale shipment timing, partially offset by growth in DTC. Wholesale net sales declined low single-digit percent. DTC net sales grew low single-digit percent, with brick-and-mortar up low single digits and e-comm growing mid-single digits. From our review of Q3 year-over-year net sales growth in international geographies, I will reference constant currency growth rates to illustrate underlying performance in each market.
Tim Boyle: EMEA net sales increased 7% overall. Europe direct net sales increased low single-digit percent, driven by strong double-digit percent growth in DTC, despite unfavorable weather and a challenging macro environment. This was partially offset by a decline in wholesale, reflecting fall 2026 supply chain delays. The Europe team continues doing an incredible job of connecting with our target consumers, particularly on the trail.
Tim Boyle: Our Hike Society events in Q3 remain highly popular and continue to sell out, driving energy and awareness for our brand. Key highlights in the quarter included full funnel marketing campaign around the launches of our Peakfreak III hiking shoe and our Street Tech apparel line. Street Tech is an exciting new collection representing the evolution of outdoor sportswear, remixing technical outdoor function into streetwear-led styles for a youth audience.
Tim Boyle: Street Tech launched recently and was sold into some of our leading partners such as JD Sports, Zalando, and ASOS. Early indications show high consumer engagement and strong sell-through with the target demographic. Our EMEA distributor business grew in the high 30% range, primarily reflecting fall 2026 shipment timing versus the prior year, which more heavily weighted Q2. Key growth drivers included hike, supported by Columbia Hike Society events sponsored in several countries.
Tim Boyle: We also saw strong growth and sell-through in outdoor lifestyle, driven by fleece and the ROC pant, as well as in PFG. LAAP net sales increased 10%. China net sales grew low teens percent, reflecting growth across channels amid a challenging macro and competitive environment. The China team continues to do a great job of increasing its share of business with younger consumers, connecting with local communities through Columbia Hike Society and Outdoor Club events.
Tim Boyle: A key highlight included our Hike Party 3.0, a first-of-its-kind activation for the launch of our new Railway Rambler Interchange Jacket. The event combined hiking, fishing, and kayaking, and attracted millions of impressions on social channels, with hundreds of thousands of viewers tuning in to the live stream. We were also pleased with successful campaigns featuring our Peakfreak hiking footwear and our China-exclusive Transit apparel line.
Tim Boyle: Japan net sales increased low double-digit percent, with growth across channels reflecting healthy demand for fall season products. Key product drivers included women's pants, Konos footwear, and rainwear, which was helped by unusual rainy and cool conditions during September. Korea net sales increased high teens percent, driven by strong wholesale growth, reflecting a higher fall 2026 order book. Key drivers in the quarter included the Helvetia fleece, trending lightweight down styles, and BOA footwear styles.
Tim Boyle: These were supported by elevated in-store presentations and a successful fall campaign, leveraging the Engineered for Whatever global brand platform. Our LAAP distributor markets declined low single-digit percent, primarily reflecting earlier fall shipment timing that landed in Q2 versus the prior year. Canada net sales were relatively flat overall. This primarily reflected a decline in wholesale sales due to supply chain delays, leading to later shipments versus the prior year.
Tim Boyle: This was offset by growth in DTC, particularly e-comm. Key growth drivers in the quarter included the Amaze collection, hiking footwear, and fleece. Our Canada team also continues to find unique ways to engage new, younger consumers. For example, we sponsored a hike in Q3 to the top of Mount Tremblant, capped off with a yoga class on the summit. We also held an event at the Toronto International Film Festival, connecting and introducing our brand and products to numerous influencers and cultural tastemakers.
Tim Boyle: Looking at Q3 performance by brand, Columbia net sales increased 3%, reflecting high single-digit percent growth in DTC and relatively flat wholesale sales. Turning now to our emerging brands, as a reminder, each of these brands derive a significant majority of their revenue from the US marketplace. SOREL net sales increased 2%, primarily driven by growth in wholesale on stronger fall 2026 orders.
Tim Boyle: A key highlight for SOREL in the quarter was the launch of the Ambler, a new franchise rooted in the iconic style of the Caribou boot. The Ambler has seen encouraging sell-through in DTC e-comm to date, supported by creative, full-funnel marketing, activations, collaborations, and influencer partnerships. prAna net sales declined 1%, primarily reflecting lower DTC e-comm sales, largely due to the late arrival of fall 2026 inventory.
