Columbia Sportswear : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Columbia Sportswear Company

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 consisting of 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 115 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 In 2024, 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 effort centered around several consumer-centric shifts to the Brand, product and marketplace strategies, as well as enhanced ways of working. We believe successful operationalization of the ACCELERATE Growth Strategy can elevate the Brand and drive profitable growth. 2025 was an important milestone in this journey. 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, and re-launched the U.S. Columbia.com website, with enhanced features and photography. We're encouraged with early indicators, which signal that our differentiated marketing communications and enhanced products are resonating with consumers, providing us confidence as we plan for future seasons. 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 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 | Q1 2026 FORM 10-Q | 19 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, including brand perception, changes in consumer trends, and an increasingly competitive environment. While product functionality, quality and value remain important elements for consideration for some consumers, other consumers have increasingly shifted their preferences to also incorporate versatility and style for everyday wear. Athletic, athleisure, emerging outdoor, and other brands have capitalized on this casualization and style trend in the historical outdoor space. The Columbia brand's ACCELERATE Growth Strategy is intended to overcome certain of these headwinds and elevate the consumers' perception of the Brand to bring younger and more active consumers into the Brand, all while continuing to serve historical value-oriented consumers and to fuel future revenue growth. To elevate consumers' perception of the Columbia brand, beginning in 2024, the Brand began to refresh portions of its product line to appeal to target consumers and, in Fall 2025, launched a new Brand marketing campaign, Engineered for Whatever, coupled with increased investment in demand creation, which we expect to maintain in seasons to come. These improvements, among others, are expected to elevate consumers' perception of the Columbia brand over time with the focus on younger and more active consumers becoming more pervasive and sustained within the Brand. We have already begun to see proof points of the ACCELERATE Growth Strategy, including in products such as the Amaze Puff, which is bringing new younger consumers into the Brand. U.S. Tariffs | On February 20, 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under IEEPA were unconstitutional. Subsequently, the CIT ruled that the collected tariffs in question shall be refunded in accordance with the law. The CBP has issued an official notice and launched a special tariff refund program to facilitate such refunds. We have begun the process of requesting refunds of IEEPA tariffs paid. However, as of March 31, 2026, we did not recognize any tariff refunds in our unaudited condensed consolidated financial statements as we were unable to assert loss recovery is probable due to the uncertainty surrounding the tariff refund program. To the extent more clarity comes from the tariff refund program which changes the evaluation of probability, we could recognize a receivable for the amount of the IEEPA tariffs paid. If recognized, the receivable/refunds will benefit cost of sales to the extent the associated inventory has been sold. At the time the IEEPA tariffs were ruled unconstitutional, we had already paid approximately $80 million of IEEPA tariffs. As of March 31, 2026, approximately $55 million of that amount had been realized through cost of sales, with the remainder in inventory. The ultimate benefit to gross margin from any tariff refunds is subject to variability due to a number of factors, including accommodations to certain third-party vendors. Further, outstanding amounts to be recovered are also subject to interest payable to us. We absorbed much of the incremental tariff cost related to Fall 2025 as the costs were realized and did not raise prices on our products in 2025. As of the date of this filing, we have not received any portion of the IEEPA tariff refunds which we requested. In addition to the potential recovery of IEEPA tariffs previously paid, we are also facing uncertainly surrounding any future incremental tariffs. In response to the decision on IEEPA tariffs, the U.S. President issued an executive order imposing incremental 10% tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective on February 24, 2026 ("Section 122 Tariffs"). Our financial outlook assumes Section 122 Tariffs continue through July 2026 before returning to rates approximate to levels that were in place prior to the U.S. Supreme Court's tariff ruling on IEEPA. However, further trade