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 (the "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. The third quarter of 2025 was an important milestone in this journey. In August 2025, the Columbia brand launched its new brand platform "Engineered for Whatever" through a global brand campaign in print, on social and in-person. The Columbia brand also released certain new products designed with a younger, more active consumer in mind, such as the Amaze Puff. Additionally, the Columbia brand re-launched the U.S. Columbia.com website, with enhanced features and photography. Through the ACCELERATE Growth Strategy, we are focused 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 globally, particularly 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. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 24 Table of Contents 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 • 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 third quarter 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 The Columbia brand in the U.S. | The Columbia brand in the U.S. has been under pressure due to numerous factors. The Columbia brand's ACCELERATE Growth Strategy is intended to overcome certain of these headwinds, elevate the consumers' perception of the Brand, and to fuel future growth. Wholesale sales for the Columbia brand in the U.S. are expected to be down for full year 2025 and extending into first half 2026. The Columbia brand's U.S. direct-to-consumer ("DTC") e-commerce channel has also experienced reduced sales year-over-year as we strategically positioned the site to represent a more premium expression of the Brand. The Columbia brand’s U.S. DTC brick-and-mortar business primarily consists of outlet stores, and was supplemented in 2024 by temporary clearance stores to clear excess inventory. To help change consumers’ perception of the Columbia brand from a solely value-oriented proposition at physical retail, the Brand is investing in in-store marketing at key wholesale partners, enhancing our channel segmentation strategies and opening a small number of premium stores in high-traffic shopping malls in North America. Elevating consumers’ perception of the Columbia brand will take time. The Brand’s product refresh is still underway, with different segments of the Brand’s global line being updated over time to resonate more with younger and more active consumers while still serving our value-oriented consumers. The Columbia brand’s ACCELERATE Growth Strategy and increased investment in demand creation began in the second half of this year and we expect will continue in seasons to come. Over time, we expect these investments and improvements to elevate the Brand in the marketplace and eventually stimulate consumer demand in the U.S. Tariffs Uncertainty | We are headquartered in the U.S. and are subject to the laws and regulations governing companies operating in the U.S. Incremental tariffs on products imported into the U.S. from most countries are now in place, in addition to the product-based tariffs the Company has historically paid for its imported goods into the U.S. Certain of these incremental tariff levels have changed with little notice, making it difficult to predict product costs and market impacts. We expect Vietnam, Bangladesh, Indonesia, and India to represent approximately 42 percent, 23 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 percentage of our finished goods imports into the U.S. in 2025. Higher tariffs on U.S. imports are already adversely impacting our U.S. product input costs. We estimate that the 2025 unmitigated financial impact of the incremental tariffs will be approximately $35 to $40 million. On an annualized basis utilizing an approximation of our 2024 imports of finished goods inventory, we estimate that the unmitigated financial impact of the incremental tariffs will be approxim ately $160 million. For Fall 2025, 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 has helped alleviate storage capacity constraints within our distribution center network. We also continue to be 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. We are absorbing the incremental tariff cost related to Fall 2025 as the underlying inventory is sold. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 25 Table of Contents For 2026, we intend to continue to take actions to offset the impact of higher U.S. tariffs on our business. For Spring 2026, we increased U.S. pricing by a high-single digit percent, and we are maintaining similar price increases for the Fall 2026 season. When combined with other mitigation tactics, our goal in 2026 is to offset the dollar impact of higher tariffs. Longer-term, our goal is to restore our product margin percentage to historical levels through a combination of actions, including price increases, vendor negotiations, re-sourcing product, 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. We expect these incremental tariffs may also impact demand for our products as end consumers weigh discretionary spending and wholesale customers rationalize their open to buy budgets. We expect our inventories to also be impacted by a reduction in consumer and customer demand, and have rationalized Fall 2025 inventory buys and Spring 2026 inventory plans, while seeking to preserve our strategic sourcing relationships, in order to reduce the risk of holding excess inventory. 