Tim Boyle: This was partially offset by growth in wholesale and DTC brick-and-mortar. A key highlight was the opening earlier this month of its fourth branded store in Burlingame, California. With fall 2026 products now fully in stock, we expect prAna to rebound with a stronger Q4. Mountain Hardwear net sales declined 17% year over year, primarily reflecting lower fall 2026 wholesale orders and closeout sales.
Tim Boyle: While it was a challenging quarter overall for Mountain Hardwear, a bright spot was the strong US wholesale growth in full-price outerwear. This was driven by our new patent-pending stretch-down innovation, DoppleWeave, which provides both flexible warmth and unrestricted movement. Additionally, Mountain Hardwear's new lifestyle line, Hardwear Supply, launched in fall 2026 in DTC e-comm and REI doors. It contributed to growth in e-comm for the quarter, with strong sell-through to date.
Tim Boyle: We were thrilled to announce last month that Peter Rauch has assumed the role of president at Mountain Hardwear. Peter is a highly experienced and respected leader who has been with the Columbia family for nearly 20 years in different leadership roles. Most recently, Peter was the GM of the Columbia Brands North America region, leading the business through the initial phase of ACCELERATE growth strategy. Peter also previously spent several years leading our Asia direct businesses.
Tim Boyle: He brings deep knowledge of our industry and consumers, a track record of delivering business results, and a genuine passion for the outdoors. Mountain Hardwear continues to have tremendous growth potential, and we are confident Peter is the right leader to guide Mountain Hardwear into its next chapter. We are also pleased that Troy Sicotte, Mountain Hardwear's president for the past five years, will remain with the brand as global vice president of sales.
Tim Boyle: Troy played a pivotal role in strengthening the brand and building a strong foundation for future success. His deep industry expertise and strong retailer partnerships position him well to help drive the brand's next phase of growth and success. With Peter moving to Mountain Hardwear, Columbia Brand President Joe Boyle is being supported by a strong bench of leaders within our North America DTC and wholesale businesses.
Tim Boyle: We'll now discuss our financial outlook for Q4 2026 and the full year. This outlook and commentary include forward-looking statements. Please see our CFO commentary and financial review presentation for additional details and disclosures related to those statements.
Tim Boyle: For Q4, we anticipate sales growth of 3.5% to 7%. We expect Q4 EPS to be in the range of $1.85 to $2.10. This brings our full-year sales outlook to a revised range of up 2% to 3% versus the prior year, and brings our full-year EPS guidance to a range of $4.65 to $4.90 on a reported basis. We continue to expect full-year reported gross margins of 52.1% to 52.3% on a reported basis, or up 160 to 180 basis points versus the prior year.
Tim Boyle: As a reminder, this includes a roughly 180 basis point benefit from tariff refunds, net of accommodations to factory partners. We now expect that SG&A will represent 43.8% to 44% of net sales, increasing slightly year over year, but at a slower rate than the net sales growth. Based on these assumptions, we anticipate reported operating margins in the range of 8.7% to 9.1% for the year.
Tim Boyle: Now I'll provide an early update on our 2027 outlook. While we intend to provide full-year 2027 guidance on our Q4 call, we're currently forecasting wholesale growth in the mid-single-digit percent range, both in the US and globally, for H1 2027. This is supported by our wholesale spring order book, which improved from low to mid-single-digit growth since our last call. In closing, I'm highly encouraged by our Q3 results amid dynamic and challenging market conditions.
Tim Boyle: From a consumer standpoint, it's been just over 13 months since we launched our ACCELERATE growth strategy into the marketplace. This quarter's performance provides us with further proof points and greater confidence that our strategy is gaining traction.
Tim Boyle: At the same time, I'm even more excited about the opportunity that we have ahead of us, and that we will continue to work to elevate the Columbia brand and improve consumers' perceptions in the US. There is still significant room for improvement. I'm confident that we have the strategies in place, combined with our talented and energized global workforce, to return our business to a path of long-term sustainable growth. That concludes my prepared remarks. Operator, can you help us with the questions?
