COLM

New in FY2025

• Global Trade Policy Has Had and May Continue to Have an Adverse Impact on Our Business, Operating Results and Financial Condition.
• Our imported products are subject to duties, tariffs or import limitations that affect the cost and quantity of various types of goods imported into the U.S. and other markets.
• The changes in U.S. global trade policy, and ongoing uncertainty around future tariffs or other alternative measures and refunds of prior incremental tariffs paid, have had and may continue to have, an adverse impact on our business, financial condition and operating results and may (and in many cases, have): • Lead to a decline in discretionary spending by consumers weary of inflationary pressures, particularly increased prices for apparel and footwear products in the U.S.
• (see "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings"); • Impair the financial health of certain of our wholesale customers (see "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings"); • Result in a misalignment between demand and supply, as has occurred in our cancellation of product orders in advance of the Fall 2025 and Spring 2026 seasons (see "Our Inability to Accurately Predict Consumer and/or Customer Demand for Our Products Could Lead to a Build-up of Inventory or a Lack of Inventory and Affect Our Gross Margin"); • Impact global economic conditions and contribute to an economic slowdown (see "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings" and "We May Incur Additional Expenses, Be Unable to Obtain Financing, or Be Unable to Meet Financial Covenants of Our Financing Agreements as a Result of Downturns in the Global Markets"); • Impact previous business assumptions (see "We May Have Additional Tax Liabilities or Experience Increased Volatility in Our Effective Tax Rate" and "Our Inability to Accurately Predict Consumer and/or Customer Demand for Our Products Could Lead to a Build-up of Inventory or a Lack of Inventory and Affect Our Gross Margin"); • Cause an increase in promotional activity in the U.S. marketplace to offset tariff-induced price increases ( "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings."); • Cause currency rate fluctuations (see “Fluctuations in Inflation and Currency Exchange Rates Could Result in Lower Revenues, Higher Costs and/or Decreased Margins and Earnings”); • Result in rising costs across our U.S. operations; • Cause any number of other disruptions to our business, the risks of which may be otherwise identified herein.
• In addition, the impact of U.S. global trade policy changes may also exacerbate other risks discussed in this Item 1A, any of which could have a material adverse effect on our results of operations, financial condition or cash flows.
• New or increased tariffs or other alternative measures, retaliatory actions, or anti-American sentiment could also exacerbate the risks outlined above and in this Item 1A.
• The current trade environment is dynamic in nature.
• Significant uncertainty remains regarding the newly imposed 122 tariffs, whether and how the prior incremental tariffs that we have paid will be refunded by the U.S. government, and the tariff rates that will apply to our U.S. imports in the near and long-term from additional alternative measures pursued by the U.S. government to preserve revenues from foreign imports.
• The timing, scope and form of such measures are unknown and may lead to additional volatility and uncertainty in the global markets.
• More recently this competition has extended to brands that may not be viewed as outdoor brands but are participating in the outdoor apparel and footwear industry.
• Certain of our brands have wide recognition, and our success has been due in large part to our ability to maintain, enhance and protect our brand image and reputation and our consumers' and customers' connection to our brands.
• Finally, demand in certain channels may be impacted in the short term as we seek to elevate the perception of the Columbia brand by proactively managing the promotional activity in the marketplace. • Weather Conditions.
• Unseasonably warm weather also impacts future sales to and sell through of current orders at our wholesale customers, who may hold inventory into subsequent seasons in response to unseasonably warm weather and may not follow historical replenishment patterns.
• To the extent weather patterns trend warmer, consumer and customer demand for our outerwear and cold weather footwear products will be negatively affected. • Shifts in Retail Traffic Patterns.
• Shifts in consumer purchasing patterns in our key markets may have an adverse effect on our DTC brick-and-mortar operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick-and-mortar store fleet, file for protection under bankruptcy laws, restructure, or cease operations.
• Our ability to accurately predict consumer and/or customer demand well in advance of the selling season for our products is impacted by these risks, as well as our reliance on manual processes, human judgments and systems predictions that are all subject to error.
