COLUMBIA SPORTSWEAR CO 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Special Note Regarding Forward-Looking Statements", Part I, Item 1 and Part II, Item 1A of this Quarterly Report on Form 10-Q. OVERVIEW As a global leader in designing, developing, marketing, and distributing outdoor, active and lifestyle products, our mission is to connect active people with their passions. We provide our products through our four brands: Columbia, SOREL, Mountain Hardwear, and prAna; and two major product categories: apparel, accessories and equipment products and footwear products. Apparel, accessories and equipment products are provided by our Columbia, Mountain Hardwear and prAna brands. Footwear products are provided by our Columbia and SOREL brands. We sell our products in more than 110 countries and operate in four geographic segments: U.S., LAAP, EMEA, and Canada. Our business is affected by the general seasonal trends common to the industry, including seasonal weather and discretionary consumer shopping and spending patterns. Our products are marketed on a seasonal basis, and our sales are weighted substantially toward the third and fourth quarters, while our operating costs are more equally distributed throughout the year. ACCELERATE Growth Strategy Last year, we announced the Columbia brand ("Brand") ACCELERATE Growth Strategy. At its core, the ACCELERATE Growth Strategy is intended to elevate the Brand to target a younger and more active consumer while maintaining those consumers that have known and trusted Columbia to offer high quality products at an exceptional value. It is a multi-year initiative centered around several consumer-centric shifts to the Brand, product and marketplace strategies, as well as enhanced ways of working. We believe successful execution of the ACCELERATE Growth Strategy can elevate the Brand and drive profitable growth. Through the ACCELERATE Growth Strategy, we will focus on achieving the following objectives: • steward existing consumer segments while focusing on bringing new younger and active consumers into the Brand; • elevate consumers' perception of the Brand; • create product based on a consumer-centric product construct; • enhance the positioning of the Brand in the U.S. marketplace; and • deliver integrated full-funnel marketing. In addition, we are committed to investing in our company-wide strategic priorities with a renewed emphasis to: • accelerate profitable growth; • create iconic products that are differentiated, functional and innovative; • drive brand engagement through increased, focused demand creation investments; • enhance consumer experiences by investing in capabilities to delight and retain consumers; • amplify marketplace excellence, with digitally-led, omni-channel, global distribution; and • empower talent that is driven by our core values. Ultimately, we expect our investments to enable market share capture across our brand portfolio, expand gross margin, improve selling, general and administrative expense efficiency, and drive improved operating margin over the long-term. Profit Improvement Program Concurrent with the ACCELERATE Growth Strategy, we continue to make progress on our multi-year Profit Improvement Program to accelerate profitable growth and improve the efficiency of our operations. The Profit Improvement Program focuses on four areas of cost reduction and realignment, including: • operational cost savings; • organizational cost savings; • operating model improvements; and COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 23 Table of Contents • indirect, or non-inventory, spending. In 2024, our Profit Improvement Program resulted in approximately $90 million of annualized cost savings. In early 2025, in response to ongoing SG&A expense and operating profit pressures, we initiated a review of our cost structure to pursue additional cost savings, beyond the previously stated $125 to $150 million target. On a cumulative basis, actions executed in 2024 and through the first half of 2025 yield annualized cost savings exceeding $150 million. Despite achieving our target, we continue to pursue profit improvement opportunities. Our Profit Improvement Program is intended to lower the Company's SG&A expenses as a percentage of consolidated net sales and to increase the Company's operating margin, over time. Business Environment and Trends Tariffs Uncertainty | We are headquartered in the U.S. and are subject to the laws and regulations governing companies operating in the U.S. The U.S. presidential administration has announced incremental tariffs on products imported into the U.S. from most countries. These incremental tariffs are in addition to the product-based tariffs the Company already pays for its imported goods into the U.S. These actions, and the potential for retaliatory actions by other countries and their consumers, have led to significant volatility and uncertainty in global markets. We expect Vietnam, Bangladesh, Indonesia, and India to represent approximately 42 percent, 26 percent, 11 percent, and 9 percent, respectively, of our finished goods imports into the U.S. in 2025. Additionally, we expect for China to represent a minimal percent of our finished goods imports into the U.S. in 2025. While we have very little direct exposure to the new U.S. tariffs on products from China, China remains a strategically important country for us, and we intend to continue investing in product creation capabilities in China and remain committed to manufacturing in China to support our China direct business as well as other international markets. Additional information about the potential expense related to these incremental tariffs can be found in Part II, Item 5 under "Tariff Expense" of this Quarterly Report on Form 10-Q. In an effort to mitigate the impact of further potential tariff increases, we have partnered with our finished goods vendors and logistics providers to accelerate the timing of inventory receipts. Additionally, we have worked with our wholesale customers to ship Fall 2025 orders earlier than initially planned, which will help alleviate storage capacity constraints within our distribution center network. Nevertheless, we have begun to incur additional temporary storage expenses as a result of these earlier inventory receipts. Higher tariffs on U.S. imports are already adversely