COLM — Q2 2026 Financial Report Analysis

Columbia Sportswear's second quarter of 2026 (April to June) went from a $10.2 million loss a year ago to a $26.6 million profit, $0.52 per share. The swing came almost entirely from a refund. In March a US trade court ruled that tariffs collected under the International Emergency Economic Powers Act (IEEPA) must be paid back, and Columbia received about $78 million in June. Without the refund, the company would have reported a larger loss than last year. Sales rose 1.5% to $614.4 million: growth in Asia and Europe more than made up for another decline in the US, Columbia's biggest market.

Q2 is a small quarter for Columbia. Most of its sales come in the second half, when stores stock up on winter jackets and boots, while costs are spread fairly evenly through the year. Second-quarter results say more about where the brand is heading than about full-year profit.

At a glance

• $0.93 of the $0.52 EPS came from the tariff refund. Columbia says this itself. Without it, the quarter's EPS would have been about -$0.41, compared with -$0.19 a year ago.
• US sales fell 4.5% while the rest of the world grew. Asia/Latin America (LAAP) was up 12% and Europe/Middle East/Africa (EMEA) up 10%. Abroad the brand is growing; in the US it is not.
• Inventory is 6% lower than a year ago at $874.8 million. Unsold stock is the usual risk for a clothing company, and it looks contained heading into the main selling season.

Key figures

n/m = not meaningful (a loss turning into a profit has no sensible percentage change). Gross margin is the share of sales left after paying for the goods sold. Operating margin is the share left after running the business too, before interest and tax. Columbia says the refund added about 980 basis points (9.8 percentage points) to gross margin; the "excluding refund" row simply subtracts that.

The tariff refund, and what is left without it

According to the 10-Q, Columbia had received about $78 million of IEEPA tariff refunds, interest included, by June 30. The accounting split it three ways:

• $60 million went to cost of sales. The tariffs had been paid on goods that were already sold, so the refund lowered the cost of those goods after the fact. This is the money behind the jump in gross margin.
• $2 million was interest income. It is the main reason net interest income rose 28% to $6.2 million.
• $15 million reduced the value of goods still in inventory. That will lower cost of sales as those products sell. But management says the future benefit "is expected to be largely offset by anticipated accommodations to certain third-party factory partners", meaning payments to the factories that make its products. So little of this $15 million should show up as extra profit.

Take out the $60 million and operating income becomes roughly a $29 million loss, about -4.7% of sales. A year ago the operating loss was $23.6 million, or -3.9% of sales. In other words, the business underneath did slightly worse. Two things the filing names explain it. Gross margin before the refund slipped because of "increased promotional activity within DTC B&M", which means discounting in Columbia's own physical stores. And SG&A (selling, general and administrative expenses: staff, stores, marketing, overhead) rose $6.6 million. That included $11.5 million more in store costs, among them impairment charges on underperforming retail stores (a write-down when a store is worth less than its book value). Savings from last year's Profit Improvement Program cost-cutting partly offset it.

Brands: footwear and the smaller brands grew, SOREL shrank

The Columbia brand makes up 90% of sales, so it sets the result. Footwear sales across the company rose 5.5% to $117.0 million. The filing credits growth of the Columbia brand's footwear "led by the U.S." and partly offset by SOREL. SOREL, the winter-boot brand, sells little in the spring, so a 13.5% drop in a small quarter tells us less than its Q3 and Q4 results will. Still, it was also down 12% for the first half. prAna (yoga and climbing clothing) and Mountain Hardwear (technical outdoor gear) both grew, but together they are under 7% of sales.

Regions: a US problem and an international recovery

Constant currency removes the effect of exchange-rate moves, so growth figures reflect real sales changes rather than a weaker or stronger dollar.

