While most of you reading this probably haven't bought a
product, that doesn't mean tons of kids, teens and young adults
(especially hipsters, skaters, BMX'ers, etc) aren't buying en
In fact Zumiez reported record earnings on March 8th and saw
sales increase almost 18% in the fourth quarter that ended on
January 28th. Yesterday's strong retail sales data also added
credence and perhaps stability to the Zumiez numbers and future
Can this niche retailer keep their sales growth and stock
momentum going into 2012?
Company Description & Developments
Zumiez got their start outside of Seattle in 1978.
Headquartered in Everett, WA, they now operate over 420 stores in
37 states across the US, 10 in Canada and are growing rather
Just about all of their locations are inside malls, which is
where you are likely to find someone in their target
demographic. Similar to Starbucks, they offer couches and
video games to keep customers hanging around the store and
hopefully spending money on one or more of their many
Having been around for almost 34 years, there is no doubt the
company is doing something right. But on the other hand one
has to realize that as a niche, discretionary retailer they are
going to be highly susceptible to consumer habits and trends.
For now, it seems that their business model is benefitting from an
overall strong consumer and product line that is in
In 2011 they added 45 productive new stores which help fuel a 3%
improvement in operating margin and generated more than $68 million
in operating cash flow. I will be curious to see if
that expansion will continue into 2012 and continue to justify
Zumiez' relatively high P/E multiple.
ZUMZ is a small-cap (1.08 billion) company that is trading at about
24.13 times forward (expectations for next quarter) earnings.
ZUMZ recently became a Zacks Rank 1 strong buy on March 10th, 2011,
but has been between a Rank 1 and 2 since December 6th.
Total 2011 sales increased 16.1% compared to full year
2010. Comparable store sales increased 8.7% in fiscal 2011,
slightly down from the 11.9% sales growth in fiscal 2010.
ZUMZ GAAP earnings increased from $0.83 in FY2012 to $1.19
FY2011 and they expected to earn $1.20 in FY2013 according to the
Zacks Consensus Estimate.
Zumiez projected Q1 revenue to be in the range of $123 to $125
million and resulting in net income per diluted share of
approximately $0.06 to $0.08, which includes an estimated $0.01 per
diluted share, for charges associated with the relocation of
ecommerce fulfillment operations. Guidance is based on an
anticipated comparable store sales increase in the high single
digit range for the first quarter of fiscal 2012.
Of the 17 analysts who cover ZUMZ, the consensus is for the
company to grow earnings by 19.4% in the current year (FY2013) and
roughly 14% in FY2014. Zumiez has surprised analysts to the
upside 4 quarters in a row at an average of almost 68%.
In terms of the magnitude of analyst estimate trends, we are
seeing all of the consensus estimates the same or higher than they
were 30 days ago for the current and next quarter as well as FY2013
Market Performance & Technicals
Since its swift recovery from its October 2011 lows, Zumiez has
enjoyed a fairly consistent bullish trajectory ever since.
During that people the stock has maintained above its 50 day
moving average which now stands at $30.26.
ZUMZ managed to make another new 52 week high yesterday as
markets rallied on strong retail data.
Look for the 50 day moving average to be key support moving
forward; a break below it could spell a trend change for the
company. It is also important to note that ZUMZ was in
overbought territory yesterday as it eclipsed its upper Bollinger
ZUMZ has exceeded the S&P 500's performance in the past year
by 29% and outpaced it by almost 12% in the past 3 months as the
broad market has rallied. The stock remains in a bullish
trend and has maintained its momentum in the past month, leading
the S&P 500 index by 13.5%.
With a Beta of 1.9, ZUMZ is both correlated to, but more
volatile than the S&P 500.
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He
is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
ZUMIEZ INC (
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