impacting our U.S. product input costs. We expect these incremental tariffs may also impact demand for our products as consumers weigh discretionary spending. We expect our inventories to also be impacted by a reduction in consumer and customer demand, and have rationalized Fall 2025 inventory buys and are evaluating Spring 2026 inventory plans, while seeking to preserve our strategic sourcing relationships, in order to reduce the risk of holding excess inventory. For Fall 2025, we are focused on maximizing our marketplace opportunity. We are working with our wholesale partners to deliver value to consumers and keep inventory and wholesale partner margins healthy. As a result, at this point in time, we expect to absorb much of the incremental tariff cost related to Fall 2025 as the costs are realized. For 2026, we are implementing strategies to offset the impact of higher U.S. tariffs on our business. Our goal is to offset higher tariffs over time through a combination of actions including price increases, vendor negotiations, SG&A expense efficiencies and other mitigation tactics. We intend to balance these actions with our overall growth strategy, seeking to minimize the impact to consumer demand and maximize our market share potential. Retaliatory actions and anti-American consumer sentiment may also adversely impact our ability to compete in other regions of the world. Heightened Geopolitical Risk | We sell our products in more than 110 countries and our ability to sell, import into and produce in certain markets may be impacted by ongoing geopolitical tensions. We believe these tensions will remain elevated and will continue to manifest themselves in certain regions where we operate. Evolving North America Strategy | Over the past year, U.S. consumer demand for many traditional outdoor apparel and footwear brands has softened. This weakness can be attributed to several factors, including a highly competitive environment as many brands have shifted their strategies and new brands have entered the marketplace to capitalize on the emergence of casual and lifestyle trends. In response to these trends and to drive profitable growth, the Columbia brand initiated the ACCELERATE Growth Strategy, to retain our historical value-oriented consumers while attracting younger and more active consumers to the Columbia brand. As part of the Columbia brand ACCELERATE Growth Strategy, we are approaching the North America marketplace with an updated omni-channel perspective and evaluating how, when, and where we utilize promotions across all channels, creating new product assortments and enhancing our marketing to attract these younger and more active consumers. During 2024, we shifted our marketing strategies for the Columbia brand's U.S. direct-to-consumer ("DTC") e-commerce business to become less promotional, in order for Columbia.com to represent the best expression of the Brand. In our DTC brick-and-mortar business, we have COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 24 Table of Contents opened a small number of branded stores in high-traffic shopping malls in North America, featuring elevated product assortments that showcase Columbia’s apparel and footwear innovations. Within our U.S. wholesale business, we are implementing pricing, promotional and segmentation strategies that are also intended to elevate the positioning of the Brand in the marketplace while continuing to serve our core consumer base that is focused primarily on value. To capture demand associated with value-oriented consumers, we have increasingly relied on our fleet of DTC brick-and-mortar outlet stores. We remain committed to increasing our investment in demand creation in 2025 to bring our new highly differentiated marketing campaign and products to life. In August 2025, we began the roll out of our new global marketing platform that will be the Columbia brand character and voice for years to come. This new campaign is designed to bring Columbia back to the roots of what made us an iconic global brand, by leveraging our signature irreverence and humor in memorable advertising. Not only are we investing more in demand creation, but we are also investing more efficiently, leveraging modern digital and social-first strategies. We are launching a new site redesign on Columbia.com with enhanced mobile capabilities and up-leveled photography that highlights the beauty and craftsmanship of our iconic products. We are also enhancing our product assortment to emphasize innovation and style, with new product launching this coming Fall. International Trends | We have not seen a meaningful change in trends in the majority of our international businesses, which were quite healthy in the first half of 2025. Across our LAAP and EMEA markets, our product offerings, marketing activations and marketplace strategies, are working to create a more premium Columbia brand experience. However, it is not possible to predict the extent to which U.S. tariff actions will impact international economic growth and consumer demand for our products globally. RESULTS OF OPERATIONS The following discussion of our results of operations and liquidity and capital resources should be read in conjunction with Part I, Item 1 of this Quarterly Report on Form 10-Q. Non-GAAP Financial Measure To supplement financial information reported in accordance with U.S. GAAP, we disclose constant-currency net sales information, which is a non-GAAP financial measure, to provide a framework to assess how the business performed excluding the effects of changes in foreign currency exchange rates against the U.S. dollar between comparable reporting periods. We calculate constant-currency net sales by translating net sales in foreign currencies for the current period into U.S. dollars at the exchange rates that were in effect during the comparable period of the prior year. Management believes that this non-GAAP financial measure reflects an additional and useful way of viewing an aspect of our operations that, when viewed in conjunction with our GAAP results, provides a more comprehensive understanding of our business and operations. In particular, investors may find the non-GAAP measure useful by reviewing our net sales results without the volatility of foreign currency exchange rates. This non-GAAP financial measure also facilitates management's internal comparisons to our historical net sales results and comparisons to competitors' net sales results. Constant-currency financial measures should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP. The following discussion includes references to constant-currency net sales, and we provide a reconciliation of this non-GAAP measure to the most directly comparable financial measure calculated in accordance with GAAP below. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 25 Table of Contents Results of Operations — Consolidated The following table presents the items in our unaudited Condensed Consolidated Statements of Operations, both in dollars and as a percentage of net sales: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except for percentage of net sales and per share amounts) 2025 2024 2025 2024 Net sales $ 605,246 100.0 % $ 570,244 100.0 % $ 1,383,698 100.0 % $ 1,340,226 100.0 % Cost of sales 308,138 50.9 % 296,825 52.1 % 690,533 49.9 % 677,248 50.5 % Gross profit 297,108 49.1 % 273,419 47.9 % 693,165 50.1 % 662,978 49.5 % Selling, general and administrative expenses 325,628 53.8 % 302,749 53.1 % 680,099 49.2 % 652,019 48.6 % Net licensing income 4,929 0.8 % 5,528 1.0 % 9,851 0.7 % 9,920 0.7 % Operating income (loss) (23,591) (3.9) % (23,802) (4.2) % 22,917 1.7 % 20,879 1.6 % Interest income, net 4,838 0.8 % 8,344 1.5 % 11,655 0.8 % 17,541 1.3 % Other non-operating income, net 2,164 0.4 % 476 0.1 % 3,715 0.3 % 747 0.1 % Income (loss) before income tax (16,589) (2.7) % (14,982) (2.6) % 38,287 2.8 % 39,167 3.0 % Income tax expense (benefit) (6,393) (1.1) % (3,241) (0.6) % 6,235 0.5 % 8,608 0.6 % Net income (loss) $ (10,196) (1.7) % $ (11,741) (2.0) % $ 32,052 2.3 % $ 30,559 2.4 % Diluted earnings (loss) per share $ (0.19) $ (0.20) $ 0.58 $ 0.51 COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 26 Table of Contents Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Net Sales. Net sales by brand, product category and channel are summarized in the following table: Three Months Ended June 30, (in thousands, except for percentages) Reported Net Sales 2025 Adjust for Foreign Currency Translation Constant-currency Net Sales 2025 (1) Reported Net Sales 2024 Reported Net Sales % Change Constant-currency Net Sales % Change (1) Brand net sales: Columbia $ 548,345 $ (2,202) $ 546,143 $ 508,613 8% 7% SOREL 18,826 (5) 18,821 21,034 (10)% (11)% prAna 20,537 3 20,540 21,796 (6)% (6)% Mountain Hardwear 17,538 (42) 17,496 18,801 (7)% (7)% Total $ 605,246 $ (2,246) $ 603,000 $ 570,244 6% 6% Product category net sales: Apparel, accessories and equipment $ 494,302 $ (1,353) $ 492,949 $ 463,940 7% 6% Footwear 110,944 (893) 110,051 106,304 4% 4% Total $ 605,246 $ (2,246) $ 603,000 $ 570,244 6% 6% Channel net sales: Wholesale $ 317,218 $ (1,015) $ 316,203 $ 278,384 14% 14% Direct-to-consumer 288,028 (1,231) 286,797 291,860 (1)% (2)% Total $ 605,246 $ (2,246) $ 603,000 $ 570,244 6% 6% (1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information. Our global net sales increase was driven by growth within our EMEA, LAAP and Canada regions, partially offset by declines in the U.S., as compared to the same period in 2024. The growth in our EMEA and LAAP net sales was largely driven by increased net sales of our Columbia brand across both wholesale and DTC channels in most markets. We attribute the international strength of the Columbia brand to the execution of our business strategies and brand positioning, as well as to the benefit of certain trends and/or factors favorably impacting the outdoor apparel and footwear sector. The growth in our Canada net sales reflects the impact of favorable timing of wholesale shipments, partially offset by declines in our Canada DTC business. The decline in the U.S. net sales was driven by declines in our U.S. DTC e-commerce and brick-and-mortar businesses, partially offset by growth in our U.S. wholesale business. The decline in our U.S. DTC e-commerce business was attributable to a challenging e-commerce environment for outdoor brands and increased competition within the outdoor lifestyle category, coupled with a difficult macroeconomic environment as global economic uncertainty weighs on consumer sentiment. The decline in our U.S. DTC brick-and-mortar business was attributable to the closure of our temporary clearance locations, partially offset by contributions from new stores. The increase in wholesale net sales reflected the impact of favorable timing of wholesale shipments and increased Spring 2025 orders, partially offset by lower closeout sales. Underlying business trends within our U.S. wholesale business remain under pressure. Gross Profit. Gross profit is summarized in the following table: Three Months Ended June 30, (in thousands, except for percentages and basis points) 2025 2024 Change Gross profit $ 297,108 $ 273,419 $ 23,689 9 % Gross margin 49.1 % 47.9 % 120 bps COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 27 Table of Contents Gross margin expanded primarily due to the following factors: • an approximate 245 bps increase in channel profitability resulting from healthier overall inventory composition, which enabled higher product margins across our wholesale and DTC channels. Higher wholesale margins were driven by lower closeout sales with higher margins and a favorable product net sales mix. Higher DTC margins were driven by less promotional activity and lower outbound freight costs; partially offset by • unfavorable channel and regional net sales mix resulting from a higher portion of wholesale net sales, including distributor net sales, which generally carry lower margins. Selling, General and Administrative Expenses. SG&A expenses are summarized in the following table: Three Months Ended June 30, (in thousands, except for percentages and basis points) 2025 2024 Change Selling, general and administrative expenses $ 325,628 $ 302,749 $ 22,879 8 % Selling, general and administrative expenses as percent of net sales 53.8 % 53.1 % 70 bps SG&A expenses increased primarily due to the following factors: • higher omni-channel expenses of $12.7 million, reflecting higher DTC brick-and-mortar expenses associated with new stores, partially offset by temporary clearance location closures; • higher demand creation expenses, reflecting our increased investment in demand creation in line with our ACCELERATE Growth Strategy; and • higher other expenses, reflecting a variety of both recurring and non-recurring expenses. Interest Income, Net. Interest income, net is summarized in the following table: Three Months Ended June 30, (in thousands, except for percentages) 2025 2024 Change Interest income, net $ 4,838 $ 8,344 $ (3,506) (42) % Interest income, net as a percent of net sales 0.8 % 1.5 % Interest income, net decreased, primarily reflecting lower yields on decreased levels of cash, cash equivalents and short-term investments. Income Tax Benefit. Income tax benefit and the related effective income tax rate are summarized in the following table: Three Months Ended June 30, (in thousands, except for percentages) 2025 2024 Change Income tax benefit $ ( 6,393 ) $ (3,241) $ (3,152) 97 % Effective income tax rate 38.5 % 21.6 % Our effective income tax rate increased primarily due to a tax benefit associated with foreign currency losses. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 28 Table of Contents Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Net Sales. Net sales by brand, product category and channel are summarized in the following table: Six Months Ended June 30, (in thousands, except for percentages) Reported Net Sales 2025 Adjust for Foreign Currency Translation Constant-currency Net Sales 2025 (1) Reported Net Sales 2024 Reported Net Sales % Change Constant-currency Net Sales % Change (1) Brand net sales: Columbia $ 1,231,466 $ 10,268 $ 1,241,734 $ 1,172,578 5% 6% SOREL 61,031 510 61,541 66,694 (8)% (8)% prAna 48,651 11 48,662 53,094 (8)% (8)% Mountain Hardwear 42,550 256 42,806 47,860 (11)% (11)% Total $ 1,383,698 $ 11,045 $ 1,394,743 $ 1,340,226 3% 4% Product category net sales: Apparel, accessories and equipment $ 1,123,122 $ 8,959 $ 1,132,081 $ 1,082,994 4% 5% Footwear 260,576 2,086 262,662 257,232 1% 2% Total $ 1,383,698 $ 11,045 $ 1,394,743 $ 1,340,226 3% 4% Channel net sales: Wholesale $ 716,987 $ 5,406 $ 722,393 $ 669,281 7% 8% Direct-to-consumer 666,711 5,639 672,350 670,945 (1)% —% Total $ 1,383,698 $ 11,045 $ 1,394,743 $ 1,340,226 3% 4% (1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information. Our global net sales increase was driven by growth within our EMEA and LAAP regions, partially offset by declines in the U.S. and Canada, as compared to the same period in 2024. The growth in our EMEA and LAAP net sales was largely driven by increased net sales of our Columbia brand across both wholesale and DTC channels in most markets. We attribute the international strength of the Columbia brand to the execution of our business strategies and brand positioning, as well as to the benefit of certain trends and/or factors favorably impacting the outdoor apparel and footwear sector. The decline in the U.S. net sales was driven by declines in our U.S. DTC e-commerce and brick-and-mortar businesses, partially offset by growth in our U.S. wholesale business. The decline in our U.S. DTC e-commerce business was attributable to a challenging e-commerce environment for outdoor brands and increased competition within the outdoor lifestyle category, coupled with a difficult macroeconomic environment as global economic uncertainty weighs on consumer sentiment. A modest decline in our U.S. DTC brick-and-mortar business was attributable to the closure of our temporary clearance locations, partially offset by contributions from new stores. The increase in wholesale net sales reflected the impact of favorable timing of wholesale shipments and increased Spring 2025 orders, partially offset by lower closeout sales. Underlying business trends within our U.S. wholesale business remain under pressure. The decline in Canada net sales was primarily attributable to a difficult macroeconomic environment as global uncertainty weighs on consumer spending, coupled with a shift of consumers turning to local brands. Gross Profit. Gross profit is summarized in the following table: Six Months Ended June 30, (in thousands, except for percentages and basis points) 2025 2024 Change Gross profit $ 693,165 $ 662,978 $ 30,187 5 % Gross margin 50.1 % 49.5 % 60 bps COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 29 Table of Contents Gross margin expanded primarily due to a favorable increase in channel profitability resulting from healthier overall inventory composition which enabled higher product margins across our wholesale and DTC channels. Higher wholesale margins were driven by lower closeout sales with higher margins. Higher DTC margins were driven by less promotional activity and lower outbound freight costs. Selling, General and Administrative Expenses. SG&A expenses are summarized in the following table: Six Months Ended June 30, (in thousands, except for percentages and basis points) 2025 2024 Change Selling, general and administrative expenses $ 680,099 $ 652,019 $ 28,080 4 % Selling, general and administrative expenses as percent of net sales 49.2 % 48.6 % 60 bps SG&A expenses increased primarily due to the following factors: • higher omni-channel expenses of $19.6 million, reflecting higher DTC brick-and-mortar expenses associated with new stores, partially offset by temporary clearance location closures; • higher demand creation expenses, reflecting our increased investment in demand creation in line with our ACCELERATE Growth Strategy; and • higher other expenses, reflecting a variety of both recurring and non-recurring expenses. Interest Income, Net. Interest income, net is summarized in the following table: Six Months Ended June 30, (in thousands, except for percentages) 2025 2024 Change Interest income, net $ 11,655 $ 17,541 $ (5,886) (34) % Interest income, net as a percent of net sales 0.8 % 1.3 % Interest income, net, decreased, primarily reflecting lower yields on decreased levels of cash, cash equivalents and short-term investments. Income Tax Expense. Income tax expense and the related effective income tax rate are summarized in the following table: Six Months Ended June 30, (in thousands, except for percentages) 2025 2024 Change Income tax expense $ 6,235 $ 8,608 $ (2,373) (28) % Effective income tax rate 16.3 % 22.0 % Our effective income tax rate decreased primarily due to a tax benefit associated with foreign currency losses. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 30 Table of Contents Results of Operations — Segment Segment operating income includes net sales, cost of sales, segment SG&A expenses, and other segment items for each of our four reportable segments. For each reportable segment, other segment items include certain corporate expenses and net licensing income allocated to each of the reportable segments, as well as net licensing income directly attributable to each of the reportable segments. Refer to Note 16 in Part II, Item 8 of our Annual Report on Form 10-K for further information. Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Net sales by geographic segment are summarized in the following table: Three Months Ended June 30, (in thousands, except for percentage changes) Reported Net Sales 2025 Adjust for Foreign Currency Translation Constant-currency Net Sales 2025 (1) Reported Net Sales 2024 Reported Net Sales % Change Constant-currency Net Sales % Change (1) U.S. $ 335,117 $ — $ 335,117 $ 340,228 (2)% (2)% LAAP 112,333 (928) 111,405 99,484 13% 12% EMEA 130,562 (2,010) 128,552 103,922 26% 24% Canada 27,234 692 27,926 26,610 2% 5% $ 605,246 $ (2,246) $ 603,000 $ 570,244 6% 6% (1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information. Segment operating income (loss) for each reportable segment and unallocated corporate expenses are summarized in the following table: Three Months Ended June 30, (in thousands) 2025 2024 Change U.S. $ 17,338 $ 23,466 $ (6,128) LAAP 7,022 6,082 940 EMEA 21,630 14,419 7,211 Canada (1,954) (23) (1,931) Total segment operating income 44,036 43,944 92 Unallocated corporate expenses 67,627 67,746 (119) Operating loss $ (23,591) $ (23,802) $ 211 U.S. U.S. operating income decreased $6.1 million to $17.3 million, or 5.2% of net sales, for the second quarter of 2025 from $23.5 million, or 6.9% of net sales, for the comparable period in 2024. The decrease was driven primarily by decreased net sales and increased segment SG&A expenses, partially offset by increased gross profit. U.S. net sales decreased $5.1 million, or 2%, for the second quarter of 2025, compared to the same period in 2024, primarily driven by decreased net sales in our DTC e-commerce and brick-and-mortar businesses, partially offset by net sales growth in our U.S. wholesale business. The decline in our U.S. DTC e-commerce business was attributable to a challenging e-commerce environment for outdoor brands and increased competition within the outdoor lifestyle category, coupled with a difficult macroeconomic environment as global economic uncertainty weighs on consumer sentiment. The decline in our U.S. DTC brick-and-mortar business was attributable to the closure of our temporary clearance locations, partially offset by contributions from new stores. As of June 30, 2025, our U.S. business operated 171 retail stores and 7 temporary clearance locations, compared to 163 retail stores and 46 temporary clearance locations for the comparable period in 2024. The increase in wholesale net sales reflected a shift of Spring 2025 and Fall 2025 shipments into the second quarter of 2025 and increased Spring 2025 orders, partially offset by lower closeout sales. U.S. segment SG&A expenses increased as a percentage of net sales to 40.0% for the second quarter of 2025, compared to 35.1% for the same period in 2024, driven primarily by fixed SG&A expense deleverage on decreased net sales. In total, U.S. segment SG&A expenses increased 12.1% for the three months ended June 30, 2025, as compared to the same period in 2024, driven primarily by our investment in demand creation in line with our ACCELERATE Growth Strategy. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 31 Table of Contents LAAP LAAP operating income increased $0.9 million to $7.0 million, or 6.3% of net sales, for the second quarter of 2025 from $6.1 million, or 6.1% of net sales, for the comparable period in 2024. LAAP net sales increased 13% (12% constant-currency), for the second quarter of 2025, compared to the same period in 2024, primarily driven by our China, LAAP distributor and Japan businesses, partially offset by a decline in our Korea business. The growth in our China business was driven by robust demand across all channels, which we believe was attributable to the execution of our marketplace strategies, including premium product offerings and unique marketing activations. The growth was further aided by positive outdoor category trends as compared to the same period in the prior year. The growth in our LAAP distributor business was driven by growth in our Fall 2025 distributor orders as compared to the same period in the prior year. The growth in our Japan business was driven by healthy demand across all channels, which we believe was attributable to the execution of our marketplace strategies, as well as the effect of increased inbound international tourism. The decline in our Korea business reflected unfavorable effects from foreign currency fluctuation, which more than offset constant-currency net sales growth within our Korea wholesale business, which reflected a shift of Fall 2025 shipments into the second quarter of 2025, partially offset by a decline in our Korea DTC business. LAAP segment SG&A expenses decreased as a percentage of net sales to 39.8% for the second quarter of 2025, compared to 40.9% for the same period in 2024, driven by fixed SG&A expense leverage on increased net sales. In total, LAAP segment SG&A expenses increased 9.9% for the three months ended June 30, 2025, as compared to the same period in 2024. EMEA EMEA operating income increased $7.2 million to $21.6 million, or 16.6% of net sales, for the second quarter of 2025 from $14.4 million, or 13.9% of net sales, for the comparable period in 2024. The increase was driven primarily by increased net sales and gross profit, partially offset by increased segment SG&A expenses. EMEA net sales increased $26.6 million, or 26% (24% constant-currency), for the second quarter of 2025, compared to the same period in 2024, primarily driven by our EMEA distributor and Europe-direct businesses. The growth in our EMEA distributor business was primarily driven by growth in our Fall 2025 distributor orders, as well as a shift of Fall 2025 shipments out of the third quarter of 2025 into the second quarter of 2025, as compared to the same period in 2024. The growth in our Europe-direct businesses was driven by robust demand across all channels, which we believe was attributable to