• US: Sales fell $15.0 million. Wholesale customers placed smaller Spring 2026 orders "in response to weak sell-through performance during the Spring 2025 season": stores had trouble selling last spring's stock, so they bought less this year. Sales in Columbia's own US stores fell because of store closures and lower traffic. Online sales grew slightly. US segment profit almost quadrupled, but only because of the refund. Columbia says the refund added about 1,875 basis points to US gross margin, and without it US margin would have gone down as discounting rose. The filing is direct about the brand's problems in the US: other consumers "have increasingly shifted their preferences to also incorporate versatility and style for everyday wear", and athletic, athleisure and newer outdoor brands have "capitalized on this casualization and style trend." Columbia's response is its ACCELERATE strategy, aimed at younger, more active buyers. Management says it is "starting to show tangible signs of traction" but will "take more time and work."
• LAAP: Every market grew, led by distributors and China. Distributor growth came from healthy Fall 2026 orders, plus some Fall shipments that went out in Q2 this year instead of Q3. Part of this growth is borrowed from next quarter. In China, online demand was solid, but the company's own stores were weaker in constant currency.
• EMEA: Europe grew in both wholesale and the company's own stores, helped by new store openings. Profit fell $1.2 million anyway, because SG&A rose 21% as the region paid for those new stores.
• Canada: Wholesale shipments shifted to later quarters, so the loss widened.

What the headline numbers hide

• The refund is a one-off and it flatters the quarter. It accounts for $0.93 of EPS. Remove it and the operating margin was weaker than a year ago, not better. Next year's comparison will look much worse unless the underlying business improves.
• Cash flow also depends on the refund. Operating cash flow for the first half was $37.5 million, compared with a $62.9 million outflow a year ago. Columbia attributes the change "primarily" to the roughly $78 million refund. Without it, first-half operating cash flow would have been about -$40 million: less negative than last year, but still an outflow. That is normal for the first half, when Columbia buys inventory for the fall.
• Buybacks did some of the per-share work. Columbia spent $150.0 million in Q1 buying back about 2.5 million shares at an average of $60.03. It bought none in Q2. Diluted shares were 6.4% lower than a year ago, so the same profit is spread across fewer shares and per-share results look better than total profit.
• The tax rate is not distorting much. The effective tax rate was 26.8%, compared with 38.5% a year ago. Last year's rate was high on a loss, partly from a tax benefit related to foreign-currency losses. Pre-tax income is the cleaner comparison, and it also swings because of the refund.
• Inventory and receivables look healthy. Inventory is down 5.6% from a year ago. Receivables (money customers owe Columbia) are down 6.6% to $271.3 million, while sales were up 1.5%, so neither is growing faster than sales. The year-ago inventory was inflated on purpose: Columbia brought Fall 2025 goods in early to get ahead of tariffs. Part of the decline is that pull-forward unwinding, not only better buying. Inventory purchase commitments were $534.6 million, almost unchanged from $523.8 million at year-end.
• No debt, plenty of cash. Cash and short-term investments were $624.6 million and there were no borrowings. In March Columbia also took out a new $500 million revolving credit line that it has not used.

Takeaway: The 920-basis-point gross-margin jump is a court-ordered tariff refund, not a turnaround. Without it, Columbia's spring quarter was slightly worse than last year's, because the US business keeps shrinking and its stores are discounting more. Growth in Asia and Europe is real, but part of it is Fall orders shipped early from Q3.

Outlook

Management raised its full-year 2026 targets on July 30, but almost entirely because of the refund:

The company says the new gross margin includes about 180 basis points from the refunds. It also says that, excluding the refunds, it still expects full-year results within the earlier ranges. The CEO added that the outlook for the second half "has incrementally moderated" because of geopolitical and economic pressure. Operating cash flow guidance went down, even though the year now includes roughly $78 million of refund cash. The release does not explain the cut. Because the earlier margin and EPS ranges left out the refunds, this suggests weaker underlying cash generation. That is the line to watch most closely.

For Q3 (July to September), Columbia guided to sales of $929–943 million, between 1.5% lower and flat. It also expects an operating margin of 8.1–9.5% and EPS of $1.15–1.35, compared with $0.95 a year ago. The company attributes part of the softer sales outlook to Fall shipments moving into Q4. We would also expect some payback from the LAAP Fall shipments pulled into Q2. Columbia also warns of three things: supply-chain congestion that may delay Fall 2026 inventory, cancelled orders from Middle East distributors since the conflict that began in late February, and gross margin pressure from the planned payments to factory partners.

Our read: International growth and footwear are working. The US core is not working yet. Columbia's own Q3 guidance shows margin improvement, but ahead of a quarter in which US consumer pressure, late deliveries and discounting all push the other way. Q3 results are scheduled for October 29, 2026. What will show whether ACCELERATE is working is not EPS, which the refunds still distort. It is whether US wholesale orders for Fall stop falling, and whether discounting in Columbia's own stores eases. A cleaner test comes in 2027, when there are no refunds to compare against.