policy actions are very uncertain and volatile. We continue to closely monitor and evaluate the changing tariff and trade restrictions and the potential impacts of these decisions on our business plans for 2026 and any potential impacts on consumer demand. Geopolitical Uncertainty | We sell our products in 115 countries, and our ability to sell, import into and produce in certain markets is impacted by ongoing geopolitical tensions. The current domestic and international political environment, including volatile trade relations and heightened military action and diplomacy in the Middle East, have contributed to uncertainty surrounding the future state of the global economy. The conflict in the Middle East, which broke out in late February 2026, has resulted in volatility in energy and transportation costs and heightened risk across international supply chains. These conditions have already resulted in cancellations of orders as well as reductions of forecasted orders for our Middle East distributor markets. Further potential impacts include softening of global consumer confidence and spending levels, increases to product input costs with exposure beginning in our Spring 2027 season, as well as disruptions to our supply chain, which may result in increased lead times, increased freight and logistics costs, order cancellations, customer accommodations for inventory that may be delivered late, and factory production disruptions, including potential energy availability issues and potential input bottlenecks. We continue to closely monitor the situation. The duration, scope and our ability to effectively respond to the impacts of the conflict could significantly impact our business plans for 2026. Macroeconomic Pressures | The current global macroeconomic environment is creating a complex and challenging retail environment and has had, and may continue to have, a negative impact on consumer and customer behavior and demand for our products. These pressures may result in moderation of or a slowdown in our international businesses. In the U.S., targeted price increases for the U.S. Spring 2026 and COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 20 Fall 2026 seasons may further impact demand for our products as end consumers weigh discretionary spending and wholesale customers rationalize their open-to-buy budgets. 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. 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 March 31, (in thousands, except for percentage of net sales and per share amounts) 2026 2025 Net sales $ 779,013 100.0 % $ 778,452 100.0 % Cost of sales 384,051 49.3 % 382,395 49.1 % Gross profit 394,962 50.7 % 396,057 50.9 % Selling, general and administrative expenses 357,137 45.8 % 354,471 45.5 % Net licensing income 4,168 0.5 % 4,922 0.6 % Operating income 41,993 5.4 % 46,508 6.0 % Interest income, net 4,883 0.6 % 6,817 0.9 % Other non-operating income, net 397 0.1 % 1,551 0.2 % Income before income tax 47,273 6.1 % 54,876 7.0 % Income tax expense 12,965 1.7 % 12,628 1.6 % Net income $ 34,308 4.4 % $ 42,248 5.4 % Diluted earnings per share $ 0.65 $ 0.75 COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 21 Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 Net Sales. Net sales by brand, product category and channel are summarized in the following table: Three Months Ended March 31, (in thousands, except for percentages) Reported Net Sales 2026 Adjust for Foreign Currency Translation Constant-currency Net Sales 2026 (1) Reported Net Sales 2025 Reported Net Sales % Change Constant-currency Net Sales % Change (1) Brand net sales: Columbia $ 690,149 $ (20,782) $ 669,367 $ 683,121 1% (2)% SOREL 37,163 (817) 36,346 42,205 (12)% (14)% prAna 26,661 (6) 26,655 28,114 (5)% (5)% Mountain Hardwear 25,040 (125) 24,915 25,012 -% -% Total $ 779,013 $ (21,730) $ 757,283 $ 778,452 -% (3)% Product category net sales: Apparel, accessories and equipment $ 623,093 $ (15,832) $ 607,261 $ 628,820 (1)% (3)% Footwear 155,920 (5,898) 150,022 149,632 4% -% Total $ 779,013 $ (21,730) $ 757,283 $ 778,452 -% (3)% Channel net sales: Wholesale $ 401,072 $ (13,455) $ 387,617 $ 399,769 -% (3)% Direct-to-consumer 377,941 (8,275) 369,666 378,683 -% (2)% Total $ 779,013 $ (21,730) $ 757,283 $ 778,452 -% (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 were relatively flat, reflecting strength of the Columbia brand across most of our international markets and channels within those markets, offset by underlying weakness in the U.S., primarily in the Columbia and SOREL brands across channels. Net sales included a favorable 280 basis point impact from foreign currency translation. Gross Profit. Gross profit is summarized in the following table: Three Months Ended March 31, (in thousands, except for percentages and basis points) 2026 2025 Change Gross profit $ 394,962 $ 396,057 $ (1,095) - % Gross margin 50.7 % 50.9 % -20 bps Gross margin contracted primarily due to an unfavorable decrease in channel profitability driven by a 310 basis point unmitigated impact of incremental U.S. tariffs, partially