Columbia Sportswear Co (COLM) 2025 Q4 法說會逐字稿

Please note this conference is being recorded. I will now turn the conference over to your host, Reed Anderson. You may begin.

Good afternoon, and thanks for joining us to discuss Columbia Sportswear Company's fourth-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.

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. 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'd also like to point out that during the call, we may reference certain non-GAAP financial measures, including constant currency net (technical difficulty) 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 in the Appendix of the CFO commentary and financial review.

Following our prepared remarks, we will host a Q&A period during which we will limit each caller to two questions, so we can get to everyone by the end of the hour.

Now I will turn the call over to Tim, our Chairman and Chief Executive Officer.

Thanks, Reed, and good afternoon. With me on the call today are Co-Presidents, Joe Boyle and Peter Bragdon; our Executive Vice President and Chief Financial Officer, Jim Swanson; and our Executive Vice President, Chief Administrative Officer, General Counsel, Rochelle Luther.

This is our first earnings call for Joe, Peter, and Rochelle in their new roles. As announced in November, these role changes are part of our ongoing process to advance our succession plans. I'm glad to have such a strong bench of leadership to help grow the company over the coming years.

Now turning to the fourth quarter. We're pleased to have delivered net sales and profitability exceeding our guidance for the fourth quarter, driven by better-than-expected demand in the US. While our US business remains challenged, I'm encouraged with continued growth internationally combined with early signs of momentum, indicating that the Columbia ACCELERATE Growth Strategy is resonating with consumers, including new and enhanced product collections and differentiated marketing. I'd like to thank our global workforce whose hard work and dedication have enabled us to make this meaningful progress.

Highlights from 2025 include international sales growth, which was strong and broad-based, reflecting wholesale and DTC growth. The launch of Columbia brand ACCELERATE Growth Strategy is beginning to attract younger consumers into the brand with new product collections, such as the Amaze Puff. The Engineered for Whatever campaign launched in August drove robust consumer engagement with key activations such as expedition impossible.

Inventories are healthy and essentially flat as we exit 2025, inclusive of increased tariff costs in the US. The rate of SG&A growth has slowed as we optimize spending to allow us to increase the level of marketing to drive engagement and demand. We remain steadfast in our commitment to driving shareholder value, returning meaningful cash to shareholders, including $201 million in share repurchases and $66 million in dividends. We continue to maintain our fortress balance sheet, exiting the year with $791 million in cash and equivalents and no debt.

While we made progress in many areas, our 2025 financial performance was short of my personal growth and profitability goals. Overall, our full-year '25 net sales increased 1% to $3.4 billion as growth in the international markets was mostly offset by continued headwinds in the US.

The impact of unmitigated tariffs, brand impairments, and increased marketing spend contributed to operating margin contraction and a decline in earnings. Looking forward, we see positive indicators from each of our brands. With the Columbia brand, the Amaze Puff collection was an outstanding success for Fall '25.

For Spring '26, we introduced a seasonally appropriate Amaze collection. We're also excited about the potential of the ROC pant program and recently launched the ROC Lite series. New for Spring '26, the ROC Lite short includes a differentiated stretch waste band, the rock band, providing all-day comfort.

Throughout our Spring '26 offering, we have invested in a diverse range of new styles across apparel and footwear from high-performance hiking, fishing, and trail running products to contemporary outdoor lifestyle products designed to resonate with consumers in the outdoor communities that we serve.

Another key highlight for Spring '26 is Outdry Extreme, our patented technology delivering industry-leading waterproofness in a post-PFAS world. Outdry Extreme combines enhanced functionality with sustainability as the base material is made from recycled textiles. As we look forward to the year ahead, our initial full-year net sales outlook contemplates growth of 1% to 3%.

In addition to Columbia brand growth, all of our emerging brands are expected to grow led by prAna.

Our initial 2026 operating margin outlook contemplates expansion from 2025 despite ongoing headwinds from incremental US tariffs. We expect modest SG&A expense growth with the goal of offsetting gross margin contraction.

Turning to fourth-quarter financial performance. We delivered fourth-quarter results that exceeded our guidance range as stronger-than-anticipated demand in the US more than offset unseasonably warm weather in most direct international markets. Net sales decreased 2% year over year to $1.1 billion, driven by a 7% decrease in wholesale net sales, partially offset by a 1% increase in direct-to-consumer sales. Recall that earlier-than-planned shipments of Fall '25 orders shifted some wholesale sales to earlier in the year.