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. International Trends | We have not seen a meaningful change in trends in the majority of our international businesses, which were quite healthy for the first nine months of 2025. Across our EMEA and LAAP 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 | Q3 2025 FORM 10-Q | 26 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 September 30, Nine Months Ended September 30, (in thousands, except for percentage of net sales and per share amounts) 2025 2024 2025 2024 Net sales $ 943,425 100.0 % $ 931,768 100.0 % $ 2,327,123 100.0 % $ 2,271,994 100.0 % Cost of sales 471,607 50.0 % 464,209 49.8 % 1,162,140 49.9 % 1,141,457 50.2 % Gross profit 471,818 50.0 % 467,559 50.2 % 1,164,983 50.1 % 1,130,537 49.8 % Selling, general and administrative expenses 380,892 40.4 % 361,243 38.8 % 1,060,991 45.6 % 1,013,262 44.6 % Impairment of goodwill and intangible assets 29,000 3.1 % — — % 29,000 1.2 % — — % Net licensing income 5,460 0.6 % 6,225 0.7 % 15,311 0.7 % 16,145 0.7 % Operating income 67,386 7.1 % 112,541 12.1 % 90,303 3.9 % 133,420 5.9 % Interest income, net 2,870 0.3 % 5,364 0.6 % 14,525 0.6 % 22,905 1.0 % Other non-operating income, net 732 0.1 % 1,283 0.1 % 4,447 0.2 % 2,030 0.1 % Income before income tax 70,988 7.5 % 119,188 12.8 % 109,275 4.7 % 158,355 7.0 % Income tax expense 18,983 2.0 % 29,031 3.1 % 25,218 1.1 % 37,639 1.7 % Net income $ 52,005 5.5 % $ 90,157 9.7 % $ 84,057 3.6 % $ 120,716 5.3 % Diluted earnings per share $ 0.95 $ 1.56 $ 1.53 $ 2.04 COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 27 Table of Contents Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024 Net Sales. Net sales by brand, product category and channel are summarized in the following table: Three Months Ended September 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 $ 803,973 $ (8,673) $ 795,300 $ 799,653 1% (1)% SOREL 80,964 (635) 80,329 73,903 10% 9% prAna 30,375 1 30,376 28,566 6% 6% Mountain Hardwear 28,113 (4) 28,109 29,646 (5)% (5)% Total $ 943,425 $ (9,311) $ 934,114 $ 931,768 1% —% Product category net sales: Apparel, accessories and equipment $ 734,315 $ (6,275) $ 728,040 $ 735,356 —% (1)% Footwear 209,110 (3,036) 206,074 196,412 6% 5% Total $ 943,425 $ (9,311) $ 934,114 $ 931,768 1% —% Channel net sales: Wholesale $ 634,171 $ (6,845) $ 627,326 $ 605,217 5% 4% Direct-to-consumer 309,254 (2,466) 306,788 326,551 (5)% (6)% Total $ 943,425 $ (9,311) $ 934,114 $ 931,768 1% —% (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 EMEA and LAAP net sales was largely driven by the strength of the Columbia brand within our wholesale business across many 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 Canada net sales reflects the impact of favorable timing of wholesale shipments and modest growth in our Fall 2025 orders, partially offset by declines in our Canada DTC business. The decline in U.S. net sales was driven primarily by our U.S. DTC brick-and-mortar and e-commerce businesses. U.S. wholesale net sales were relatively flat reflecting earlier shipments of Fall 2025 orders, offset by decreased wholesale customer demand and lower closeout sales. The underlying business trends within our U.S. business remain under pressure. Gross Profit. Gross profit is summarized in the following table: Three Months Ended September 30, (in thousands, except for percentages and basis points) 2025 2024 Change Gross profit $ 471,818 $ 467,559 $ 4,259 1 % Gross margin 50.0 % 50.2 % -20 bps Gross margin contracted primarily due to an approximate 160 bps decrease in channel profitability resulting from unmitigated incremental tariffs, which more than offset higher channel profitability from lower clearance and promotional activity. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 28 Table of Contents Selling, General and Administrative Expenses. SG&A expenses are summarized in the following table: Three Months Ended September 30, (in thousands, except for percentages and basis points) 2025 2024 Change Selling, general and administrative expenses $ 380,892 $ 361,243 $ 19,649 5 % Selling, general and administrative expenses as percent of net sales 40.4 % 38.8 % 160 bps SG&A expenses increased primarily due to the following factors: • higher demand creation expenses of $11.6 million, reflecting increased investment in demand creation in line with our ACCELERATE Growth Strategy; • higher omni-channel expenses, reflecting higher DTC brick-and-mortar expenses associated with new stores, partially offset by temporary clearance location closures; and • higher other expenses, reflecting higher supply chain costs, partially offset by lower technology expenses. Impairment of Goodwill and Intangible Assets. During the third quarter of 2025, we recognized $29.0 million of impairment charges as a result of our interim quantitative impairment tests for the prAna and Mountain Hardwear indefinite-lived intangible assets (which consists of trade names and trademarks) (collectively, "trade names") and goodwill reporting units. These charges consisted of a $12.2 million impairment charge related to the Mountain Hardwear goodwill reporting unit, comprising the full Mountain Hardwear goodwill balance, an $8.8 million impairment charge related to the prAna goodwill reporting unit, and an $8.0 million impairment charge related to the prAna trade name. Refer to Note 6 in Part I, Item 1 and our Critical Accounting Estimates in Part I, Item 2 of this Quarterly Report on Form 10-Q for further information regarding these impairments. Interest Income, Net. Interest income, net is summarized in the following table: Three Months Ended September 30, (in thousands, except for percentages) 2025 2024 Change Interest income, net $ 2,870 $ 5,364 $ (2,494) (46) % Interest income, net as a percent of net sales 0.3 % 0.6 % 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: Three Months Ended September 30, (in thousands, except for percentages) 2025 2024 Change Income tax expense $ 18,983 $ 29,031 $ (10,048) (35) % Effective income tax rate 26.7 % 24.4 % Our effective income tax rate increased primarily due to the impact of non-deductible impairment charges. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 29 Table of Contents Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024 Net Sales. Net sales by brand, product category and channel are summarized in the following table: Nine Months Ended September 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 $ 2,035,439 $ 1,595 $ 2,037,034 $ 1,972,231 3% 3% SOREL 141,995 (125) 141,870 140,597 1% 1% prAna 79,026 12 79,038 81,660 (3)% (3)% Mountain Hardwear 70,663 252 70,915 77,506 (9)% (9)% Total $ 2,327,123 $ 1,734 $ 2,328,857 $ 2,271,994 2% 3% Product category net sales: Apparel, accessories and equipment $ 1,857,437 $ 2,684 $ 1,860,121 $ 1,818,350 2% 2% Footwear 469,686 (950) 468,736 453,644 4% 3% Total $ 2,327,123 $ 1,734 $ 2,328,857 $ 2,271,994 2% 3% Channel net sales: Wholesale $ 1,351,158 $ (1,439) $ 1,349,719 $ 1,274,498 6% 6% Direct-to-consumer 975,965 3,173 979,138 997,496 (2)% (2)% Total $ 2,327,123 $ 1,734 $ 2,328,857 $ 2,271,994 2% 3% (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 EMEA and LAAP net sales was largely driven by the strength of the Columbia brand across both wholesale and DTC channels across many 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 Canada net sales reflects the impact of favorable timing of wholesale shipments, partially offset by declines in our Canada DTC business. The decline in U.S. net sales was driven primarily by our U.S. DTC brick-and-mortar and e-commerce businesses, partially offset by a modest increase in our U.S. wholesale business, which benefitted from earlier shipments of Fall 2025 orders, partially offset by lower closeout sales and decreased wholesale customer demand. The underlying business trends within our U.S. business remain under pressure. Gross Profit. Gross profit is summarized in the following table: Nine Months Ended September 30, (in thousands, except for percentages and basis points) 2025 2024 Change Gross profit $ 1,164,983 $ 1,130,537 $ 34,446 3 % Gross margin 50.1 % 49.8 % 30 bps 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, partially offset by unmitigated incremental tariffs. 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. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 30 Table of Contents Selling, General and Administrative Expenses. SG&A expenses are summarized in the following table: Nine Months Ended September 30, (in thousands, except for percentages and basis points) 2025 2024 Change Selling, general and administrative expenses $ 1,060,991 $ 1,013,262 $ 47,729 5 % Selling, general and administrative expenses as percent of net sales 45.6 % 44.6 % 100 bps SG&A expenses increased primarily due to the following factors: • higher omni-channel expenses of $25.4 million, reflecting higher DTC brick-and-mortar expenses associated with new stores, partially offset by temporary clearance location closures; and • higher demand creation expenses of $22.4 million, reflecting our increased investment in demand creation in line with our ACCELERATE Growth Strategy. Impairment of Goodwill and Intangible Assets. During the third quarter of 2025, we recognized $29.0 million of impairment charges as a result of our interim quantitative impairment tests for the prAna and Mountain Hardwear trade names and goodwill reporting units. These charges consisted of a $12.2 million impairment charge related to the Mountain Hardwear goodwill reporting unit, comprising the full Mountain Hardwear goodwill balance, an $8.8 million impairment charge related to the prAna goodwill reporting unit, and an $8.0 million impairment charge related to the prAna trade name. Refer to Note 6 in Part I, Item 1 and our Critical Accounting Estimates in Part I, Item 2 of this Quarterly Report on Form 10-Q for further information regarding these impairments. Interest Income, Net. Interest income, net is summarized in the following table: Nine Months Ended September 30, (in thousands, except for percentages) 2025 2024 Change Interest income, net $ 14,525 $ 22,905 $ (8,380) (37) % Interest income, net as a percent of net sales 0.6 % 1.0 % 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: Nine Months Ended September 30, (in thousands, except for percentages) 2025 2024 Change Income tax expense $ 25,218 $ 37,639 $ (12,421) (33) % Effective income tax rate 23.1 % 23.8 % Our effective income tax rate decreased primarily due to a tax benefit associated with foreign currency losses, partially offset by the impact of non-deductible impairment charges. 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 3 in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 31 Table of Contents Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024 Net sales by geographic segment are summarized in the following table: Three Months Ended September 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. $ 546,690 $ — $ 546,690 $ 571,306 (4)% (4)% LAAP 143,358 (837) 142,521 134,985 6% 6% EMEA 164,461 (9,080) 155,381 141,785 16% 10% Canada 88,916 606 89,522 83,692 6% 7% $ 943,425 $ (9,311) $ 934,114 $ 931,768 1% —% (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: Three Months Ended September 30, (in thousands) 2025 2024 Change U.S. $ 97,054 $ 115,356 $ (18,302) LAAP 21,118 20,435 683 EMEA 38,221 33,238 4,983 Canada 22,821 22,369 452 Total segment operating income 179,214 191,398 (12,184) Unallocated corporate expenses 111,828 78,857 32,971 Operating income $ 67,386 $ 112,541 $ (45,155) U.S. U.S. segment operating income decreased $18.3 million to $97.1 million, or 17.8% of net sales, for the third quarter of 2025 from $115.4 million, or 20.2% of net sales, for the comparable period in 2024. The decrease in U.S. segment operating income was driven primarily by decreased net sales and increased segment SG&A expenses. U.S. net sales decreased $24.6 million, or 4%, for the third quarter of 2025, compared to the same period in 2024, driven primarily by our U.S. DTC brick-and-mortar and e-commerce businesses. The decline in U.S. DTC brick-and-mortar net sales was primarily attributable to the closure of temporary clearance locations and, to a lesser degree, decreased productivity from existing stores, partially offset by contributions from new stores. As of September 30, 2025, our U.S. business operated 172 retail stores and 8 temporary clearance locations, compared to 169 retail stores and 42 temporary clearance locations for the comparable period in 2024. The decline in U.S. DTC e-commerce net sales was attributable to a challenging e-commerce environment for outdoor brands and increased competition within the outdoor lifestyle category, coupled partially with ongoing efforts to refine and evolve our online promotions and marketing strategies. U.S. wholesale net sales were relatively flat, reflecting a shift of Fall 2025 shipments into the third quarter of 2025 out of the fourth quarter of 2025, partially offset by lower Fall 2025 orders and lower closeout sales. The underlying business trends within our U.S. business remain under pressure. U.S. segment gross margin expanded to 49.5% for the third quarter of 2025 from 49.4% for the comparable period in 2024, driven primarily by higher channel profitability from lower clearance and promotional activity, partially offset by an approximate 160 bps decrease in channel profitability resulting from unmitigated incremental tariffs. U.S. segment SG&A expenses increased as a percentage of net sales to 28.7% for the third quarter of 2025, compared to 25.8% 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 6.4% for the three months ended September 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 COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 32 Table of Contents LAAP segment operating income increased $0.7 million to $21.1 million, or 14.7% of net sales, for the third quarter of 2025 from $20.4 million, or 15.1% of net sales, for the comparable period in 2024. LAAP net sales increased $8.4 million, or 6% (6% constant-currency), for the third quarter of 2025, compared