Columbia Sportswear returned to profitability in the second quarter of 2026, but the headline earnings rebound masks a still-fragile underlying business. Net income of $26.6M swung from a $10.2M loss in the prior-year quarter. Diluted earnings per share recovered from a $(0.19) deficit. Gross margin expanded 920 basis points to 58.3%. Roughly 980 bps of that lift came from refunds of IEEPA tariffs previously paid under the now-rescinded duty regime. Stripping out the one-time tariff benefit, core operating margin remained thin. The U.S. wholesale channel continued to contract. U.S. net sales declined 4% year over year for the quarter. Underlying earnings power is the right valuation anchor until cleaner evidence of U.S. traction arrives. The headline profitability recovery masks weakness that requires careful interpretation by investors.
The quarter exposed the structural tension running through the portfolio. The Columbia brand grew 1% globally, with international segments offsetting U.S. weakness. The SOREL brand posted a 14% revenue decline. Inventories climbed sharply, reaching $874.8M as Fall 2026 shipments were intentionally pulled forward. Supply chain absorbed congestion from Middle East trade disruptions. Management continued to return capital, repurchasing $150M of stock during the six-month period while paying $31M in dividends. The buyback pace has decelerated from 2025. The capital allocation discipline contrasts with the operating uncertainty that continues to define the franchise trajectory.
The set-up heading into the second half of 2026 is mixed. Demand visibility is murky given the unresolved Columbia brand reset in the U.S. and the SOREL retrenchment. The balance sheet remains a clear strength. Cash and short-term investments total $624.6M with no funded debt. A fresh revolving facility maturing in 2031 sits undrawn. Columbia is operationally well-capitalized, but the franchise quality question remains open until the ACCELERATE growth strategy produces evidence of a stable U.S. consumer base.