This company never ceases to amaze me. If you were to ask me a week ago (as some clients did) I'd have said that I thought that COLM would smoke the quarter by a factor of 2x, but that SG&A and capex would numb the impact of a weak backlog and an FX headwind for the reminder of the year. Net/net, not a big bull event, but be weary of following the herd onto the short side. That was in the low $30s. Though the stock has since rallied to $37, I think that my original statement will prove to be flat-out wrong.
The consensus is going to end up shaking out in the $1.50-$1.75 range. There's no way this stock could maintain a 3-handle with that earnings base. To be clear, I think that they are absolutely sandbagging, and will come in between $2.00 and $2.25. Let's watch this one real close. If estimates come in closer to that $1.50 line and the stock gets obliterated, it's definitely worth a look-see.
As always, there's a ton of moving parts around the fundamentals here. What's the biggest positive that jumped out at me? The core Outerwear business performed quite well - up 10% yy. Not only is this the highest margin product for COLM, but it is the best authenticator and halo for the brand. On the flip side, just about everything else was flat-out embarrassing. This company simply can't gain traction in any of its non-outerwear businesses.
As noted above, I was in the camp that cutting costs and capex could be a buffer here for '09 and '10. In fact, I was about to beat the company up for taking capex UP in '09 by 10%. But pondering about how little traction these non-core products and brands have, I'm in the camp that COLM needs to invest more rather than cut - or simply close down what's not working (which management will not do).
The other option would be to sell the company, which is plausible if the right partner is willing to buy it and 'leave it alone' (i.e. VFC). That's probably closer to reality now than it was a month ago.
In the end, every story has its price. Let's see where numbers shake out. If this is oversold into sandbagged expectations, it may be a trade. For longer-term investors, there are clearly deep deep issues worth researching. We're on the case.