to the same period in 2024, driven primarily by our LAAP distributor and China businesses, partially offset by declines in our Japan and Korea businesses. The growth in LAAP distributor net sales was driven by growth in our Fall distributor orders as compared to the same period in the prior year. The growth in China net sales reflected continued healthy demand, which we believe was attributable to the execution of our marketplace strategies, including premium offerings and unique marketing activations. The decline in Japan net sales was driven primarily by decreased Japan wholesale net sales, reflecting a shift of Fall 2025 shipments into the fourth quarter of 2025, partially offset by growth in Japan DTC net sales which we believe was attributable to the execution of our marketplace strategies, including localized product offerings. The decline in Korea net sales was driven primarily by decreased Korea wholesale net sales, partially offset by modest growth in Korea DTC net sales. LAAP segment gross margin contracted to 53.8% for the third quarter of 2025 from 54.5% for the comparable period in 2024, driven primarily by unfavorable region and channel net sales mix and lower channel profitability reflecting unfavorable input costs, partially offset by higher channel profitability reflecting favorable product mix. LAAP segment SG&A expenses increased as a percentage of net sales to 35.1% for the third quarter of 2025, compared to 34.1% for the same period in 2024, driven primarily by higher personnel and DTC brick-and-mortar expenses associated with new stores. In total, LAAP segment SG&A expenses increased 9.3% for the three months ended September 30, 2025, as compared to the same period in 2024. EMEA EMEA segment operating income increased $5.0 million to $38.2 million, or 23.2% of net sales, for the third quarter of 2025 from $33.2 million, or 23.4% of net sales, for the comparable period in 2024. EMEA net sales increased $22.7 million, or 16% (10% constant-currency), for the third quarter of 2025, compared to the same period in 2024, driven primarily by our Europe-direct business. The growth in Europe-direct net sales was driven by robust demand across both wholesale and DTC channels, which we believe was attributable to the execution of our marketplace strategies, including marketing activations and partnership with strategic wholesale partners and brand authenticators. EMEA distributor net sales decreased modestly, reflecting a shift of Fall 2025 shipments out of the third quarter of 2025 into the second quarter of 2025, partially offset by growth in Fall distributor orders, as compared to the same period in 2024. EMEA segment gross margin expanded to 49.7% for the third quarter of 2025 from 49.6% for the comparable period in 2024, driven primarily by higher channel profitability from lower clearance and promotional activity, partially offset by unfavorable input costs. EMEA segment SG&A expenses increased as a percentage of net sales to 24.2% for the third quarter of 2025, compared to 23.4% in 2024, driven primarily by higher personnel and demand creation expenses. In total, EMEA segment SG&A expenses increased 20.1% for the three months ended September 30, 2025, as compared to the same period in 2024. Canada Canada segment operating income increased $0.5 million to $22.8 million, or 25.7% of net sales, for the third quarter of 2025 from $22.4 million, or 26.7% of net sales, for the comparable period in 2024. Canada net sales increased $5.2 million, or 6% (7% constant-currency), for the third quarter of 2025, compared to the same period in 2024, driven primarily by our Canada wholesale business, partially offset by declines in our Canada DTC business. The growth in our Canada wholesale business reflected a shift of Fall 2025 shipments into the third quarter of 2025 out of the fourth quarter of 2025 and modest growth of Fall orders. Canada segment gross margin contracted to 47.4% for the third quarter of 2025 from 49.4% for the comparative period in 2024, driven primarily by lower channel profitability from unfavorable input costs and unfavorable effects from foreign exchange hedge rates, partially offset by higher channel profitability from lower clearance and promotional activity. Canada segment SG&A expenses increased as a percentage of net sales to 17.2% for the third quarter of 2025, compared to 16.9% for the same period in 2024. In total, Canada segment SG&A expenses increased 8.1% for the three months ended September 30, 2025, as compared to the same period in 2024. Unallocated corporate expenses Unallocated corporate expenses increased by $33.0 million to $111.8 million in the third quarter of 2025, from $78.9 million for the comparable period in 2024, driven primarily by $29.0 million of impairment charges related to Mountain Hardwear and prAna goodwill and the prAna trade name. COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 