Gross margin expanded 50 basis points to 51.6%, driven by cleaner inventories that contributed to lower promotions, clearance activities, and lower inventory loss provisions, which more than offset the impact of incremental US tariffs. SG&A expense increased 3%, reflecting higher DTC expenses and other non-recurring SG&A expenses associated with our profit improvement program, partially offset by the effect of cost reduction efforts, lowering expenses in targeting areas of the business. This performance resulted in operating income and diluted earnings per share above our guidance range.

Looking at net sales by geography. US net sales decreased 8%. The US wholesale business was down high-teens percent, reflecting earlier ship in a Fall wholesale orders from a lower order book. Results were partially impacted by inventory supply constraints as we curtailed Fall '25 inventory purchases as a precautionary measure upon US tariff announcements earlier in the year. US DTC net sales declined low single-digit percent in the quarter.

Brick-and-mortar was down low single-digit percent, reflecting the closure of temporary clearance locations and lower mall traffic, partially offset by higher productivity from existing stores and contribution from new stores. We exited the quarter with 8 temporary clearance locations compared to 28 in the prior year.

E-commerce was down low single-digit percent as soft traffic and less clearance and promotional activities were partially offset by ongoing efforts to refine our marketing investments for the Columbia brand. We saw modest sales growth in the Columbia brand, offset by declines in emerging brands. The improved photography on the redesigned uscolumbia.com website helped to drive discovery and engagement.

From our review of fourth quarter year-over-year net sales growth in international geographies, I will reference constant currency growth rates to illustrate underlying performance in each market. LAAP net sales increased 10%. China net sales increased low double-digit percent, driven by wholesale and e-commerce growth despite the impact of warm weather on demand for seasonal products. The outdoor category remains robust in China.

We continue to drive high levels of brand engagement with young active consumers by emphasizing iconic products and styling as well as premium localized product offerings, including the Transit and Hike 365 collections.

During the quarter, we educated consumers about our technologies through an Omni-Heat Infinity roadshow that our team executed in four of China's largest cities. In addition, we saw strong engagement from the Sunset Lower PFG campaign launched on TikTok as well as our Titanium Ski campaign.

Japan net sales increased high single-digit percent, reflecting increased Fall '25 wholesale shipments shifting into the fourth quarter. Our Japan business remains healthy despite declines in tourism and lower domestic consumer sentiment. Omni-Heat Infinity outerwear and winter boots performed well during the quarter.

Korea net sales increased low single digit percent driven by wholesale and e-commerce as we gain share in a soft outdoor category.

We're thrilled with our team's execution across brand and marketing initiatives that drive digital sales. The team delivered improvements in both conversion and marketing efficiency during the quarter. The Engineered for Whatever campaign is driving brand momentum, including strong engagement from a local brand ambassador partnership that resulted in millions of Instagram impressions and exceptional product sell-through.

LAAP distributor markets delivered high-teens-percent growth driven by a strong order book for spring '26, further reinforcing the enduring strength of the Columbia brand in these important markets. Our distributor teams are successfully engaging young active consumers through localized marketing activations and elevated brand retail experiences that showcase our best products and innovations.

EMEA net sales increased 3%. Europe direct net sales increased slightly as growth in brick-and-mortar retail was partially offset by lower wholesale sales reflecting earlier shipments of Fall wholesale orders. Warm weather across Europe dampened consumer demand for cold weather products. Europe offers strong growth potential, and we're determined to capitalize on our brand momentum and drive broader awareness led by younger active consumers. Our EMEA distributor business increased low-teens percent, reflecting healthy order book for spring '26.

Canada net sales increased 3% in the quarter, driven by improved store productivity in DTC and wholesale growth.

Looking at fourth-quarter performance by brand. Columbia net sales decreased 1% as international growth was more than offset by declines in the US, reflecting earlier timing of Fall shipments along with the closure of temporary clearance stores and soft consumer mall traffic.