• If a contract manufacturer fails to ship orders in a timely manner or is unable to produce contracted goods (including as a result of third-party supply chain financing issues), we could experience supply disruptions that result in missed delivery deadlines, which may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price or cause us to incur additional freight costs.
• We may also not be able to produce the goods necessary to meet our demand and experience lost sales.
• Additionally, should U.S. tariffs be imposed based on origin of raw materials, the tariffs applicable to us might increase meaningfully.
• For our Spring 2026 and Fall 2026 inventory combined, our contract manufacturers sourced roughly 27% of our footwear raw materials and roughly 21% of our apparel raw materials for the U.S. market from China.
• We may need to seek sourcing of raw materials in alternative countries, which may not be available at all or in a timely manner.
• Our Success Depends on Our Third-Party Logistics Providers and Our Third-Party Distribution Facilities.
• In addition, the ability to move products over larger geographical distances could be negatively affected by ocean, air and trucking cargo capacity constraints or labor disruptions, or such constraints or disruptions at ports or borders, or geopolitical conflicts.
• In addition, our inability to keep up with rapid technological change (including the successful utilization of data analytics, artificial intelligence ("AI") and machine learning) could adversely impact our business.
• We may not be able to exit DTC brick-and-mortar locations and related leases at all or without significant cost or loss, including impairment losses, renegotiate the terms thereof, or effectively manage the profitability of our existing brick-and-mortar stores.
• Despite the implementation of security measures that we believe to be reasonable, both our on-premises and our cloud-based infrastructure may also be vulnerable to hacking, ransomware and digital extortion, computer viruses, the installation of malware and similar disruptions either by third parties or employees, which may result in outages.
• In addition, our legacy systems may not support desired functionality for our operations and may inhibit our ability to operate efficiently and cost effectively.
• Changes in tax laws or regulations in the jurisdictions where we operate, including increases in tax rates, modifications to deductions or credits, or new rules affecting multinational companies, could materially impact our income tax expense and effective tax rate.
• Many countries are moving forward with the Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two global minimum tax framework, which includes a 15% minimum effective tax rate and related administrative guidance, such as transition and safe‑harbor provisions that may affect how the rules are applied in the initial years.
• We continue to monitor the adoption of these rules and evaluate their potential impact on our tax rate and our eligibility for any available safe harbors.
• As jurisdictions implement these requirements, tax uncertainty may increase and could adversely affect our provision for income taxes.
• In addition, many of our imported products are subject to duties, tariffs or other import limitations that affect the cost and quantity of various types of goods imported into the U.S. and other markets.
• Moreover, goods suspected of being manufactured with forced labor could be blocked from importation into the U.S. or other countries, which could materially impact sales.
• We employ several strategies in an effort to mitigate this transactional currency risk, but these strategies may not fully mitigate the negative effects of adverse foreign currency exchange rate fluctuations on the cost of our finished goods in a given period and there is no assurance that price increases will be accepted by our wholesale customers, international distributors or consumers.
• Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future (as has recently occurred with the prAna and Mountain Hardwear brands).
• Moreover, heat stress and natural disasters such as wildfires, earthquakes, hurricanes and tsunamis, whether occurring in the U.S. or abroad, and their related consequences and effects, including energy shortages and public health issues, could disrupt our operations, the operations of our vendors and other suppliers or result in economic instability and changes in consumer preferences and spending that may negatively impact our operating results and financial condition.
• We Have Implemented a Shared Services Model.
• Over the last several years, we have invested in a shared services model under which certain of our operations, including certain finance functions, are performed by teams around the globe.
• We may not achieve the expected or desired synergies or other benefits of implementing shared services.
• In addition, the operation and continued expansion of the shared services model could lead to operational challenges, inefficiencies, or increased costs, any of which may have a material adverse effect on our business, financial condition, results of operations, or cash flows.