33 Table of Contents Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024 Net sales by reportable segment are summarized in the following table: Nine Months Ended September 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. $ 1,352,988 $ — $ 1,352,988 $ 1,385,940 (2)% (2)% LAAP 407,901 3,498 411,399 373,115 9% 10% EMEA 402,503 (6,652) 395,851 350,227 15% 13% Canada 163,731 4,888 168,619 162,712 1% 4% $ 2,327,123 $ 1,734 $ 2,328,857 $ 2,271,994 2% 3% (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: Nine Months Ended September 30, (in thousands) 2025 2024 Change U.S. $ 180,348 $ 211,815 $ (31,467) LAAP 54,469 48,340 6,129 EMEA 78,828 66,802 12,026 Canada 29,830 33,515 (3,685) Total segment operating income 343,475 360,472 (16,997) Unallocated corporate expenses 253,172 227,052 26,120 Operating income $ 90,303 $ 133,420 $ (43,117) U.S. U.S. segment operating income decreased $31.5 million to $180.3 million, or 13.3% of net sales, for the nine months ended September 30, 2025 from $211.8 million, or 15.3% of net sales, for the comparable period in 2024. The decrease in U.S. segment operating income was driven primarily by decreased net sales and increased segment SG&A expenses. U.S. net sales decreased $33.0 million, or 2%, for the nine months ended September 30, 2025, compared to the same period in 2024, driven primarily by our U.S. DTC brick-and-mortar and e-commerce businesses, partially offset by a modest increase in U.S. wholesale net sales. The decline in U.S. DTC brick-and-mortar net sales was attributable to the closure of temporary clearance locations and decreased productivity from existing stores, partially offset by contributions from new stores. As of September 30, 2025, our U.S. business operated 172 retail stores and 8 temporary clearance locations, compared to 169 retail stores and 42 temporary clearance locations for the comparable period in 2024. The decline in U.S. DTC e-commerce net sales 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. Our U.S. DTC e-commerce business was also partially impacted by ongoing efforts to refine and evolve our online promotions and marketing strategies. The modest increase in U.S. wholesale net sales reflected a shift of Fall 2025 shipments into the first nine months of 2025, partially offset by lower closeout sales and lower Fall 2025 orders. The underlying business trends within our U.S. business remain under pressure. U.S. segment gross margin expanded to 49.6% for the nine months ended September 30, 2025 from 48.9% for the comparable period in 2024, driven primarily by higher channel profitability from lower clearance and promotional activity, partially offset by unmitigated incremental tariffs. U.S. segment SG&A expenses increased as a percentage of net sales to 32.4% for the nine months ended September 30, 2025, compared to 29.3% 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 7.8% for the nine months ended September 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 | Q3 2025 FORM 10-Q | 34 Table of Contents LAAP LAAP segment operating income increased $6.1 million to $54.5 million, or 13.4% of net sales, for the nine months ended September 30, 2025 from $48.3 million, or 13.0% of net sales, for the comparable period in 2024. LAAP net sales increased $34.8 million, or 9% (10% constant-currency), for the nine months ended September 30, 2025, compared to the same period in 2024, driven primarily by our China, LAAP distributor and Japan businesses, partially offset by a decline in our Korea business. The growth in China net sales reflected continued strong demand, which we believe was attributable to the execution of our marketplace strategies throughout the first nine months 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 LAAP distributor net sales was driven by growth in our distributor orders as compared to the same period in the prior year. The growth in Japan net sales 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 through most of the first nine months of 2025, as compared to the same period in 2024. The decline in Korea net sales reflected unfavorable effects from foreign currency fluctuation, which more than offset constant-currency net sales growth 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 36.3% for the nine months ended September 30, 2025, compared to 36.7% 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 8.2% for the nine months ended September 30, 2025, as compared to the same period in 2024. EMEA EMEA segment operating income increased $12.0 million to $78.8 million, or 19.6% of net sales, for the nine months ended September 30, 2025 from $66.8 million, or 19.1% of net sales, for the comparable period in 2024. The increase in EMEA segment operating income was driven primarily by increased net sales and gross profit, partially offset by increased segment SG&A expenses. EMEA