The Amaze Puff collection was our top product story for the Fall season. By pairing an incredible product with a campaign that resonated with a focused and engaged audience of stylish young females, we were able to deliver amazing success. Many of the Amaze consumers in our US e-commerce channel were new first-time purchasers of the brand. The engineers for Whatever campaign had a profound impact in the fourth quarter driving and amplifying our messaging and building buzz.

We executed a campaign across consumer touch points, including key trade outlets, Thursday Night Football, our social channels, certain of our wholesale accounts, and our US branded retail stores. Since the launch, there have been distinct changes to certain of our brand metrics, including measurable increases in unaided brand awareness and branded search as well as the perceptions of their reference in style. The impact of the campaign underscores the success of Engineered for Whatever and provides us confidence in the direction of the brand and our accelerated growth strategy.

We drove large-scale buzz with our activations, which has been a key part of the ACCELERATE Growth Strategy. In December, we executed the expedition in possible activation, a marketing campaign that are flat earth to find the literal edge of the earth. We promised that anyone who could actually find the edge of the earth, photographic and send evidence would receive everything owned by the company, LLC, including gear, office equipment, and assorted used corporate assets.

The campaign kicked off with an open letter published in the New York Times and on Columbia's social channels, challenging flat earthers to put their beliefs to the test. The campaign engaged online communities lately interacting with flat earth content and sparking conversation.

We're excited for the upcoming 2026 Winter Olympic Games, it's an incredible honor to be the official uniform sponsor for the USA Curling National team. We've been working closely with USA Curling to support these athletic ambassadors as they compete at the highest level on the Olympic stage.

Lastly, our latest marketing activation combines our passion for the outdoors with American's enthusiasm for the biggest game in football. With Nature Calls, the only beer that uses bear scat in the brewing process. We've taken our active engineering excellence to a new level to make even the worst parts of Mother Nature bearable or, in this case, palatable.

In a series of short videos that dropped on social media beginning January '26, consumers were introduced to a bear whose GI routines deliver the foundational ingredient in Nature Calls. The campaign culminates with their activation at a tailgate pre-game event in Santa Clara, where consumers can enjoy our new favorite beverage Nature Calls.

Turning now to our emerging brands. As a reminder, each of these brands derive almost all of their revenue from the US marketplace. Additionally, a Mountain Hardwear heavily promoted PFAS inventories in the fourth quarter last year in advance of US regulatory deadlines, which impacts year-over-year comparisons.

SOREL net sales decreased 18% due to the earlier shipment of Fall wholesale orders along with less clearance activity. Full-price demand for the brand was healthy with demand exceeding supply for key styles. In e-commerce, we continue to acquire new consumers and drive strong traffic. The team had successful launches during the quarter and unveiled the Horizon collection which delivered particularly strong results from the call science style. The team also created brand heat through collabs with Barber, Neighborhood, and Aspen. Corona

net sales increased 6%, driven by DTC, reflecting strong momentum for the brand's updated product offering supported by advanced full-funnel marketing. Our team has been successfully expanding the prAna marketplace by targeting more lifestyle fitness accounts and the active original consumer more broadly. We're very encouraged by positive sales trends in Shay Soft and women's seasonal products during the quarter. Mountain Hardwear net sales decreased 5%, driven by lower clearance and promotional activity compared to elevated levels in the prior year.

Underlying business trends were healthy with notable strength in outerwear as well as fleece, led by our Summit Grid franchise. Ongoing optimization of Mountain Hardwear's full-funnel advertising approach drove online traffic during the quarter. Additionally, branded in-store environments are continuing to deliver strong results and are poised for growth next year based on the current order book and planned door expansion.

The brand also released its celebrated Mythogen kit, a new high-tech snow kit sold exclusively with Evo and on its e-commerce site with a launch party at Evo Salt Lake City location and a pop-up experience at the Brighton Resort in Utah in the quarter.

I'll now discuss our 2026 financial outlook. 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.

For the full year, we expect net sales growth in the range of 1% to 3%. Based on recent weakening of the US dollar, foreign currency is expected to be a slight tailwind, contributing 50 to 100 basis points to the top line. With greater than 80% of all '26 advanced global bookings orders in hand, we project second-half global wholesale net sales to increase up to a mid-single-digit percent.

