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Zumiez, Inc. Message Board

  • ccmcquaid ccmcquaid Aug 16, 2006 11:25 PM Flag

    a little insight

    OK...so I am not a trader. Just a consumer and a devout follower of the action sports/retail space and have many years of experience working in both. I am offering this information not as a know it all, but as a proactive source of information for anyone trying to understand what the feet on the street (consumers, not "the street" might think of zumz).

    PacSun, is done. Zumz is the next generation. For every PacSun store there is, it will be replaced by a Zumiez store. Zumiez' exposure ranges from the NW which is their sweetspot, and then will slowly gradiate/migrate throughout the US. ZUMZ has no formal presence in the NE, SE, or any real place outside of WA, OR or CA. The kids that live in every place outside of that spectrum, live, breathe, sleep, sht, you name it....ZUMZ culture. ZUMZ differentiator? They are legit. They have the BEST relationship of any retailer with the most sought after brands these kids want. In short, this company will by all means build 600-1000 locations and each one, will be sucessful. Now, again, I am no trader, so I do not understand P/E ratios and all the factors that make a company a good "street" trade. But, I can tell you that if you are a long, and the person that understands those metrics, and couple those things with what I mention from a consumer/main street perspective, you will be very successful in how you trade this stock. In short, this company is captilalizing on a space in a distinct locations that has never been tapped like any other business. They can deliver. Every single young kid in your town will congregate around a ZUMZ store...when it comes. ZUMZ is THAT credible and THAT legit.

    Hope that may help anyone who is disconnected with the culture of the targe audience. If not, I apologize.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • for any great market transition, it is tough to pick which companies will prevail in the longer term. at the turn of the last century, visionaries could easily see that airplanes and autos would see multilevel expansion. thereafter some 1500 airlines and auto makers have gone under, more than 90% of them. the more sure play would have been to short buggy whips.

      we saw a similar result in the tech revolution of the last decade.

      what seems different in the case i site this time, is that the great global trend is being overlooked by the analysts and the market. they only see the dark side or the fickleness of fashion. so all of the stocks are heavily discounted to the S&P because of the risk of unsustainability.

      the safest surest way to play it has to be the upscale brand names that have been here for decades like NKE and RL. both are institutionalized in china and are committed to international expansion. COH stock is not quite as cheap and has barely gotten started in china. a risky play is TRLG. can they become another RL?

      the midlevel teen brands benefit from the global trend. AEOS has been my largest holding and my favorite since last december. i have pared back a little in favor of KSWS. i like both management teams.

      it is not enough to see the global trends to buy a stock. you have to identify all the important variables. aside from the strength and durability of the brand, the stock has to be cheap by EV/EBIT, EBIT/net tangible assets, and other important criteria. my number one criteria is leadership quality but it is tougher to judge when you don't know them personally.

      SBUX is an example of an obvious play that is ubiquitious and therefore fully valued. AAPL is in similar shape but i believe still has more to run.

    • Chicago...

      Lets keep going. I completely agree with you and by all means can admit my global blinders may be on when assessing the situation. Let's talk about these folks:

      there are millions of new rich people being created every year in the emerging economies in china, india, south and central america, eastern europe, africa, russia, etc. this is the way economies grow. unfortunately, it means a widening gap between the haves and have nots. but when investing, realism is what it takes to profit.

      I have had some unique experiences with these folks myself. Tell me some more about who you think in terms of companies that have big upside in new global markets. I would love to hear what you have to say.

      Cc

    • To ccmcquaid,


      Would you mind sending me an e-mail at

      margaux1959@hotmail.com

      Would like to ask you a question.

      M

    • if your question is to me, i do have a financial background, was a cpa for many years but the past decade i manage people's retirement funds along with my own portfolio.

      i'll buy and hold for 2-10 years for about 70-80% of my holdings and turn over or swing trade the other 20-30% frequently but not daily and ususally not weekly. i have keen interest in the upscale brand name sector which includes apparrel of course, real estate, foreign markets, and any other company that meets my deep value criteria and has visionary and honorable management. while i carry about 30 stocks at a time, i do not have too hot a relationship with the diversity imperative that is alledged by many gurus.

    • Sorry for not being clear. I guess I was asking the three of you Jill, Mr Cashin and louiee. The reason I ask is that I am curious to know who is as interested as I am. You are all traders? Or you work within the retail sector, or have a totally different career and just an interest like me. For example, I am a sales manager, at the largest IT research and consulting company in the world. Nothing to do with this...arena. I am just curious really.

      Kinda just trying to meet folks and network I guess, but I understand if no one wants to share as this is the internet.

