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Bear of the Day: Zumiez (ZUMZ)

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After meeting both the Zacks Consensus Earnings and Revenue estimates for Q2, this specialty retailer announced weakness in August. The company saw August comps at -10.7%, versus the expected -4.2% due to a decrease in transactions across the board. This includes, mens, footwear, juniors, hardgoods, and accessories. Also, the company saw lower customer traffic, FX (foreign currency) difficulties in their Canadian division, and weak summer and spring merchandise. Due to these reasons, Zumiez Inc ( ZUMZ ) is the Zacks Bear of the Day.

This Zacks Ranked #5 (Strong Sell) company is a leading specialty retailer of action sports related apparel, footwear, equipment and accessories. Their stores cater to young men and women between ages 12-24, focusing on skateboarding, surfing, snowboarding, motocross and BMX.

Going into Q3, management is expecting "an anticipated comparable sales decrease in the 7% to 9% range for the third quarter of fiscal 2015." This caused management to reduce net sales guidance for Q3 to a range of $202 to $206 million down from expected $225 million. These decreases the expected net income per diluted share to now be between $0.27 to $0.31 from a previously anticipated $0.52. To make matters worse, management saw cash and marketable securities drop -28.7% from the year ago level of $113.4 million.

Decreasing Estimates

As you can see in the table below, estimates for Q3 15, Q4 15, FY 16 and FY 17 have all significantly declined due to this recent bad news.

The big drop-off in estimates over the past 30 days showed; Q3 15 estimates dropped from $0.53 to $0.29, Q4 15 estimate falling from $0.82 to $0.65, FY 16 decreased from $1.58 to $1.17, and FY 17 fell from $1.80 to $1.39.

Bottom Line

Due to a lack of lack of trends to pull in the general customer, and management's admission that they currently don't have a strong performance driver, estimates for Zumiez have fallen considerably. Unfortunately, there does not seem to be a driver on the horizon either, which means a rough road ahead for the company.

If you are inclined to invest in the Retail Apparel/Shoe segment, we would suggest looking into Express Inc. ( EXPR ), and or Foot locker ( FL ). Both carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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