offset by mitigation tactics, which primarily included targeted price increases for our Spring 2026 product lines. Selling, General and Administrative Expenses. SG&A expenses are summarized in the following table: Three Months Ended March 31, (in thousands, except for percentages and basis points) 2026 2025 Change Selling, general and administrative expenses $ 357,137 $ 354,471 $ 2,666 1 % Selling, general and administrative expenses as percent of net sales 45.8 % 45.5 % 30 bps COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 22 SG&A expenses increased primarily due to the following factors: • higher omni-channel expenses, reflecting higher DTC brick-and-mortar expenses, including the impact of new stores and variable expenses; and • an unfavorable impact from foreign currency translation; partially offset by • lower expenses in targeted areas of the business resulting from our Profit Improvement Program actions taken last year. Interest Income, Net. Interest income, net is summarized in the following table: Three Months Ended March 31, (in thousands, except for percentages) 2026 2025 Change Interest income, net $ 4,883 $ 6,817 $ (1,934) (28) % Interest income, net as a percent of net sales 0.6 % 0.9 % 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 March 31, (in thousands, except for percentages) 2026 2025 Change Income tax expense $ 12,965 $ 12,628 $ 337 3 % Effective income tax rate 27.4 % 23.0 % Our effective income tax rate increased primarily due to an expense related to share-based compensation for the three months ended March 31, 2026, compared to a benefit related to a decrease in accrued foreign withholding taxes included in the three months ended March 31, 2025. 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. Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 Net sales by reportable segment are summarized in the following table: Three Months Ended March 31, (in thousands, except for percentage changes) Reported Net Sales 2026 Adjust for Foreign Currency Translation Constant-currency Net Sales 2026 (1) Reported Net Sales 2025 Reported Net Sales % Change Constant-currency Net Sales % Change (1) U.S. $ 422,454 $ - $ 422,454 $ 471,181 (10)% (10)% LAAP 160,243 (3,248) 156,995 $ 152,210 5% 3% EMEA 145,349 (15,709) 129,640 $ 107,480 35% 21% Canada 50,967 (2,773) 48,194 $ 47,581 7% 1% $ 779,013 $ (21,730) $ 757,283 $ 778,452 -% (3)% (1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information. COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 23 Segment operating income for each reportable segment and unallocated corporate expenses are summarized in the following table: Three Months Ended March 31, (in thousands) 2026 2025 Change U.S. $ 49,012 $ 65,954 $ (16,942) LAAP 26,895 26,330 565 EMEA 28,151 18,978 9,173 Canada 8,220 8,963 (743) Total segment operating income 112,278 120,225 (7,947) Unallocated corporate expenses 70,285 73,717 (3,432) Operating income $ 41,993 $ 46,508 $ (4,515) U.S. U.S. segment operating income decreased $16.9 million to $49.0 million, or 11.6% of net sales, for the first quarter of 2026 from $66.0 million, or 13.9% of net sales, for the comparable period in 2025. The decrease in U.S. segment operating income was driven primarily by decreased net sales and gross profit, partially offset by decreased segment SG&A expenses. U.S. net sales decreased $48.7 million, or 10%, for the first quarter of 2026, compared to the same period in 2025, driven by decreased net sales in our U.S. wholesale and DTC businesses. We attribute the decline in our U.S. business to a combination of ongoing challenges as we seek to elevate the Columbia brand in the U.S. marketplace and external factors, including geopolitical uncertainty and a difficult macroeconomic environment weighing on consumer sentiment. In addition, results were impacted by inventory supply constraints resulting from our decision to curtail Fall 2025 inventory purchases as a precautionary measure following prior-year U.S. tariff announcements. The decline in our U.S. DTC business was broad-based across the U.S. DTC e-commerce and brick-and-mortar businesses. The decline in our U.S. DTC brick-and-mortar business was further impacted by lower clearance sales, primarily reflecting cleaner inventories and the closure of temporary clearance locations, as well as decreased productivity from existing stores. As of March 31, 2026, our U.S. DTC brick-and-mortar business operated 170 retail stores, compared to 169 retail stores for the comparable period in 2025. U.S. segment gross margin contracted to 48.4% for the first quarter of 2026 from 49.1% for the comparable period in 2025 due to an unfavorable decrease in channel profitability driven by a 580 basis point unmitigated impact of incremental U.S. tariffs, partially offset by mitigation tactics, which primarily included targeted price increases for our Spring 2026 product lines. U.S. segment SG&A expenses increased as a percentage of net sales to 32.5% for the first quarter of 2026, compared to 31.1% for the same period in 