Operator: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Also, we ask each participant to limit yourself to one question and one follow-up. Once again, if you have any questions or comments, please press star one on your phone. Your first question's coming from Jonathan Komp from Baird. Your line is live.
Jonathan Komp: Yeah, great. Good afternoon. I want to follow up on the encouraging improvement you are seeing in the US D2C performance. I want to ask if you see that trend continuing here going forward, and some of the drivers that get you excited here. The commentary on 2027 orders, do you think that relates to the positive D2C performance resulting in stronger orders from some of your partners? Any other color there would be helpful.
Tim Boyle: Well, e-comm for Columbia is just one part of our Accelerate system that we are using to make the business better. I would say if you took a look at our website and ancillary items on the site by comparison to last year to this year, you would see a dramatic difference in how the garments appear, how the footwear appears. We really made a distinct effort to make our e-comm business the pinnacle of the Columbia brand, where it has the most and best recommendations.
Tim Boyle: If we talk about the success, it is really a function of better traffic, more traffic as a result of our Accelerate activities, and then once consumers are there on the site, better conversion, and really a better environment and a better experience for consumers. That is really how we are seeing the improvements in North American e-comm.
Tim Boyle: As it relates to our spring, to our 2027 business, spring 2027 order book just continued to strengthen, and that is based on a number of factors. I think likely the continued exposure of our various activations and marketing efforts as it relates to Accelerate. We are just now starting to sell fall 2027, so our expectations are quite buoyant, and I am expecting that we are going to see great things.
Jonathan Komp: That is great to hear. Then maybe, Jim, if I could follow up, thinking through a bit more just directionally some of the cost factors into 2027. You will be cycling the refunds, certainly in an inflationary environment broadly. Do you think SG&A becomes a lever that you intend to pull a little more aggressively to drive underlying margin expansion? Any other color there would be helpful. Thank you.
Jim Swanson: Yeah. Thanks for the question, Jonathan. Certainly, we are not looking to provide any forward-looking guidance. As we look out to next year, not unlike this year, we would fully expect that we are able to leverage the SG&A line, all dependent upon how we come in, hopefully on a full-year basis from a revenue growth standpoint. I would emphasize just a couple points as it relates to the gross margin.
Jim Swanson: One, I think you nailed a good point in terms of adjusting for the tariff refunds net of the factory accommodations that we have realized this year to the tune of about 180 basis points. Beyond that, it is really difficult, and we are in the midst of our planning process right now. There is obviously a lot of uncertainty as we look ahead as it relates specifically to whether there is any additional tariffs imposed by the administration.
Jim Swanson: Certainly, there are product input cost pressures that will increasingly impact us in the latter part of next year. We are taking surgical price increases where we can to help mitigate those. Those are among the factors we are looking at. Going beyond that, providing specific guidance, we cannot do that today.
Jonathan Komp: That is very helpful. Thank you.
Operator: Thank you. Your next question is coming from Bob Drbul from BTIG. Your line is live.
Bob Drbul: Hi. Good afternoon. Couple questions just on the Q3, Q4 for a second. When you guys look at the inventory levels, the in-transit situation coming out of the Q2 into the Q3, has everything normalized now as you think about what you're seeing? And within the Q4 outlook, have you seen any material order cancellations or changes to the 2026 order book around the business?
Tim Boyle: Yeah. Bob, as it relates to the in-transit inventory, that's primarily now been delivered to our various distribution centers and is on its way, if it has not already been received by our customers. So, that bit of logistics issues we believe is behind us. As it relates to Q4, and we get orders every day, we get cancels every day, but there's no meaningful change in anything that we've seen from the order book perspective. And we run a global business that's highly complex, and so we've given you the best advice that we can and guidance about where we believe the Q4 will end up.
Jim Swanson: I think one other point, Bob, as it relates to the inventory side of the equation is, Tim touched on, I think we're well-received to fulfill the remaining demand that we've got for fall 2026 coming into the Q4. A big chunk of the increase in our inventory at the end of the quarter and what we're now projecting at the end of the year, we have accelerated our spring 2027 production in light of longer logistics lead times. So, just one thing to keep in mind as you think about the overall growth in our inventory is really current and future season inventory, and it's timing-related.
Bob Drbul: Got it. And I guess just as you think about where we are in the Q4 right now, do you see elevated risk with weather or anything as it relates to especially your wholesale business, Tim?
