U.S. Specialty retailer in action sports related apparel,
footwear, equipment and accessories,
), is scheduled to release its third-quarter 2012 results on
Thursday, November 29, 2012.
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ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
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The current Zacks Consensus earnings per share (EPS) estimate for
the third quarter is 47 cents, reflecting a year-over-year
increase of 4.4%. Estimate revision trend over the last month has
trended downwards, mainly due to the lesser-than-expected sales
results in October and a continued decline in the rate of
increase of comparable store sales so far this year.
Nevertheless, Zumiez has outperformed the Zacks Consensus
Estimate in the trailing four quarters, exhibiting continued
strength and consistent with its history of delivering positive
earnings surprises. Zumiez's second quarter witnessed a positive
surprise of 30.8%. The company's average surprise for the
trailing four quarters comes to nearly 19.7%.
Second-Quarter 2012 Synopsis
On August 30, Zumiez reported better-than-expected results for
the second quarter of fiscal 2012 based on robust sales and
improved gross margin. Quarterly adjusted earnings of 17 cents
per share beat the Zacks Consensus Estimate of 13 cents,
reflecting an escalation that more than doubled from the
prior-period level of 8 cents.
Net sales in the reported quarter elevated 20.4% to $135.1
million from $112.2 million a year ago, marginally beating the
Zacks Consensus Estimate of $135 million. The year-over-year
growth in sales was primarily driven by the company's strong
merchandise, store expansion and e-commerce strategies. In the
second quarter of fiscal 2012, comparable store sales at Zumiez
were up 9.5% compared with an increase of 7.5% reported in the
For third quarter 2012, management anticipates revenue in the
range of $181-$185 million, on the back of 3%-5% growth in
comparable store sales. Based on sales projections for the
quarter, the company expects earnings per share to come in the
band of 42 cents- 45 cents. The earnings expectation also
includes the estimated costs and expenses of 6 cents and 3 cents
per share related to the Blue Tomato acquisition and inventory
Further, the company is still on track to open 50 new stores
during fiscal 2012, of which 10 are to be opened in Canada.
Estimate revision trend have been largely negative, with
estimates moving down in the last 30 days. For the third quarter,
15 out of 17 estimates were lowered over the past month. For
fiscal 2012, the company witnessed a negative shift in 11 out of
12 estimates in the last 30 days.
In the last 7 days, however, third quarter estimates remained
stable with no movement in either direction, while for fiscal
2012 the company saw one estimate move down with no upward
For the third-quarter of 2012, the Zacks Consensus Estimate moved
down by 6 cents to 47 cents a share in the last 30 days.
Similarly, the Zacks Consensus Estimate for fiscal 2012 slipped
by 8 cents to $1.52 per share in the last 30 days. There was no
change in estimates in the last 7 days.
Zumiez is currently in the early phase of its store expansion
program and plans to enlarge its network by opening 50 new stores
during fiscal 2012, including 10 new stores in Canada.
Additionally, in the recent years, Zumiez has launched stores
averaging 3,000 square feet, which enables it to offer extended
merchandise without compromising on the store ambience. These
initiatives provide the company with a strong platform to
effectively capitalize on the emerging opportunities.
Further, the Everett, Washington-based sporting goods retailer
targets young men and women in the age group of 12 to 24 years,
who seek popular brands that represent a lifestyle centered
around extreme sports activities. This provides the company a
distinct market niche, which in combination with its store
expansion strategy should help deliver solid performances in the
However, intense competition from other specialty retailers like
Hot Topic Inc.
Pacific Sunwear of California Inc.
), seasonal nature of the business and risks associated with
sourcing merchandise from foreign countries may weigh upon the
Currently, Zumiez holds a Zacks #3 Rank, implying a short-term
'Hold' rating on the stock. We retain our long-term 'Neutral'
recommendation on the stock.