the execution of our marketplace strategies, including marketing activations and elevating the online and in-store customer experience. EMEA segment SG&A expenses decreased as a percentage of net sales to 22.9% for the second quarter of 2025, compared to 23.3% in 2024, driven by fixed SG&A expense leverage on increased net sales. In total, EMEA segment SG&A expenses increased 23.3% for the three months ended June 30, 2025, as compared to the same period in 2024. Canada Canada operating loss increased $1.9 million to $2.0 million, or 7.2% of net sales, for the second quarter of 2025 from $0.1 million, or 0.1% of net sales, for the comparable period in 2024. The increase was driven primarily by increased segment SG&A expenses. Canada net sales increased $0.6 million, or 2% (5% constant-currency), for the second quarter of 2025, compared to the same period in 2024, primarily driven by increased net sales in our Canada wholesale business, partially offset by decreased net sales in our Canada DTC business. Canada segment SG&A expenses increased as a percentage of net sales to 41.0% for the second quarter of 2025, compared to 35.8% for the same period in 2024, driven primarily by fixed SG&A expense deleverage on decreased net sales. In total, Canada segment SG&A expenses increased 17.0% for the three months ended June 30, 2025, as compared to the same period in 2024. Unallocated Corporate Expenses Unallocated corporate expenses decreased by $0.1 million to $67.6 million in the second quarter of 2025, from $67.7 million for the same period in 2024. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 32 Table of Contents Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Net sales by reportable segment are summarized in the following table: Six Months Ended June 30, (in thousands, except for percentage changes) Reported Net Sales 2025 Adjust for Foreign Currency Translation Constant-currency Net Sales 2025 (1) Reported Net Sales 2024 Reported Net Sales % Change Constant-currency Net Sales % Change (1) U.S. $ 806,298 $ — $ 806,298 $ 814,634 (1)% (1)% LAAP 264,543 4,335 268,878 238,130 11% 13% EMEA 238,042 2,428 240,470 208,442 14% 15% Canada 74,815 4,282 79,097 79,020 (5)% —% $ 1,383,698 $ 11,045 $ 1,394,743 $ 1,340,226 3% 4% (1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information. Segment operating income for each reportable segment and unallocated corporate expenses are summarized in the following table: Six Months Ended June 30, (in thousands) 2025 2024 Change U.S. $ 83,292 $ 96,459 $ (13,167) LAAP 33,352 27,904 5,448 EMEA 40,608 33,565 7,043 Canada 7,009 11,145 (4,136) Total segment operating income 164,261 169,073 (4,812) Unallocated corporate expenses 141,344 148,194 (6,850) Operating income $ 22,917 $ 20,879 $ 2,038 U.S. U.S. segment operating income decreased $13.2 million to $83.3 million, or 10.3% of net sales, for the six months ended June 30, 2025 from $96.5 million, or 11.8% of net sales, for the comparable period in 2024. The decrease was driven primarily by decreased net sales and increased segment SG&A expenses, partially offset by increased gross profit. U.S. net sales decreased $8.3 million, or 1%, for the six months ended June 30, 2025, compared to the same period in 2024, driven primarily by decreased net sales in our U.S. DTC e-commerce and brick-and-mortar businesses, partially offset by net sales growth in our U.S. wholesale business. The decline in our U.S. DTC business was attributable to a challenging e-commerce environment for outdoor brands and increased competition within the outdoor lifestyle category, coupled with a difficult macroeconomic environment weighing on consumer sentiment. The decline in our U.S. DTC brick-and-mortar business was attributable to the closure of our temporary clearance locations, partially offset by contributions from new stores. As of June 30, 2025, our U.S. business operated 171 retail stores and 7 temporary clearance locations, compared to 163 retail stores and 46 temporary clearance locations for the comparable period in 2024. The increase in wholesale net sales reflected a shift of Fall 2025 shipments into the first half of 2025 and increased Spring 2025 orders, partially offset by lower closeout sales. U.S. segment SG&A expenses increased as a percentage of net sales to 34.8% for the six months ended June 30, 2025, compared to 31.7% for the same period in 2024, driven primarily by fixed SG&A deleverage on decreased net sales. In total, U.S. segment SG&A expenses increased 8.6% for the six months ended June 30, 2025, as compared to the same period in 2024, driven primarily by our investment in demand creation in line with our ACCELERATE Growth Strategy. LAAP LAAP segment operating income increased $5.4 million to $33.4 million, or 12.6% of net sales, for the six months ended June 30, 2025 from $27.9 million, or 11.7% of net sales, for the comparable period in 2024. The increase was driven primarily by increased net sales and gross profit, partially offset by increased segment SG&A expenses. LAAP net sales increased $26.4 million, or 11% (13% constant-currency), for the six months ended June 30, 2025, compared to the same period in 2024, primarily driven by our China, LAAP distributor and Japan COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 33 Table of Contents businesses, partially offset by a decline in our Korea business. The growth in our China business reflected continued robust demand, which we believe was attributable to the execution of our marketplace strategies throughout the first half of 2025, including premium product offerings and unique marketing strategies. The growth was further aided by positive outdoor category trends, as compared to the same period in 2024. The growth in our LAAP distributor business was driven by growth in our Spring 2025 and Fall 2025 distributor orders as compared to the same period in the prior year. The growth in our Japan business was driven by strong demand across all channels, which we believe was attributable to the execution of our marketplace strategies, as well as the effect of increased inbound international tourism throughout the first half of 2025, as compared to the same period in 2024. The decline in our Korea business reflected unfavorable effects from foreign currency fluctuation, which more than offset constant-currency net sales growth resulting