    • I do not know the c-levels personally, but enough through watching them through the growth period and through my past employers to make an assessment. I only know about the action sports companies, and outside of that AEOS. In action sports, the anti-christ was always being "corporate." In fact, with all the passion I had for the industry, when I left the business a major reason was that I couldn't stand the level of drive and ambition that the companies tended to exhibit. I am not saying all personnel were this way, but the majority. They were just complacent and didn't want to make things happen. Challenged in sense of purpose. In all fairness however, thats what the culture was founded on though and that is what made it attractive to alot of people. What has occured however, is the fact that it isn't just a game anymore. Action Sports have driven everyone to take notice and millions and millions of dollars are now available/on the line. Its not a kids game anymore and those who will/are successful have always had good business acumen, or they built the bridge to get it soon enough. ZQK, had it, and is open to the realization that they don't know things and open to taking guidance. VLCM, I don't think those execs really know the game they got themselves into in May of 05. Yes, the founders father is a money man, and their board has some good people on it, but some of the things I have hard about the founders doing on earnings calls etc, do not surprise me. I think what separates the real talents from the lesser in life are those who understand what they are good at, and understand they need to take a seat when they don't. I will comment more in a bit, particularly in regards to your emerging markets bit as I have something to offer.

    • nice job, cc.

      it' nice to see a first class discussion. it is tough to find on these boards. i think i'll hang around a while and see if it continues.

      FWIW, i have a little to add.

      i hold a ton of upscale brand name stocks. for me it is not so much about america but about global trends.

      there are millions of new rich people being created every year in the emerging economies in china, india, south and central america, eastern europe, africa, russia, etc. this is the way economies grow. unfortunately, it means a widening gap between the haves and have nots. but when investing, realism is what it takes to profit.

      but these new money people have one thing in common.....they have a passion for western elite brand names! seeing this is my edge as many stocks like TRLG, AEOS, RL, COH, TIF, BEBE, NKE, KSWS, are valued low and heavily discounted by the market because of the fear of fickle/fad factor. i think the emerging global trends that i have sited offer unprecented breadth and depth and will extend the life cycles of these brand names far beyond current market expectations. NKE continues to expand globally and more recently RL is doing an incredible job in china.

      i also like AAPL but it is very highly valued as is ZUMZ and PNRA.

      cc,

      i very much enjoy your comments but i did have the sense that your highly intellectual summary was laced heavily with a projection of your own tastes and values onto the rest of the world. we all to that but we have to careful. i'm no alpha male but i think i have been able to in apply what i know about human nature and global trends into making a great deal of money in the stock market.

      there is an important knowledge gap i have regarding this sector that perhaps you could shed light on if you are willing. you have been very generous already.

      my question is about the leadership of these stocks. i believe that for the most part companies grow or shrink to the size of the leadership regardles of products or markets.

      what do you know about the leadership of these companies? who are the great visionaries, i.e. the people who are thinking big with long time horizon? what do you know about their integrity? regatding the former, i listen to conference calls to assess leaders' capacity the best i can; for the latter character trait, i mostly rely on warren buffett's axiom that modest CEO compensation is the best single indicator of management integrity.

      do you know any of these guys personaly?

      thanks for the conversation.

    • I appreciate your positiive comments as I feel I understand this teen sector very well and frankly wish I could have a career based on my passion and knowledge of it. I used to work in the action sports business for years but got off the path a few years back. In short, my career is totally disconnected from this space currently and it kills me. I will by all means offer some comments on the other brands you mention. Need to wait until tonight to do so, but please look and let me know if they are valuable. Thanks for your positive feedback.

    • Thanks for the insight. That's reassuring given the market's negative reaction to the solid earnings report. I suppose that given ZUMZ's high P/E anything less than stellar results get punished, although I was hoping that it being well off the high of 38+ in July meant a less than stellar report was already priced in...

      Anyway, since you appear to know the industry, what can you tell me about competition from Hollister? Abercrombie & Fitch posted good earnings and the stock shot up - Among its brands, the company said Hollister Co. net sales rose 32% to $262.9 million; Hollister Co. same-store sales increased by 3%. Hollisters web site appears to compete directly with Zumiez and they are already much larger in terms of sales and store count.

      By the way, ZUMZ is a Motley Fool Hidden Gem recommendation and I suspect the Fools will step in and buy for the long term at this price...

    • cc:

      i enjoyed and appreciated your perspective on ZUMZ vs PSUN.

      how about a summary of the rest of the teen retail space or maybe even the entire specialty retail space?

      • 2 Replies to shoelessjill
      • shoelessjill, louiee,

        happy to talk. mutiple posts as too much to add to one. again, this is strictly opinion but I think I have a knack for the youth market, the opportunities and consumer's buying behaviors....but I know NOTHING about financials, just reading people and trends. So, I haven't the foggiest about the 9.5% down day. I am long on this and not selling for a long time. I can only comment on consumers and markets. This is long winded as this is my passion, so read if you care. First to Jill.

      • i guess i overlooked that your interest is more specialized than that. so let me change my question to ask if you have any opinions on brands like VLCM and ZQK that you would be willing to share.

 
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