We were encouraged that our US wholesale business is expected to return to growth in the second half, including growth from all brands. That said, retailers remain cautious as tariff-induced price increases are just now beginning to hit the marketplace.

Gross margin is expected to contract 70 to 50 basis points to 49.8% to 50%. The decline in gross margin is primarily driven by the impact of incremental unmitigated tariff costs. We continue to evaluate and have taken actions to mitigate the financial impact of tariffs through a combination of price increases, vendor negotiations, resourcing production, and other tactics.

For both Spring '26 and Fall '26, we increased US pricing by a high single-digit percent. When combined with our other mitigation tactics, our goal of '26 is to offset the dollar impact of higher tariffs. Longer term, our goal is to restore our product margin percentage to historical levels.

SG&A is expected to increase but at a slower rate than net sales growth. SG&A leverage reflects the effect of previously executed and planned cost reduction actions, partially offset by continuing strategic investments internationally along with maintaining accelerated marketing spend. Based on these assumptions, we expect an operating margin of 6.2% to 6.9%, leading to diluted earnings per share in the range of $3.20 to $3.65. This range includes a positive impact of approximately $0.10 to diluted earnings per share due to changes in foreign currency exchange rates.

For the first quarter, we anticipate sales to be down approximately 2.5% to 4%, reflecting overall softness year to date. This will result in SG&A deleverage. And when combined with our anticipated decline in gross margin, resulted in earnings per share of $0.29 to $0.37.

In closing, I'm thrilled with the successful launch of the Columbia brand Engineered for Whatever platform. Over the past few months, we've witnessed brand momentum as consumers embraced our new product collections with even more exciting launches on the horizon.

Engineered for Whatever has not only reenergized our unique brand voice but has provided powerful differentiation in a competitive marketplace. This momentum positions us well for continued success as we execute our vision and continue investing across all of our brands to accelerate profitable growth; create iconic products that are differentiated, functional, and innovative; drive brand engagement with increased, focused demand creation investments; enhance consumer experiences by investing in capabilities to delight and retain consumers; amplify marketplace excellence that is digitally-led, omnichannel, and global; and empowered talent that is driven by our core values.

That concludes my prepared remarks. Operator, could you help us get questions for the remainder of the hour?

(Operator Instructions) Bob Drbul, BTIG.

Peter, Joe, and Rochelle, welcome. And Peter, let her do her job, okay?

Thank you, Bob.

All right. So I guess the first question, generally, Tim, is when you look at the trends in the business, the initiatives underway, and I would even say incorporating current weather, can you just talk about like how the business has developed over the last, let's call it, December, January into February?

I think you talked about the order book. I think maybe you said 85% complete. I guess your updated thoughts around what remains to be booked and how that might trend given the trends that we're seeing today.

Yes, certainly. Well, I mean we're very encouraged. The bookings have been strong. We were quite cautious in entering the sales period for Spring '26 as were our retailers. The impact of tariffs were not fully known and frankly, still not yet, but we were quite conservative in terms of our approach to winter products for first quarter and our spring business.

So the business could frankly have been a lot better had we been more aggressive. But the trends right now with, of course, the great weather we're having in the first quarter, inventory should be very low in the US. And I just see great things happening, including the terrific acceptance of our Amaze collection and other products, which are really leading the Fall categories.

And then we've got some really exciting projects underway to create an impact on the brand and the awareness for the brand and its products, which are quite differentiated. We don't think anybody else in our space can do these things. So we're very excited.

Great. And I guess just on the brand advertising, and you talked about the progress that you're seeing. When you consider the marketing, I guess, the level of spend that you put into the business in '25, the needs to continue to invest in marketing in the back -- in '26 generally, do you think you're at the right level? And I don't know if you could give us any more of the metrics around progress for the brand equity, especially here in the US. Thanks.

Yeah. I think we could spend more. I don't think we need to spend a significant amount more than that than what we're spending today. And Jim will remind us what our delta in ad spend has been over the last several years. But I think we've found an efficient way to get noticed. We've found a way to break through the clutter and in a way that's incredibly efficient. So I think we always can use some more, but I think we're in the right spot for right now.

Yeah. I think, Bob, just to add a couple of comments on that. We do believe that the incremental investments that we're making in marketing allow us to have a louder voice in the marketplace. I think that's pretty clear from a differentiation standpoint over the last year.