net sales increased $52.3 million, or 15% (13% constant-currency), for the nine months ended September 30, 2025, compared to the same period in 2024, driven by our Europe-direct and EMEA distributor businesses. The growth in Europe-direct net sales 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, elevating the online and in-store customer experience, and partnership with strategic wholesale partners and brand authenticators. The growth in EMEA distributor net sales was primarily driven by growth in our distributor orders as compared to the same period in the prior year. EMEA segment gross margin expanded to 47.9% for the nine months ended September 30, 2025 from 47.3% for the comparable period in 2024, driven primarily by favorable region and channel mix and higher channel profitability from favorable product mix. EMEA segment SG&A expenses increased as a percentage of net sales to 25.3% for the nine months ended September 30, 2025, compared to 24.6% for the same period in 2024, primarily driven by higher personnel and DTC brick-and-mortar expenses associated with new stores. In total, EMEA segment SG&A expenses increased 18.1% for the nine months ended September 30, 2025, as compared to the same period in 2024. Canada Canada segment operating income decreased $3.7 million to $29.8 million, or 18.2% of net sales, for the nine months ended September 30, 2025 from $33.5 million, or 20.6% of net sales, for the comparable period in 2024. Canada net sales increased $1.0 million, or 1% (4% constant-currency), for the nine months ended September 30, 2025, compared to the same period in 2024, driven primarily by our Canada wholesale business, partially offset by declines in our Canada DTC business. Canada segment gross margin contracted to 48.6% for the nine months ended September 30, 2025 from 49.4% for the comparable period in 2024, driven primarily by unfavorable channel mix, partially offset by higher channel profitability from lower clearance and promotional activity. Canada segment SG&A expenses increased as a percentage of net sales to 23.2% for the nine months ended September 30, 2025, compared to 20.9% for the same period in 2024. In total, Canada segment SG&A expenses increased 11.6% for the nine months ended September 30, 2025, as compared to the same period in 2024. Unallocated corporate expenses Unallocated corporate expenses increased by $26.1 million to $253.2 million for the nine months ended September 30, 2025 from $227.1 million for the comparable period in 2024, driven primarily by $29.0 million of impairment charges related to Mountain Hardwear and prAna goodwill and the prAna trade name. 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 COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 35 Table of Contents 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. Our cash position is also impacted by incremental tariff costs for U.S. product. While we currently project having adequate liquidity to meet our short-term and long-term working capital needs, 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. Cash Flow Activities Cash flows are summarized in the following table: Nine Months Ended September 30, (in thousands) 2025 2024 Change Net cash provided by (used in): Operating activities $ (333,443) $ (76,608) $ (256,835) Investing activities 239,084 321,148 (82,064) Financing activities (221,848) (284,575) 62,727 Net effect of exchange rate changes on cash 13,170 (3,604) 16,774 Net decrease in cash and cash equivalents $ (303,037) $ (43,639) $ (259,398) The change in cash flows used in operating activities for the nine months ended September 30, 2025 was primarily driven by a $256.3 million increase in cash used in changes in assets and liabilities. The most significant comparative changes in assets and liabilities included Accounts payable , Inventories , and Prepaid expenses and other current assets. A $129.9 million increase in cash used in Accounts payable and $43.9 million increase in cash used in Inventories were primarily driven by earlier timing of inventory receipts and payments, in part to proactively mitigate the impact of further incremental tariffs. A $32.9 million decrease in cash provided by Prepaid expenses and other current assets was primarily driven by an increase in U.S. prepaid income taxes. Net cash provided by investing activities was $239.1 million for the nine months ended September 30, 2025, compared to $321.1 million for the nine months ended September 30, 2024. The decrease in cash provided by investing was primarily driven by lower sales and maturities of short-term investments for the nine months ended September 30, 2025, as compared to the same period in 2024. Net cash used in financing activities was $221.8 million for the nine months ended September 30, 2025, compared to $284.6 million for the nine months ended September 30, 2024. The decrease in cash used