SID 0022 Columbia Sportswear (COLM)

In this podcast, we examine what has caused growth in outerwear, sportswear, and footwear to accelerate since the 2008 credit crisis for key players such as Columbia, North Face, and other brands.  These leading firms have  harnessed the opportunity to use outlet stores and e-commerce to redefine their relationship with their customers and retailers, and in so doing have increased their penetration of these essential apparel markets.  Coming out of the 2008 meltdown, we recount the grotesquely massive bets made by retailers on private label, which helped spur Columbia to develop this strategy.  We evaluate the return on capital of various players, taking a dive into the metrics of retailing to help contrast various approaches, and we touch upon the emergent category of yoga attire.  The industry has been changed on a deeply fundamental level, which we think has benefited the strongest brands over peripheral players, a trend that has had a profound impact upon other industries we have followed in the past, such as the travel market. 

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Stocks-in-Depth thoroughly examines the fundamentals of reasonably valued high-quality small and mid-cap growth companies. It is produced by GARP Research, a provider of equity research to institutions including many of the most well-known fund managers for over 20 years. GARP is known for its granular modelling of business lines and in-depth assessment of competition and served markets. Stocks-in-Depth searches for value and growth by researching stocks that may be out of favor, or where a major catalyst to earnings growth is hidden. Our financial models attempt to shed light on trends underneath opaque segment reporting. Stocks in Depth emphasizes balance sheet accounts and profitability margins to determine underlying return on capital, and maintains healthy skepticism regarding pro forma adjustments and undue reliance upon unconventional measures such as EBITDA. We emphasize field visits with managements, industry conferences, non-public competitors and ancillary fields to detect industry dynamics. In our search for the best companies and investment opportunities, we often challenge the consensus view. StocksinDepth forecasts over the long-term, typically over about a three year horizon, and review track records going back for years.