Just in terms of the rate of spend, we were at 5.9% last year. This year, being 25%. We finished at 6.5%. So it's one of the major drivers of our increase in SG&A. And as we go into 2016, our plan would be to more or less maintain that marketing spend down slightly to 6.4%, but by and large, seeking to maintain the strategic investments that we're fully committed to behind the Accelerate strategy.

Laurent Vasilescu, BNP Paraguay.

Tim, I want to focus on your business, but over the last 24 hours, there's a lot of news around Eddie Bauer potentially closing 200 stores in North America. Love to get your take in terms of if there's an overlap there. I don't think your guide was assuming a potential liquidation of those 200 stores. Is there any way you can maybe, for the audience, like quantify like what's the overlap if Eddie Bauer does liquidate? Thank you very much.

Certainly. Well, I think we've actually been a supplier for many years at Eddie Bauer when it was more of a typical retail operation. And of course, the brand is well known, but it's certainly fallen on hard times. And the brand relied heavily on sort of its existing reputation as opposed to building in marketing efforts and marketing expense to make it a bigger business.

It's well known. We don't overlap in every store that they have in centers, but we would expect that as they leave the centers, we'll be in a position to accept more responsibility -- more business from outdoors folks who would typically buy that brand. That brand, I would say, generally, is a notch below the Columbia pricing. So we hopefully will get some of that, but it will be a question as to exactly how large.

Okay. Fair enough. Yeah, unfortunate news, but opportunities for you to gain share.

Jim, I'd love to focus on the -- in terms of the second question, the gross margin. Your CFO presentation is always helpful. And I think in 3Q, you had $50 million to $20 million of unmitigated $20 million for 4Q. If I do the quick math, the 300 basis points of unmitigated for fiscal year '26, I think it's about $100 million. So I'm trying to understand like what's the cadence here. Like I would think like it crescendos right now, and then it tapers off. For the audience, maybe can you kind of walk us through like how do we think about that $100 million for fiscal year '26 over the coming quarters? Thank you very much.

Thanks, Laurent. I think you're thinking about it in the right way from an overarching standpoint. Maybe just to step back for a minute. When you think about the unmitigated tariff costs that we incurred in '25 of just over $30 million and an incremental 300 bps. Those are stacking, so effectively on a two-year basis. The impact of the unmitigated tariffs are about 400 basis points. And of course, we're offsetting a fair amount of that through the price increases that Tim spoke to with high single-digit price increases for both spring '26 and Fall '26.

Keep in mind, as we get into the first part of this year, as we're continuing to sell fall, winter goods, we did not increase price on that. So I think they'll be a disproportionate impact to gross margin, particularly in the front part of the year, Q1 in particular.

You'd note that when you look at the outlook that we've provided for Q1, which is weaker from an overall standpoint, both from a top line and from a gross margin perspective. And as we work our way through the year and particularly in the latter part of the year where there's more effect as it relates to those price increases that we've planned into our margins, while still also allowing us some room in that gross margin outlook for the uncertainty of how consumers react to broad price-based increases and just making sure that we've got some room to move within that.

Peter McGoldrick with Stifel.

I wanted to get a sense of the health of the US market after pulling out some of the one-time items around timing of wholesale shipments and then store closures. I was curious what's embedded in the outlook. Should we expect a return to growth by the fourth quarter or just the shape of guidance to get to the annual guide of modest declines?

Yeah. The annual estimations for the company include a softer first half and a much stronger second half. So as we were saying, we've got over 80% of our Fall order book in hand, and we know where our emphasis is going to be, both from a marketing standpoint as well as how that will link to our customers' inventories. So we're excited about the possibilities for the business in wholesale.

And then in retail, we will just continue to improve on our performance there. In terms of all the typical metrics of a retailer where we believe there's lots of room for improvement for the company.

And then, Peter, just I'm thinking through the puts and takes from a revenue standpoint. As you look at the CFO commentary, you'll note that our US wholesale business for the quarter was down high-teens percent. And just to unpack that a little bit, the wholesale shipment timing represent over half of that decline from an overing standpoint. And then the balance is effectively the lower orders for the Fall '25 season coupled with we did curtail some inventory purchase that Tim touched on at height of the tariff announcements that left us a bit light on inventory that were unable to fill some demand.

