Zumiez, the retailer specializing in surf-and-skate apparel, saw its shares soar by 9.39% today, following the release of its second-quarter earnings report, which exceeded market expectations. As of 9:53 a.m. ET, the stock had risen by 12.2% in response to the positive news.
Zumiez Impresses
In a time when the apparel industry is grappling with sluggish consumer demand, Zumiez reported impressive figures. Comparable sales increased by 3.6%, pushing overall revenue up by 8.1% to reach $210.2 million. The company noted that a shift in the retail calendar contributed 530 basis points to this sales growth, surpassing the anticipated $202 million. Additionally, the gross margin improved by 250 basis points to 34.2%, significantly reducing the loss from $0.44 per share a year ago to a mere $0.04, outperforming the expected loss of $0.33 per share.
CEO Rick Brooks commented, “We observed a marked acceleration in our sales trend as the second quarter progressed, with July’s North American comparable sales rising in the high single digits.” He attributed this growth to fresh apparel and footwear selections and enhanced customer engagement.
Building Momentum
Looking ahead to the third quarter, Zumiez reported a 12.1% increase in quarter-to-date comparable sales and a 6.8% rise in net sales for the first 30 days of the quarter, accounting for the calendar shift. Management also highlighted a robust back-to-school season. For the full third quarter, the company anticipates revenue between $221 million and $225 million, marking an increase of 2%-4%, or 7%-9% when adjusted for the calendar shift. Earnings per share are expected to range from a loss of $0.04 to a profit of $0.06.
This forecast surpasses the revenue estimates of $218.8 million, although analysts had predicted earnings per share of $0.23, a discrepancy possibly explained by the calendar adjustment. Overall, the figures indicate that the company’s growth is accelerating as it approaches the critical holiday season. While Zumiez has faced challenges in maintaining consistent profitability, the current trajectory suggests positive momentum.
However, it may be wise to wait for more definitive signs of profitability before considering the stock a buy.
