COLM: 2H Margin Pop?

Columbia Sportswear cut headcount today according to SportsOneSource (I've found them to be fairly accurate on nuggets like this). While I don't make it a practice of commenting on news stories like this, I have to point out a few important themes.

1) Based on my sources, the report appears true, and seems to be above and beyond any cost reduction efforts the company noted on its recent conference call.

2) This is literally days after K-Swiss instituted layoffs in its salesforce.

3) Kind of ironic that US companies are laying off, while workers in Vietnam are striking because recent 14% wage hikes are not enough! So the people making the product are refusing to work, and the people designing and selling the product are being fired. That's matching up supply and demand the hard way. How can this be a positive trend??

4) SG&A trends for COLM have been trending up in recent quarters due to investments in new brand initiatives (see Exhibit below, courtest of FactSet). That's a solid move - especially given the fact that sales have been struggling to find a bottom. COLM is 2 quarters away from much easier year-year margin compares. With cost cuts hitting in full in the 3rd quarter, could this thing be setting itself up for a margin pop in 2H even without a rebound in sales? At 5x EBITDA and 12x EPS this probably matters...


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