from a shift of Fall 2025 shipments into the first half of 2025 and consumer demand for late season products within our Korea wholesale business, partially offset by a decline in our Korea DTC business. LAAP segment SG&A expenses decreased as a percentage of net sales to 37.0% for the six months ended June 30, 2025, compared to 38.2% for the same period in 2024, primarily driven by fixed SG&A leverage on increased net sales. In total, LAAP segment SG&A expenses increased 7.6% for the six months ended June 30, 2025, as compared to the same period in 2024. EMEA EMEA segment operating income increased $7.0 million to $40.6 million, or 17.1% of net sales, for the six months ended June 30, 2025 from $33.6 million, or 16.1% of net sales, for the comparable period in 2024. The increase was driven primarily by increased net sales and gross profit, partially offset by increased segment SG&A expenses. EMEA net sales increased $29.6 million, or 14% (15% constant-currency), for the six months ended June 30, 2025, compared to the same period in 2024, primarily driven by our EMEA distributor and Europe-direct businesses. The growth in our EMEA distributor business was primarily driven by growth in our Fall 2025 and Spring 2025 distributor orders as compared to the same period in the prior year. The growth in our Europe-direct business was driven by robust demand across all channels, which we believe was attributable to the execution of our marketplace strategies so far this year, including marketing activations and elevating the online and in-store customer experience. EMEA segment SG&A expenses increased as a percentage of net sales to 26.0% for the six months ended June 30, 2025, compared to 25.4% for the same period in 2024. In total, EMEA segment SG&A expenses increased 16.9% for the six months ended June 30, 2025, as compared to the same period in 2024. Canada Canada segment operating income decreased $4.1 million to $7.0 million, or 9.4% of net sales, for the six months ended June 30, 2025 from $11.1 million, or 14.1% of net sales, for the comparable period in 2024. The decrease was primarily driven by lower net sales and gross profit combined with increased segment SG&A expenses. Canada net sales decreased $4.2 million, or 5% (0% constant-currency), for the six months ended June 30, 2025, compared to the same period in 2024, driven by decreased net sales in our Canada DTC and wholesale businesses. Canada segment SG&A expenses increased as a percentage of net sales to 30.3% for the six months ended June 30, 2025, compared to 25.2% for the same period in 2024, primarily driven by fixed SG&A expense deleverage on decreased net sales. In total, Canada segment SG&A expenses increased 14.1% for the six months ended June 30, 2025, as compared to the same period in 2024. Unallocated Corporate Expenses Unallocated corporate expenses decreased by $6.9 million to $141.3 million for the six months ended June 30, 2025 from $148.2 million for the same period in 2024. LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity include cash, cash equivalents, short-term investments, and available committed credit lines. Our liquidity is affected by the general seasonal trends common to the industry. Our products are marketed on a seasonal basis and our sales are weighted substantially toward the third and fourth quarters, while our operating costs are more equally distributed throughout the year. Our cash and cash equivalents and short-term investments balances generally are at their lowest level just prior to the start of the U.S. holiday season and increase during the fourth quarter from collection of wholesale business receivables and fourth quarter DTC sales. This trough cash position is impacted by the amount of product we order from our contract manufacturers in anticipation of customer demand and is more heavily impacted in advance of periods of expected high demand. We expect that our cash position will be impacted by incremental tariff costs for U.S. product in the third and fourth quarters of 2025. While we currently project having adequate liquidity to meet our working capital needs in the third quarter, we have a $500.0 million committed credit facility on which we can draw, should it be needed, until we receive cash receipts in the fourth quarter. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 34 Table of Contents Cash Flow Activities Cash flows are summarized in the following table: Six Months Ended June 30, (in thousands) 2025 2024 Change Net cash provided by (used in): Operating activities $ (62,886) $ 108,893 $ (171,779) Investing activities 110,582 29,951 80,631 Financing activities (165,262) (138,960) (26,302) Net effect of exchange rate changes on cash 13,501 (8,381) 21,882 Net decrease in cash and cash equivalents $ (104,065) $ (8,497) $ (95,568) The change in cash flows used in operating activities for the six months ended June 30, 2025 was primarily driven by a $181.2 million decrease in cash provided by changes in assets and liabilities. The most significant comparative changes in assets and liabilities included Inventories, Accounts Payable, and Accounts receivable. A $129.3 million increase in cash used in Inventories and $56.9 million increase in cash provided by Accounts payable were primarily driven by the strategic timing of inventory receipts and payments as we proactively seek to mitigate the impact of potential further incremental tariffs. A $55.2 million decrease in cash provided by Accounts receivable reflected lower wholesale sales collected in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. Net cash provided by investing activities was $110.6 million for the six months ended June 30, 2025, compared to $30.0 million of cash provided by investing activities for the six months ended June 30, 2024. The increase in cash provided by investing was primarily driven by lower purchases of short-term investments for the six months ended June 30, 2025, as compared to the same period in 2024. Net cash used in financing activities was $165.3 million for the six months ended June 30, 2025, compared to $139.0 million for the six months ended June 30, 2024. The increase in cash used in financing was primarily driven by higher share repurchases of common stock for the six months ended June 30, 2025, as compared to the same period in 2024. Sources of Liquidity