Columbia Sportswear reported Q4 EPS of $1.15 versus consensus of $1.14.
Initial 2013 guidance of flattish sales and EBIT margin contraction is worse than he expected. With the fall order book yet to be completed, visibility remains low as retailers exhibit incremental caution. Lyon believes the flat 2013 sales guidance from Columbia portends continued challenges for the winterreliant vendors in 2013.
While winter apparel inventory is relatively clean in the channel due to early and steep discounts, retailers are looking to cut fall 2013 pre-book orders by 10-20% in the category. They are becoming hyper-conservative after two warm winters and are trying to force the vendors to take all the inventory risk.
Lyon believes this heightens the risk for brands most exposed to this category such as COLM and North Face (VFC). Unlike apparel, cold-weather footwear inventory is heavy in the channel, he believes, and will likely result in retailers carrying product over to next season. This will likely lead
to a reduction in open-to-buy dollars for fall 2013. Given the extended lead times in footwear, the vendors will have to take inventory onto their balance sheets with the hopes of getting at-once orders later in the season, or build inventory to lower order levels. In either case, Lyon sees another challenging year for the cold-weather footwear brands like Deckers (DECK) and COLM, and to a lesser extent Wolverine World Wide (WWW).
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