Zumiez Records Positive June Comps - Analyst Blog

A pen and a pair of glasses on top of a graph Credit: Shutterstock photo

Wash.-based retailer of sports-related teen apparel, Zumiez Inc. ( ZUMZ ) reported a 1.0% increase in comps for the 5-weeks ended Jul 6, 2013 that remains below the analysts' expectations. This compares to a comps rise of 8.2% reported for the 5-weeks ended Jun 30, 2012. Net sales for June increased 14.5% to $58.8 million from $51.3 million reported in the year-ago period.

Of late, the company's comps have been witnessing a declining trend due to the continued fall in comparable store transactions. Looking at the trailing six months performance, we note that the company's comps growth rate has displayed a declining trend every month, with the exception of April when it rose 4.6% and February, when the company posted negative 8.9% comps.

Further, the company reported a comps decline of 0.7% in the first-quarter of fiscal 2013 compared with an increase of 12.9% reported in the year-ago quarter. The company's comps suffered due to a decline in comparable store transactions, offset by an increase in dollars per transaction, which mainly benefited from higher average per unit retail price and year-over-year increase in units per transaction.

Net sales for the quarter increased 14.3% to $148.5 million from $129.9 million in the comparable last-year quarter. The year-over-year growth in revenues was primarily driven by excellent full price selling for the combined March/April month, offset by a decline in comps. Quarterly sales were almost in line with the Zacks Consensus Estimate of $148.0 million.

Looking into the second quarter of fiscal 2013, the company anticipates revenues in the range of $155-$158 million, while comps are likely to range from flat to a 2% increase.

Coming to the company's earnings, Zumiez reported adjusted earnings of 13 cents per share in the first quarter, marginally surpassing the Zacks Consensus Estimate of 12 cents but declining 20% from 15 cents earned in the year-ago quarter. Bottom-line results benefited from the successful execution of its long-term growth strategies and the strength of its extremely distinguished and varied assortments.

Based on sales projections for the second quarter, the company expects earnings per share in the band of 12-14 cents.

We believe that the company's well-balanced store expansion and e-Commerce strategies will drive its top line further. Zumiez is targeting to augment its store network to 600-700 stores in the long run.

The company plans to expand its store base by opening 58 new stores in fiscal 2013, comprising 9 stores in Canada and 6 in Europe. As of Jul 6, 2013, the company operated 522 stores, including 490 in the United States, 25 in Canada and 7 in Europe.

Zumiez carries a Zacks Rank #3 (Hold). Other stocks worth considering among apparel/shoe retailers are The Children ( PLCE ), Wet Seal Inc . ( WTSL ) and Fossil Group, Inc. ( FOSL ). All these carry a Zacks Rank #2 (Buy).

FOSSIL GRP INC (FOSL): Free Stock Analysis Report

CHILDRENS PLACE (PLCE): Free Stock Analysis Report

WET SEAL INC -A (WTSL): Free Stock Analysis Report

ZUMIEZ INC (ZUMZ): Free Stock Analysis Report

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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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