Tim Boyle: Well, nothing out of the ordinary, Bob. Our business is highly reactionary to weather, so we are going to continue to watch it, but we have no expectations that it is going to be anything other than a normal winter.
Bob Drbul: Great. Thank you very much.
Operator: Thank you. Your next question is coming from Peter McGoldrick from Stifel. Your line is live.
Peter McGoldrick: Hey, guys. Thanks for taking my question. I wanted to dive in on the order books for spring/summer 2027. I was hoping you could help us think through the relative regional momentum compared to what we are seeing in the H2 2026, and how should we be thinking about the split of growth drivers between volume, price, and mix?
Jim Swanson: Yeah, as it relates to the. First and foremost, I would say we are awfully encouraged by where the spring 2027 order books come in. 90 days ago, we had indicated to you that that was up a low single digit to mid-single digit percentages. Tim touched on, the order book continued to come in over the course of the past couple months, and we now, with what visibility we have, we anticipate H1 wholesale growth in the mid-single digit range.
Jim Swanson: As you think about that from a geographic standpoint, and I think encouragingly from our standpoint, and I think another indicator of the work that is going on from an Accelerate standpoint, that does include low to mid-single digit rate of growth also in our US wholesale business. I think it leans more to the mid-single digit, and continued momentum in our international markets.
Jim Swanson: Our international growth is anticipated to continue to outpace the US side of business. All in all, we are quite pleased, and I think it is another, like I said, another strong indication of the work that has been going on from an Accelerate standpoint.
Tim Boyle: Yeah, I would also point out that footwear growth was larger than apparel growth for us for Q3, so very encouraging.
Peter McGoldrick: Very good. Then, just on the strategy to recruit more younger active consumers, can you give us an update on anything to support that, quantify any of the drivers there, and then how that is influencing the overall engagement with the consumer audience, whether it be price, willingness to spend, or frequency of purchase, or traffic patterns with these new dynamic audiences?
Joe Boyle: Yeah, thanks. As it relates to the consumers we are seeing in the engagement with Engineered for Whatever campaign, year-over-year improvements we have seen in both consideration and purchase intent among our target audiences on the professional leads and the dynamic actives. New customer growth in e-comm, with an increasing share of the business coming from those target audiences, is really showing momentum in the Accelerate strategy as it relates to consumers.
Peter McGoldrick: Very good. Thank you.
Joe Boyle: Thank you.
Operator: Thank you. Our next question is coming from Mitch Kummetz from Seaport Research. Your line is live.
Mitch Kummetz: Yeah, thanks for taking my questions. I guess first question, I just want to ask maybe Bob's question a different way. Tim, when you look at your retail partners, how do you think they are feeling about the winter season today, just kind of given what early sell-through trends have been, as well as kind of where channel inventory currently stands?
Tim Boyle: Well, we have been very successful on the merchandise that we have delivered has been selling through, especially in the Amaze collection, and as well our fleece offerings. I think the fleece offerings are dramatically improving in terms of the sell-through. Some of that is the emphasis we have had under our Accelerate, where we focused heavily on this product called the Helvetia, which is a 1991 garment that we have been selling since that period.
Tim Boyle: We really revitalized it through some activations as well as new colorways, et cetera. So, I think consumers, and especially retailers, are very excited about what is happening with the business. They see the unusual, and I would say differentiating activations we have done around Flat Earth and about the Don't Panic Room, which just launched yesterday. It is changing their perceptions of Columbia as a brand, and I think we are very excited about the future.
Jim Swanson: Mitch, I would just add that I think coming into the season, retailers were exceptionally clean on their inventory positions. As it relates to the outlook that we provide, I think we provided an adequate range of outcome for a variety of different weather conditions.
Mitch Kummetz: Okay. My follow-up question for you, Jim. In terms of the sales and EBIT beat in the Q3, how much of that was related to shifts in sales and spending versus plan versus just over-delivery in the quarter? On the over-delivery, what really drove that, if you had to sort of pinpoint it? I guess maybe just the last part of this question, are there any shifts contemplated in the Q4 outlook, shifts going from Q4 into Q1 2027?