And then, Jim, a follow-up on Laurent's question about leaving some room in the gross margin guide. Can you help us think about the puts and takes around the tariff mitigation strategy and the pathway to get gross profit dollars or to offset tariffs at the gross profit dollar line, whether it be pricing or your other mitigation actions?

Well, certainly, the actions that we've taken to date and the most meaningful of them will be the price increases that we've put into the market. And on average, as we've described, a high single-digit percent price increase for both the Spring '26 and Fall '26 seasons. Those aren't stacking as a high single-digit percentage effectively for the year. So that's the major mitigation factor. We've also had some success as we've worked across our strategic factory groups in doing some degree of tariff cost sharing.

And then to a lesser degree, there's also some work that we've done in terms of resourcing and moving production around to achieve the lowest tariff rate that we possibly can. So those are the major movers. And of course, we're certainly focused on the balance of the P&L from an SG&A standpoint.

And to the degree we can't get it through SG&A. We're committed to ultimately driving operating margin leverage, and that is our goal for this year. And then longer term, we're going to stay after it. We know that we need to expand our gross margins. We've got to get our product margins back up to pre-tariff levels and beyond.

Mitchel Kummetz, Seaport Research.

I must say, Tim, I did not have bear scat on my bingo card for today's call. I know you've experienced a lot of winners, a lot of order books. When you kind of think about where we are today with where channel inventory is and the order book 80% in, and the cold weather that we're experiencing right now across a lot of the country, you've seen things like that in the past. Do you see much opportunity for the order book can improve from where it is today over the next two, three months?

Yeah. I think in my experience, either the weather impact on our company is much larger than almost any other category of impact. And when we're talking about the weather that we have ongoing now, I would expect that we're going to get some small lift where retailers will go back and look at their order book, look at their carryover inventory, which should be quite negligible at this point. And they may impact their orders somewhat. But I think we've probably got what we've got for the foreseeable future.

There might be one or two more percent left to be gotten. But the important thing that retailers are doing now is still trying to gauge the impact of the tariffs and what the flexibility will be on consumers in terms of how they would expect to be buying for next season. So there's still quite a bit of cautiousness out there.

And that's why we do take orders through the end of March. So there's still some opportunity to chase, and we're still placing inventory purchases through that period as well. So we look forward to providing an update as we wrap up taking that order book and sharing that in April.

Yeah. I guess I would also comment that our footwear order deadlines are later than the apparel deadline. So there's very likely to be in the footwear category more to buy [to be gotten].

I appreciate all that color. And then, Jim, on the guide for the year, I'm struggling. I'm trying to pencil it out, and I'm having a hard time kind of reconciling the range you've given for op margin based on the growth in the SG&A. So is there something unique happening on the licensing line? Or am I missing something?

Well, the biggest thing that doesn't lap year over year are the impairment charges of $29 million that we took on prAna, Mountain Hardwear in '25. And so those are not occurring. So that's effectively, I think probably what your issue is, Mitch.

Paul Lejuez, Citigroup.

It's Tracy Kogan filling in for Paul. I think you guys said your Fall order books support mid-single-digit growth. And I was just wondering how this leaks out by region and if the US is up a similar amount. And also, just wondering what it looks like in units in the US if we're assuming there's a high single-digit price increase in there. Thank you.

Yeah. So the US business has been, frankly, over the last period are most challenged. So the biggest improvements are happening there. Our international businesses have been quite strong and our expectations are that those businesses will continue to outperform the US business.

And then, again, as I said, our back half of the year is going to be much improved over the front half of the year, especially in U.S.

And then, Tracy, just a couple of more comments on that. As Tim touched on, we're incredibly pleased with what we're seeing in the Fall '26 order book. From a geographic standpoint, we would contemplate the international businesses outpacing growth from the US, and that's going to continue to be regions that we've described from China, Europe, and the distributor business, just continued momentum in each of those markets. And then the US will be a low- to mid-single-digit rate of growth.

And then excitingly, I think Tim indicated as well. We do anticipate growth across all four brands and the emerging brands growing at a faster rate than the Columbia brand.

Got it. And are you guys pretty much taking price increases in the US only? Or are you taking them globally to offset tariffs?