in financing was primarily driven by lower share repurchases of common stock for the nine months ended September 30, 2025, as compared to the same period in 2024. Sources of Liquidity Cash and cash equivalents and short-term investments As of September 30, 2025, we had cash and cash equivalents of $228.8 million and short-term investments of $7.2 million, compared to $531.9 million and $283.6 million, respectively, as of December 31, 2024 and $306.7 million and $67.2 million, respectively, as of September 30, 2024. Committed credit facilities As of September 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 September 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 COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 36 Table of Contents As of September 30, 2025, collectively, our international subsidiaries had unsecured, uncommitted lines of credit, credit facilities and overdraft facilities, providing for borrowings up to approximately US$101.2 million. There were no balances outstanding under these facilities. 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 September 30, 2025, our inventory balance was relatively flat at $800.4 million, compared to $798.2 million as of September 30, 2024, as earlier timing of Fall 2025 inventory receipts, in part to proactively mitigate the impact of further incremental tariffs, was offset by earlier wholesale shipments. We believe older season inventories represent a manageable portion of our total inventory mix. We have planned full-year 2025 capital expenditures of approximately $65 to $75 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 $404.2 million as of September 30, 2025, compared to $473.0 million and $437.2 million as of December 31, 2024 and September 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 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Other than described below, there have been no significant changes in our 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. Indefinite-Lived Intangible Assets and Goodwill During the third quarter of 2025, the Company identified triggering events related to the prAna and Mountain Hardwear trade names and goodwill reporting units. As a result, we performed interim quantitative impairment tests where the Company compared the estimated fair COLUMBIA SPORTSWEAR COMPANY | Q3 2025 FORM 10-Q | 37 Table of Contents values of the prAna and Mountain Hardwear trade names and goodwill reporting units to their carrying values. Refer to Note 6 in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding these impairments. In our interim quantitative impairment test of the prAna trade name, the fair value of the prAna trade name was less than its carrying value of $51.8 million and, therefore, an impairment charge of $8.0 million was recorded. In our interim quantitative impairment test of the Mountain Hardwear trade name, the fair value of the Mountain Hardwear trade name exceeded its carrying value of $15.0 million by approximately 75 percent and, therefore, no impairment charge was recorded. As part of our evaluation, we performed a sensitivity analysis on the trade name impairment model. A 300 basis point decline in the compound annual growth rate for net sales assumed over the first five years would reduce the excess of the fair value over the carrying value to approximately 51 percent. Separately, a 100 basis point increase in the assumed discount rate would reduce the excess of the fair value over the carrying value to approximately 57 percent. A separate 50 basis point decline in the assumed royalty rate would reduce the excess of the fair value over the carrying amount to approximately 31 percent. In our interim quantitative impairment test of the prAna reporting unit, the fair value of the prAna reporting unit was less than its carrying value of $12.2 million and, therefore, an impairment charge of $8.8 million was recorded. In our interim quantitative impairment test of the Mountain Hardwear reporting unit, the fair value of the Mountain Hardwear reporting unit was less than its carrying value and, therefore, an impairment charge of $12.2 million was recorded, comprising the full Mountain Hardwear goodwill balance. Our impairment tests and related fair value estimates are based on a number of factors, including assumptions and estimates for projected net sales, income, cash flows, discount rates, market-based multiples, and other operating performance measures. Changes in estimates or the application of alternative assumptions could produce significantly different results. These assumptions and estimates may change in the future due to changes in economic conditions, changes in our ability to meet sales and profitability objectives, or changes in our business operations or strategic direction. RECENT ACCOUNTING PRONOUNCEMENTS Refer to Note 1 in Part I, Item 1 of this Quarterly Report on Form 10-Q.