UPDATE 2-Columbia Sportswear Q3 profit tops mkt, ups dividend

* Raises dividend by $0.02/shr to $0.18/shr

* Q3 EPS $1.38 vs est $1.0/shr; rev falls 4 pct

* Sees Q4 rev down in the high single digit pct range

* Sees Q4 gross margins to be flat

* Shares rise 7 pct after the bell (Adds details, analyst comments)

By Nivedita Bhattacharjee

BANGALORE, Oct 22 (Reuters) - Columbia Sportswear Co's (COLM.O) quarterly profit came in above market expectations as demand and shipments of fall products rose, and raised its quarterly dividend, sending its shares up 7 percent.

The company behind the Columbia Sportswear, Montrail and Pacific Trail brands also raised its full-year revenue outlook. It now sees full-year revenue to fall 8 to 9 percent, compared with its prior expectations of a "low-double-digit" percentage fall.

The Portland, Oregon-based company, expects 2009 gross margins to decline by about 100 basis points partly due to a higher volume of closeout product sales, but said in a conference call that fourth-quarter margins are expected to remain flat.

"This looks... conservative, given the low state of channel inventory, commodity deflation, and Columbia's own marked improvement in inventory position," Wall Street Strategies analyst Brian Sozzi wrote in an email to Reuters.

The company also said in the call it expects fourth-quarter sales to contract in the high single-digit percentage range.

"Global economic conditions continue to be very challenging, particularly in Europe, and we are seeing early signs of economic slowdown in Japan for the first time in several years," Chief Executive Tim Boyle said in a statement.

As of Sept. 30, wholesale backlog for Spring 2010 was $350.8 million -- down $20.1 million from last year -- mostly due to a weakening of demand in the Europe, Middle East and Africa regions.

Analyst Sozzi said the drop in backlog reflects the changing wholesale dynamics where customers are placing orders closer to the season to minimize inventory risk.

"I don't believe backlog numbers are a useful indicator anymore as they were in the past," he said.

Columbia, a supplier to department stores and other big retail chains, saw sales at most categories drop, with sales at its namesake brand sliding 6 percent.

In the latest quarter, the company earned 46.9 million, $1.38 per share, compared with net income of $58.3 million, or $1.69 per share, a year ago.

Revenue for the period fell 4 percent to $434.5 million.

Analysts on average had expected a profit of $1.0 a share, before items, on revenue of $400.3 million, according to Thomson Reuters I/B/E/S.

Shares of the company rose 7 percent at $47.75 in trading after the bell. They closed at $44.81 Thursday on Nasdaq. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Gopakumar Warrier and Unnikrishnan Nair)