and 3 more.

Gone since FY2024

• More recently this competition has extended to emerging brands that may not be viewed as outdoor brands but are participating in the outdoor apparel and footwear industry.
• Our brands have wide recognition, and our success has been due in large part to our ability to maintain, enhance and protect our brand image and reputation and our consumers' and customers' connection to our brands.
• Finally, demand in certain channels may be impacted in the short term as we seek to bring additional consumer segments to our brands by proactively managing the promotional activity of the brands in the marketplace. • Weather Conditions, Including Global Climate Change Trends.
• Unseasonably warm weather also impacts future sales to our wholesale customers, who may hold inventory into subsequent seasons in response to unseasonably warm weather.
• The magnitude of climate change and whether resulting weather patterns continue to trend warmer will influence the extent to which consumer and customer demand for our outerwear and cold weather footwear products will be negatively affected. • Shifts in Retail Traffic Patterns.
• Shifts in consumer purchasing patterns in our key markets may have an adverse effect on our DTC operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick and mortar store fleet, file for protection under bankruptcy laws, restructure, or cease operations.
• Our ability to accurately predict consumer and/or customer demand well in advance of the selling season for our products is impacted by these risks, as well as our reliance on manual processes and judgments that are subject to human error.
• If a contract manufacturer fails to ship orders in a timely manner (as recently occurred), we could experience supply disruptions that result in missed delivery deadlines, which may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price or cause us to incur additional freight costs.
• Our Success Depends on Third-Party Logistics Providers and Our and Third-Party Distribution Facilities.
• In addition, the ability to move products over larger geographical distances could be negatively affected by ocean, air and trucking cargo capacity constraints or labor disruptions, or such constraints or disruptions at ports or borders, or geopolitical conflicts (such as is occurring currently in the Red Sea).
• We may not be able to exit DTC brick and mortar locations and related leases at all or without significant cost or loss, renegotiate the terms thereof, or effectively manage the profitability of our existing brick and mortar stores.
• Despite the implementation of security measures that we believe to be reasonable, both our on-premises and our cloud-based infrastructure may also be vulnerable to hacking, computer viruses, the installation of malware and similar disruptions either by third-parties or employees, which may result in outages.
• In addition, our legacy systems, including aged systems in our Japanese and Korean businesses and systems associated with our retail order management process, may not support desired functionality for our operations and may inhibit our ability to operate efficiently and cost effectively.
• Other changes in the tax laws of the jurisdictions where we do business, including an increase in tax rates or an adverse change in the treatment of an item of income or expense, could result in a material increase in our tax expense.
• For example, changes in the tax laws of foreign jurisdictions could arise as a result of the Base Erosion and Profit Shifting project undertaken by the Organization for Economic Co-operation and Development ("OECD").
• The OECD, which represents a coalition of member countries, has recommended changes to numerous long-standing tax principles.
• The OECD Pillar 2 global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024.
• On February 2, 2023, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar 2 global minimum tax.
• Under a transitional safe harbor released July 17, 2023, the undertaxed profits rule top-up tax in the jurisdiction of a company's ultimate parent entity will be zero for each fiscal year of the transition period if that jurisdiction has a corporate tax rate of at least 20%.
• The safe harbor transition period will apply to fiscal years beginning on or before December 31, 2025 and ending before December 31, 2026.
• We are closely monitoring developments and evaluating the impact these new rules are anticipated to have on our tax rate, including eligibility to qualify for these safe harbor rules.
• As these changes are adopted by countries, tax uncertainty could increase and may adversely affect our provision for income taxes.
• Changes to the U.S. tax laws as a result of the recent U.S. presidential administration change may impact our U.S. corporate tax rate.
• Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows.
• In addition, goods suspected of being manufactured with forced labor could be blocked from importation into the U.S. or other countries, which could materially impact sales.
• In addition, many of our imported products are subject to duties, tariffs or import limitations that affect the cost and quantity of various types of goods imported into the U.S. and other markets.
• Proposals to implement new tariffs or other trade restrictions in the U.S. could impact the products we import into the U.S. and also result in retaliatory measures in international markets where we sell our products.
• Punitive measures have been threatened against certain countries that run trade surpluses with the U.S., such as Vietnam, Indonesia and India.
• We expect Vietnam, Indonesia and India to represent approximately 44 percent, 11 percent, and 10 percent, respectively, of the value of our imports to the U.S. in 2025.
• Although we cannot predict whether and in what form such measures will be adopted or implemented, these proposals for tariffs or other trade restrictions could have an adverse impact on our cost of sales, gross margin and cash flows; disrupt the U.S. marketplace; and cause an increase in our product prices, to the extent possible, and potential adverse impacts to resulting net sales in the U.S.
• Changes in tariffs may also cause a change to our sourcing strategy, which we may or may not be able to implement based on timing and availability.
• We employ several strategies in an effort to mitigate this transactional currency risk, but these strategies may not and, in the current environment, have not fully mitigated the negative effects of adverse foreign currency exchange rate fluctuations on the cost of our finished goods in a given period and there is no assurance that price increases will be accepted by our wholesale customers, international distributors or consumers.
• The foregoing includes potential impacts to our business as a result of the International Longshore and Warehouse Union and Teamsters negotiations.
• Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future (as has recently occurred with the prAna brand).
• Moreover, climate change and natural disasters such as wildfires, earthquakes, hurricanes and tsunamis, whether occurring in the U.S. or abroad, and their related consequences and effects, including energy shortages and public health issues, could disrupt our operations, the operations of our vendors and other suppliers or result in economic instability and changes in consumer preferences and spending that may negatively impact our operating results and financial condition.
• In addition, from time to time we license the right to operate retail stores for our brands to third-parties, primarily to our independent international distributors.
• As of December 31, 2024, three related shareholders, Timothy P.
• Boyle, controlled just over 50% of our common stock outstanding.