) - a mall-based specialty retailer of action sports apparel,
footwear, equipment and accessories - reported adjusted earnings
of 20 cents per share for second-quarter 2013, surpassing both
the Zacks Consensus Estimate of 17 cents as well as the year-ago
earnings of 16 cents.
Reported earnings, including a charge of 4 cents per share
related to the acquisition of Blue Tomato, were 16 cents compared
with 7 cents reported in the year-ago quarter, which included a
charge of 6 cents related to the Blue Tomato acquisition and 3
cents related to relocation of the company's e-Commerce center.
The year-over-year improvement was driven by top-line growth,
inflated margins and higher comparable store sales (comps).
However, a rise in expenses was the headwind.
Quarter in Detail
Net sales increased 16.9% year over year to $157.9 million.
Quarterly sales were almost in line with the Zacks Consensus
Estimate of $158.0 million.
Comps inched up 0.9% compared with an increase of 9.5% reported
in the year-ago quarter. By category, the company witnessed
positive comps growth in the juniors, hard goods, and footwear
categories, while men's, accessories, and boy's generated
During the quarter, gross profit increased 18.7% year over year
to $55.1 million and as a percentage of sales, it expanded 50
basis points (bps) to 34.9%. The rise in gross profit margin was
mainly due to absence of charges related to inventory costs
concerning the Blue Tomato acquisition and relocation of the
e-Commerce fulfillment center during the prior-year quarter.
Zumiez's selling, general and administrative (SG&A) expenses
increased 10.9% year over year, while as a percentage of sales,
it contracted 170 bps year over year to 29.9%.
On a reported basis, operating profit for the quarter jumped over
twofold to $7.8 million, while as percentage of sales, it
expanded 220 bps to 5.0%.
As of Aug 3, 2013, cash and marketable securities were $95.0
million, falling 1.9% from $96.8 million as of Jul 28, 2012. The
decline was due to capital expenditures and stock repurchases,
offset by cash flow from operations. During the first half of
2013, the company generated a cash flow of $9.9 million from its
operational activities as against $14.5 million in the first half
August 2013 Sales Update
Zumiez reported 3.0% increase in comparable-store sales for the
four-week period ended Aug 31, 2013. This compares with a comps
rise of 3.7% for the four weeks ended Aug 25, 2012. The comps
growth was due to rise in dollars per transaction and higher
comparable store transactions.
Net sales increased 14.3% to $85.9 million from $75.2 million
reported in the year-ago period.
Zumiez announced its sales and earnings guidance for the third
quarter of fiscal 2013. Management anticipates third-quarter
revenues in the range of $187-$191 million, while comps are
likely to range from flat to a 2% increase.
Based on sales projections for the quarter, the company expects
earnings per share to be 39-43 cents. The earnings expectation
also includes estimated charges of 4 cents related to the Blue
Tomato acquisition. Operating margin is anticipated to be in the
range of 10-11%.
For fiscal 2013, Zumiez expects capital expenditures to be around
$36-$38 million. Further, depreciation and amortization expenses
will be nearly $27 million. The company plans to expand its store
base by opening 58 new stores in fiscal 2013, which includes 9
stores in Canada and 5 in Europe.
Other Stocks to Consider
Zumiez currently carries a Zacks Rank #3 (Hold). Apart from
Zumiez, other stocks performing well in the apparel/shoe space
Citi Trends, Inc.
). While Citi Trends has a Zacks Rank #1 (Strong Buy), ANN and
The Children carry Zacks Rank #2 (Buy).
ANN INC (ANN): Free Stock Analysis Report
CITI TRENDS INC (CTRN): Free Stock Analysis
CHILDRENS PLACE (PLCE): Free Stock Analysis
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
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