2025, driven primarily by fixed SG&A deleverage on decreased net sales. In total, U.S. segment SG&A expenses decreased 6.3% for the first quarter of 2026, as compared to the same period in 2025. LAAP LAAP segment operating income increased $0.6 million to $26.9 million, or 16.8% of net sales, for the first quarter of 2026 from $26.3 million, or 17.3% of net sales, for the comparable period in 2025. LAAP net sales increased $8.0 million, or 5% (3% constant-currency), for the first quarter of 2026, compared to the same period in 2025, driven primarily by growth in our China, LAAP distributor and Korea businesses, partially offset by a decline in our Japan business. The growth in China net sales was driven primarily by our China wholesale business, partially aided by earlier wholesale shipment timing. We believe the China net sales growth was further aided by the execution of our unique marketplace strategies, as well as favorable market conditions driving outdoor category growth in China. The growth in LAAP distributor net sales was driven by strong growth in our distributor orders as compared to the same period in the prior year. The growth in Korea net sales was broad-based across all channels, which we believe was attributable to the execution of our marketplace strategies, including unique marketing activations, and improving outdoor category trends, compared to the same period in 2025. The decline in Japan net sales primarily reflected the impact of decreased inbound international tourism and later wholesale shipment timing, compared to the same period in 2025. LAAP segment gross margin expanded to 56.9% for the first quarter of 2026 from 56.5% for the comparable period in 2025. LAAP segment SG&A expenses increased as a percentage of net sales to 35.4% for the first quarter of 2026, compared to 34.9% for the same period in 2025, primarily driven by unfavorable impacts from foreign currency translation. In total, LAAP segment SG&A expenses increased 6.9% for the first quarter of 2026, as compared to the same period in 2025. COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 24 EMEA EMEA segment operating income increased $9.2 million to $28.2 million, or 19.4% of net sales, for the first quarter of 2026 from $19.0 million, or 17.7% of net sales, for the comparable period in 2025. 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 $37.9 million, or 35% (21% constant-currency), for the first quarter of 2026, compared to the same period in 2025, driven by growth in our Europe-direct and EMEA distributor businesses. The growth in Europe-direct net sales was fueled by strong Europe-direct DTC performance, partially reflecting promotional activity, and healthy Europe-direct wholesale sales, partially reflecting earlier wholesale shipment timing. Europe-direct's DTC brick-and-mortar business drove particularly strong growth for the first quarter of 2026, reflecting increased productivity from existing stores, as well as contributions from new stores. Results across all channels reflected robust demand for winter season products and ample inventory availability. We believe Europe-direct net sales growth across channels was also attributable to the execution of our marketplace strategies, including marketing activations. The growth in EMEA distributor net sales was driven primarily by earlier wholesale shipment timing and healthy growth in our distributor orders, as compared to the same period in 2025. EMEA segment gross margin expanded to 51.5% for the first quarter of 2026 from 50.8% for the comparable period in 2025, driven primarily by a favorable increase in channel profitability reflecting lower outbound shipping expenses and favorable sales mix, as well as a favorable increase in channel and regional net sales mix reflecting a higher portion of Europe-direct DTC sales, partially offset by higher Europe-direct DTC promotional activity. EMEA segment SG&A expenses decreased as a percentage of net sales to 28.9% for the first quarter of 2026, compared to 29.9% for the same period in 2025, primarily driven by fixed SG&A leverage on increased net sales. In total, EMEA segment SG&A expenses increased 30.9% for the first quarter of 2026, as compared to the same period in 2025, driven primarily by unfavorable impacts from foreign currency translation and higher DTC brick-and-mortar expenses, including personnel expenses and variable expenses from higher DTC sales. Canada Canada segment operating income decreased $0.7 million to $8.2 million, or 16.1% of net sales, for the first quarter of 2026 from $9.0 million, or 18.8% of net sales, for the comparable period in 2025. Canada net sales increased $3.4 million, or 7% (1% constant-currency), for the first quarter of 2026, compared to the same period in 2025, driven by our Canada DTC brick-and-mortar business, reflecting increased productivity from existing stores and strong demand for winter season products, partially aided by promotional activity in the first quarter of 2026, compared to the same period in 2025. Canada segment gross margin contracted to 48.1% for the first quarter of 2026 from 50.9% for the comparable period in 2025, driven primarily by an unfavorable decrease in channel profitability reflecting higher closeout sales at lower margins. Canada segment SG&A expenses increased as a percentage of net sales to 24.4% for the first quarter of 2026, compared to 24.3% for the same period in 2025. In total, Canada segment SG&A expenses increased 7.7% for the first quarter of 2026, as compared to the same period in 2025. Unallocated corporate expenses Unallocated corporate expenses decreased by $3.4 million to $70.3 million for the first quarter of 2026 from $73.7 million for the comparable period in 2025. 