Cash and cash equivalents and short-term investments As of June 30, 2025, we had cash and cash equivalents of $427.8 million and short-term investments of $151.2 million, compared to $531.9 million and $283.6 million, respectively, as of December 31, 2024 and $341.8 million and $369.3 million, respectively, as of June 30, 2024. Committed Credit Facilities As of June 30, 2025, we had available an unsecured, committed revolving credit facility, which provides for borrowings up to $500.0 million. We were in compliance with all associated covenants and there was no balance outstanding under the facility. Refer to Note 6 in Part II, Item 8 of our Annual Report on Form 10-K for further information regarding our domestic credit facility. Further, as of June 30, 2025, our European subsidiary had available an unsecured, committed line of credit, which is guaranteed by the Company and provides for borrowings up to €5.0 million (approximately US$5.9 million). There was no balance outstanding under the facility. Uncommitted Credit Facilities As of June 30, 2025, collectively, our international subsidiaries had unsecured, uncommitted lines of credit, credit facilities and overdraft facilities, providing for borrowings up to approximately US$101.8 million. There were no balances outstanding under these facilities. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 35 Table of Contents Capital Requirements Our expected short-term and long-term cash needs are primarily for working capital and capital expenditures. We expect to meet these short-term and long-term cash needs primarily with cash and cash equivalents, short-term investments, cash flows from operations and, if needed, borrowings from our existing credit facilities. Our working capital management goals include maintaining an optimal level of inventory necessary to deliver goods on time to our customers and to satisfy end consumer demand, alleviating manufacturing capacity constraints, and driving efficiencies to minimize the cycle time from the purchase of inventory from our suppliers to the collection of accounts receivable balances from our customers. Inventory balances may be elevated in advance of periods of expected high demand. As of June 30, 2025, our inventory balance increased to $926.9 million, compared to $823.6 million as of June 30, 2024, as we accelerated the production and receipt of Fall 2025 inventory, to the extent possible, to mitigate the impact of potential further incremental tariffs, as compared to the same period in 2024. We believe older season inventories represent a manageable portion of our total inventory mix. We have planned full-year 2025 capital expenditures of approximately $60 to $80 million. This includes investments in our DTC operations, including new stores and supply chain and digital capabilities to support our strategic priorities. Our actual capital expenditures may differ from the planned amounts depending on factors such as the timing of system implementations and new store openings and related construction. Our long-term goal is to maintain a strong balance sheet and a disciplined approach to capital allocation. Dependent upon our financial position, market conditions and our strategic priorities, our capital allocation approach includes: • investing in organic growth opportunities to drive long-term profitable growth; • returning at least 40% of free cash flow to shareholders through dividends and share repurchases; and • considering opportunistic mergers and acquisitions. Free cash flow is a non-GAAP financial measure. Free cash flow is calculated by reducing net cash flow from operating activities by capital expenditures. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders and acquisitions after making the capital investments required to support ongoing business operations and long-term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures since it excludes certain mandatory expenditures. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Other cash commitments Our inventory purchase obligations were $315.9 million as of June 30, 2025, compared to $473.0 million and $450.9 million as of December 31, 2024 and June 30, 2024, respectively. There have been no other significant changes to our other cash commitments as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. CRITICAL ACCOUNTING ESTIMATES Management's discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make various estimates and judgments that affect reported amounts of assets, liabilities, sales, cost of sales, and expenses and related disclosure of contingent assets and liabilities. We base our ongoing estimates on historical experience and other assumptions that we believe to be reasonable in the circumstances. The business and economic uncertainty resulting from volatile geopolitical conditions, including expanded tariffs, have made such estimates and assumptions more difficult to calculate. Accordingly, actual results may differ from these estimates and assumptions. We believe that the estimates, assumptions and judgments involved in the accounting for sales reserves, allowance for uncollectible accounts receivable, excess, close-out and slow-moving inventory, impairment of long-lived assets, intangible assets and goodwill, and income taxes have the greatest potential effect on our financial statements, so we consider these to be our critical accounting policies and estimates. Refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding our critical accounting policies and estimates. COLUMBIA SPORTSWEAR COMPANY | Q2 2025 FORM 10-Q | 36 Table of Contents Management regularly discusses with our audit committee our critical accounting estimates and the development and selection of these accounting estimates. These discussions typically occur at our quarterly audit committee meetings and include the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation. There have been no significant changes to the Company's significant accounting policies described in Note 2 in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024. RECENT ACCOUNTING PRONOUNCEMENTS Refer to Note 1 in Part I, Item 1 of this Quarterly Report on Form 10-Q. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has not been any material change in the market risk disclosure contained in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024.