Columbia Sportswear (COLME) – Get the Columbia Sportswear Company report shares slumped Tuesday after Bank of America downgraded the outerwear company and lowered its price target to address concerns about the global supply chain and other issues
Bank of America analyst Alexander Perry lowered his price target on the group from $ 29, to $ 137 per share, and downgraded his rating on the group a notch, to neutral, citing risks in wholesale shipments in the first half of 2022.
Perry said global supply chain constraints, such as continued shipping delays and the impact of factory closures in Vietnam, which he said could have a disproportionate impact on the footwear business of the company. Factories have closed in Vietnam due to a second wave of COVID-19.
“We believe Vietnam is a fairly significant part of COLM’s contract manufacturing and while we see potential disruption for Holiday,” he said, “we believe plant closures are more likely to be affected. ‘have an impact on 1H22 shipments as 70% of Holiday products were already in transit or Distribution Centers (although end-of-season orders could be affected). “
Columbia Sportswear shares were down 2.35% by mid-morning Tuesday, against a 1.14% gain for the Nasdaq, to change hands at $ 95.81 each.
Importantly, added Perry, “We expect COLM’s faster growing footwear segment to have a disproportionate impact of plant closures, especially as COLM was already constrained by production capacity constraints. “
The analyst said he believes shipping delays have increased since Columbia released its second quarter results on August 2, as ships anchored in the Port of Los Angeles continued to increase and peaked on September 20 to 37.
He added that the average number of days at anchor + berth peaked on September 28 at 18.35 days.
“While we see a longer term benefit in the potential market share gains of major sports brands such as Nike (NKE) – Get the NIKE, Inc. (NKE) report and under armor (TO) – Class C report from Get Under Armor, Inc. consolidate wholesale distribution, ”said Perry,“ we now see more limited opportunities in 2022 given supply chain constraints. “
Nike cut its full-year sales forecast last week after missing Wall Street’s guidance for first-quarter revenue due to the impact of supply chain disruptions.
Over the summer, two Nike suppliers in Vietnam – Eclat and Quang Viet – planned production cuts to meet COVID requirements amid an increase in Delta infections in the South Asian region.
Bank of America analysts lowered their rating on Kohl’s last week (KSS) – Get the Kohl’s Corporation (KSS) report Underperforming by two notches on concerns over supply chain disruptions as the holiday shopping season approaches.