Comparable-store sales (comps) for sports-related teen apparel
), edged down 1.0% for the five-weeks ended December 29, 2012.
However, the company's comps fared better than analysts'
expectations and November's comps decline of 4.2% but fell
sharply from an increase of 10.0% recorded for the five-week
period ended December 31, 2011.
Net sales for the month surged 15.0% to $120.3 million from
$104.6 million reported in the year-ago period.
On the other hand, the company's primary competitor,
Hot Topic Inc.
) posted healthy results for the holiday season, combining
November and December months. Hot Topic recorded comps increase
of 2.2% for the nine weeks ended December 29, 2012, compared with
the year-ago period. The company's net holiday sales increased
4.0% year over year to $177.3 million.
Looking ahead, the Washington-based retailer, Zumiez retained its
previously forecasted fourth-quarter fiscal 2012 sales guidance
of $218-$221 million, whereas projected comps decline of 3%-4%.
Based on sales outlook for the quarter, the company expects
earnings per share in the band of 59-62 cents. The earnings
expectation also includes estimated costs and expenses of 8 cents
related to the Blue Tomato acquisition. The current Zacks
Consensus Estimate for the fourth quarter stands at 67 cents per
share, which is above the higher end of the company's forecasted
Zumiez's core strategy is based on offering action-sports
merchandise focused on young men and women in the age of group of
12 - 24 years, which has enabled the company to carve a distinct
niche for itself. Moreover, the company's stores are
strategically located in busy areas of the mall, such as food
courts, movie theatres and music/game stores, which are typically
frequented by its target customers.
Further, the company is currently in the early phase of its store
expansion program and plans to augment its network to 600-700
stores in the long run. In fiscal 2012, the company intends to
add 50 new stores, including 10 new stores in Canada. The recent
acquisition of Blue Tomato facilitates Zumiez to tap the European
market. These initiatives provide the company with a solid
platform to effectively capitalize on the emerging opportunities.
Though the company's overall performance and store expansion
strategies are well appreciated, there is slight apprehension
surrounding the company's future comparable store sales
performances citing the recent weak comp growth.
Based on such mixed prospects, Zumiez currently carries a Zacks
#3 Rank, implying a short-term Strong Hold rating. Moreover, we
are maintaining a long-term 'Neutral' recommendation on the
HOT TOPIC INC (HOTT): Free Stock Analysis
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
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