Yeah. The primary impact of price increases in the U.S.

Mauricio Serna, UBS.

Just a point of clarification. In the CFO presentation, you mentioned something about better version of Fall '25 years wholesale orders. Could you just like to explain a little bit more what that means?

Yeah, certainly, and that was a major driver in terms of the revenue beat in the quarter. The better conversion essentially consists of a combination of looking at our cancel rates, our reorder rates, and our replenishment metrics. And from an overarching standpoint, as we look back over the last several seasons, this is our best-performing season in several across those overall metrics.

I would say there's a couple of different things that are underlying that. One of which, as we've touched on, we did curtail inventory purchases. And so the demand has exceeded supply in certain cases. So that's an impact as retailers really needed that inventory. So we've seen better conversion on the order book.

And then secondly, I do believe that the engineer for whatever campaign, the new product collections that we have in the marketplace is sold through exceptionally well. So that's certainly aided our conversion rate as well.

Got it. And then just like maybe on the US ollowing off, like it sounds -- you've mentioned -- and I'm sorry, you mentioned this, but do you expect the US wholesale to return to growth in the second half, like I guess just curious on like what kind of growth would you be expecting in US wholesale in the second half?

And just on the DTC side, like for the DTC business in the US, are you considering any new stores, new store openings for the business? And if so, what's the cadence?

Yeah. So as it relates to the second half from a wholesale perspective in the US. Our Fall '26 order book is up for the wholesale business. It's up less than the international businesses. So with the overall book being up a mid-single-digit percent, the US is going to touch the low end of mid-single to low single-digit rate of growth in the second half.

And then in terms of looking at our direct-to-consumer business, we have a modest degree of stores planned for opening this year worldwide. In the US our new store openings more or less offset with closures as we've continued to rationalize the fleet and make sure we're closing underperforming stores. So those essentially bounce out.

(Operator Instructions) Tom Nikic, Needham.

In terms -- so just kind of follow-up on US wholesale. I think it was flattish in Q3 and down high-teens in Q4. So I guess that means something like down high single digits for the season overall. Yeah, how did sell-through compare to sell in? And I mean, is it safe to assume that given the improvement in order books for Fall 2026 that the sell-throughs in Fall '25 were better than sell-in?

Yeah. The sell-through was quite good this year, which indicates -- which gave us confidence in our order book for Fall '26. And remember, the bulk of our Fall '26 order book was taken prior to the great weather that we're seeing right now and much of the United States. So we're confident that we've got a good order book or Fall '26, one that we'll be delivering into empty shelves. So we're pretty excited about what the opportunities are.

And Tom, maybe just to add a little bit more color on that. Directionally, you're accurate. When you look at combined second half, the US wholesale business being down high single-digit percent. Despite the sell-in being lower, when we look at the overall selling as Tim's touching on, I think we were up slightly. So up slightly, up in dollars. So we're encouraged that despite lower sell-in, our sell-through is actually better and the inventory in the marketplace is quite clean.

I think Spring '26 will be similar to that in terms of the order book and the softness that we saw in that from a wholesale standpoint, we'll look to capitalize on in-season demand and driving sell-through with the collections and the marketing campaigns.

And just a quick follow-up. So it sounds like for Fall 26 US, wholesale order book is up, I guess, a little bit less than mid-single digits with high single-digit pricing, which would imply that units are down a little bit. IIs that just retailers being cautious and given some of the uncertainty out there? And then how would we think about potential upside if the consumer remains resilient, if inventories are really lean, et cetera?

Yeah. I think retailers that we deal with are still unsure about what the elasticity rate is going to be on some of these more expensive products. So you're right in that the units have gone down slightly as the prices have gone up. But we'll have to see what happens. And again, as I said earlier, weather is almost more impactful than almost any other variable.

Okay. We have reached the end of the question-and-answer session. And I will now turn the call over to Tim Boyle for closing remarks.

Well, thank you for joining us today. We're very excited to see our accelerated growth strategy truly come to life. The Engineered for Whatever brand platform is driving strong energy and engagement. With this strategy and platform, combined with great new products, such as the Amaze collection, we are building momentum.

We look forward to sharing our continued progress when we report our first-quarter results. Thanks very much for your support.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.