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. Our cash position is also impacted by our capital allocation approach. In addition, our cash position is impacted by incremental tariff costs for U.S. product, which may fluctuate based on changes in trade policies. 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. Refer to "Sources of Liquidity" below for further information regarding our domestic credit facility. COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 25 Cash Flow Activities Cash flows are summarized in the following table: Three Months Ended March 31, (in thousands) 2026 2025 Change Net cash provided by (used in): Operating activities $ (77,542) $ (32,038) $ (45,504) Investing activities 124,573 (61,431) 186,004 Financing activities (169,639) (118,649) (50,990) Net effect of exchange rate changes on cash (79) 3,588 (3,667) Net decrease in cash and cash equivalents $ (122,687) $ (208,530) $ 85,843 The change in cash flows used in operating activities for the three months ended March 31, 2026 was primarily driven by a $42.9 million increase in cash used in changes in assets and liabilities. The most significant comparative change in assets and liabilities was driven by changes in Accounts payable. The $30.3 million increase in cash used in Accounts payable was driven primarily by the timing of receipt and payment of invoices. The change in cash flows provided by investing activities was primarily driven by lower purchases of short-term investments for the three months ended March 31, 2026, as compared to the same period in 2025. The change in cash flows used in financing activities was primarily driven by higher share repurchases of common stock for the three months ended March 31, 2026, as compared to the same period in 2025. Sources of Liquidity Cash and cash equivalents and short-term investments As of March 31, 2026, we had cash and cash equivalents of $319.3 million and short-term investments of $216.0 million, compared to $442.0 million and $348.8 million, respectively, as of December 31, 2025. Committed credit facilities In March 2026, we terminated our prior domestic credit agreement and, simultaneously, entered into a new Domestic Credit Agreement which provides for up to $500.0 million of borrowings pursuant to an unsecured, committed revolving credit facility. As of March 31, 2026, we were in compliance with all associated covenants and there was no balance outstanding under the facility. Refer to Note 7 in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Further, as of March 31, 2026, our European subsidiary had available an unsecured, committed overdraft facility, which provides for borrowings up to €3.0 million (approximately US$3.4 million). There was no balance outstanding under the facility. Uncommitted credit facilities As of March 31, 2026, collectively, our international subsidiaries had unsecured, uncommitted lines of credit, credit facilities and overdraft facilities, providing for borrowings up to approximately US$78.3 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, lines of credit and overdraft 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 COLUMBIA SPORTSWEAR COMPANY | Q1 2026 FORM 10-Q | 26 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 March 31, 2026, our inventory balance decreased to $624.0 million, from $689.5 million as of December 31, 2025, primarily resulting from our decision to curtail Fall 2025 inventory purchases as a precautionary measure following prior-year U.S. tariff announcements and to better align inventory supply with anticipated seasonal demand. The decrease was partially offset by approximately $25 million of incremental tariff costs. We believe older season inventories represent a manageable portion of our total inventory mix. We have planned full-year 2026 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 $618.3 million as of March 31, 2026, compared to $523.8 million as of December 31, 2025. There have been no other significant changes to our other cash commitments as described in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. 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. 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, 2025. RECENT ACCOUNTING PRONOUNCEMENTS Refer to Note 1 in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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