Jim Swanson: Yeah, far less on the latter piece. I do not think we have got any meaningful timing differences between Q4 and Q1. As it relates to the third quarter, the beat from a revenue standpoint, certainly the lion's share of that related to timing. I think it was to the tune of, if we got a revenue beat that is in the $25 million range, call it $20 million of that is related to better wholesale shipments, and then the balance would be the D2C business.
Jim Swanson: I think the key to all of that, Mitch, would be, one, yeah, we were able to deliver a bit earlier than we had expected coming into the quarter. But I think importantly in all of this is you look at the underlying trends in our US business, and particularly the D2C and the e-commerce channel.
Jim Swanson: We were awfully encouraged by a notable change, and I think that is the collective efforts of what Joe and his team have done over the better part of the last year from an Accelerate standpoint, that all coming together. So, nice to see on those overall changes.
Mitch Kummetz: Okay, great. Thank you.
Operator: Thank you. Your next question is coming from Laurent Vasilescu from BNP Paribas. Your line is live.
Laurent Vasilescu: Oh, good afternoon. Thank you very much for taking my question. I wanted to follow up on your China number. I think last quarter, China on a constant currency basis grew mid-single digits, and this quarter, a little step up here, low teens. Curious to know, I know your business is humming there, but curious to know what you are seeing in the environment there.
Laurent Vasilescu: It seems like it is just a challenged environment, but it seems like you are, at the same time, improving that business. How do we think about I know you do not guide explicitly for China on a full-year basis, but could we kind of see that momentum continue in the low double digits into Q4?
Jim Swanson: Yeah, I think I can take that, Laurent. As it relates to China and looking at the execution in that marketplace, there was some acceleration, as you noted, from Q2 into Q3. Yeah, I think we would attribute that to the local marketplace strategies and the execution around that. I think our China team has done an exceptional job. I think we would also acknowledge that the macro environment in China, it is challenging.
Jim Swanson: I think it has gotten incrementally more challenging during the quarter. I think the competitive nature of what is going on there is also holding to be true in terms of just increased competition. I think our team is doing a great job in executing an otherwise difficult marketplace and taking some market share.
Jim Swanson: As we look out to Q4, I do not have the specifics on China, but I think we continue to forecast on a full-year basis that we would see double-digit percent level growth in China. So, really happy with what we are seeing there.
Laurent Vasilescu: Very good. Thank you, Jim, on that. Then in your CFO commentary, I know you reiterated your gross margin, but within the fine bullet points, I noticed you mentioned higher incremental US tariffs. I am just curious to know what is your assumption on tariffs?
Laurent Vasilescu: Because we are so close to the end of the year, I am just curious to know what was driving that as a source of pressure for the balance of the year. We really do not have any news from the White House. Then on the flip side, I noticed that you removed higher D2C promotions as a headwind. So, I am just curious to know those puts and takes, if you could unpack that for the audience. Thank you.
Jim Swanson: Yeah, good question. As it relates to the higher incremental US tariffs, it is noted in our gross margin outlook. Frankly, that probably should have been there previously. Essentially what that is, when you look on a year-on-year basis, this year we have got a full year's impact of the incremental tariffs, albeit rates have been changing throughout the year. Whereas last year, the tariffs really did start coming into place themselves midway through Q3 and then Q4.
Jim Swanson: So, it is just a year-on-year comparison. The offset to that is the high single-digit price increases that we implemented for both spring 2026 and fall 2026. So, effectively, those two things are neutralizing each other. Then with regard to the removal of the slight headwind as it relates to D2C promotions, yeah, I think there is, dependent upon geography and brand, there is certainly some promotional activity out there.
Jim Swanson: China would be, I think, an example of that. We saw a little bit of that in Europe as well. But then the counter to it as well, as you have seen, is we have had better full price realization within our D2C e-comm business, and we are making a very concerted effort and decision to pull back on those promotion levels. So, those are more or less offsetting as the reason why you are not seeing that appear in the overall gross margin bridge.
Laurent Vasilescu: Very helpful. Thank you very much, and best of luck with the rest of the year.
Jim Swanson: Thank you.
Operator: Thank you. Your next question is coming from Mauricio Serna from UBS. Your line is live.
Mauricio Serna: Great. Good afternoon. Thanks for taking our questions. I wanted to ask, on the Q4 outlook, you guiding to 3.5% to 7% growth. Just wanted to make sure, is there an impact from shipment? I do not know if you quantified that, if you could tell us there is an impact on Q4 sales growth outlook from that front. On the DTC part in the US, it is nice to see that inflection to positive. Any way of how you are thinking about that business in Q4? Are you thinking that that business can sustain that positive growth across both channels? Thank you.
Jim Swanson: Yeah. Mauricio, appreciate the question. As it relates to the timing shifts between Q3 and Q4, it is about a $30 million shift. For each of the two quarters, it is in the 2.5 to 3 percentage points impact to revenue growth. So keep that in mind as a component of what you are seeing as a 3.5% to 7% to be adjusted for that in both quarters.
Jim Swanson: As it pertains to the direct-to-consumer business in the fourth quarters, we have planned that business more or less in line with what we realized in Q3. So if you look at our DTC brick-and-mortar business being up 4% in the third quarter, we are more or less planning at a commensurate level in the fourth quarter. E-commerce business, I think we planned slightly more aggressively. We finished high single digit, what, 8%, 9% growth in Q3.
Jim Swanson: We have got planned, I think, at a low double-digit percent level for the fourth quarter, and that would be somewhat indicative of the improvement that we saw in the trend in that part of our business throughout the third quarter and in the exit rate. So, we feel good about the outlook that we are providing here today from an overall top-line perspective.
Mauricio Serna: Got it. If I could just have a quick follow-up on, I know you haven't given guidance for next year, but is the right way to think about the 2027 gross margin, just take out the 180 basis points of refund, then layer in things like freight, raw material, and I guess, promos, is the right way to think about it, like flat-ish year over year? Thank you.
Jim Swanson: Yeah, really tough to provide any indication on that. I mean, yes, as it relates to adjusting for the tariff refunds and the factory accommodations, but going above and beyond that in terms of all the different variables on promotional and markdown activity, where we're taking pricing, the product input cost pressure, there's a lot of variables there. We're in the middle of our planning process, and we look forward to providing an update on that in February at our year-end call.
Mauricio Serna: Got it. Appreciate it. Thank you so much.
Operator: Thank you. Our next question is coming from Tom Nikic from Needham. Your line is live.
Tom Nikic: Hey, guys. Thanks for taking my question. Wanted to ask about the progress you have made on the Accelerate strategy, and I am curious, things like product and marketing, are they where you want to get them to? Is there still more progress to be made on improving the product or improving the marketing? Just curious where we stand there.
Joe Boyle: Yeah, thanks for the question. This is Joe Boyle. Accelerate is a long-term strategy, so we are very encouraged with some of the momentum we are seeing, particularly around our consumer focus and being able to reach them with the marketing, which I will remind, Engineered for Whatever is just a little more than a year old, so we are making a lot of progress with Engineered for Whatever, targeting the consumers.
Joe Boyle: Then as it relates to the product, focusing on new products that we have designed and developed around these consumer segments, like the Amaze Puff, MTR fleece, Helvetia fleece, which is really a new product for a lot of these new consumers, even though it is a reincarnation of a classic product that we have.
Joe Boyle: Even in footwear, as we look at the products we are making specifically around attracting consumers through Accelerate, a lot of progress being made there in footwear across the board, and particularly in products focused with Omni-MAX as well.
Tom Nikic: All right. Very helpful. Thanks very much, and best of luck this holiday season.
Joe Boyle: Thank you.
Operator: Thank you. That concludes our Q&A session. I will now hand the conference back to Tim Boyle for closing remarks. Please go ahead.
Tim Boyle: Thanks, operator, and thanks everyone who joined the call today. I would like to close the call by thanking our global workforce for their continued commitment and strong performance through the first nine months of this year. Like Mother Nature, the global business environment can be volatile and unpredictable. So far this year, we have navigated tariff uncertainty, geopolitical conflicts, soaring energy costs, and supply chain disruptions.
Tim Boyle: Through it all, our teams have weathered the storm, focused on what we can control, and positioned us to achieve the upper half of our initial 2026 sales and earnings guidance. As usual, our Q4 performance will remain critical to achieving our full-year goals. Despite what you have heard, winter is coming, and we are ready for it. Wish all of you and your families a safe and happy holiday season, and look forward to updating you on our progress again in a few months. Thanks.
Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
