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Factors Likely to Decide Zumiez's (ZUMZ) Fate in Q1 Earnings

Zacks Equity Research
·3 mins read

Zumiez Inc. ZUMZ is expected to register a decline in the top line when it reports first-quarter fiscal 2020 results on June 4, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $159 million, indicating a decline of 25.3% from the prior-year reported figure.

Further, the bottom line is expected to tumble year over year. The Zacks Consensus Estimate for first-quarter bottom line is pegged at a loss of 47 cents, marking an improvement from a loss of 50 cents mentioned 30 days ago. Notably, the company recorded earnings of 3 cents a share in the year-ago period.

Notably, this specialty retailer of apparel, footwear and accessories has a trailing four-quarter positive earnings surprise of 64.7%, on average. In the last reported quarter, the company delivered a positive earnings surprise of 8.8%.

Key Factors to Note

The coronavirus outbreak-induced stay-at-home orders, social distancing and mandatory store closures are likely to have impacted Zumiez’s top-line performance. Quite apparent, prolonged store closures, supply-chain disruptions and lower traffic trends acted as deterrents. Moreover, people restricted their purchases to essential items.

Certainly, the company took every measure to mitigate the impacts of the pandemic and be financially sound. Management delayed most of the merit increases, curbed capital spend, extended payment terms for vendor invoices and reduced inventory receipts by canceling or delaying orders. Also, management has been minimizing operating costs, which consist of marketing and other non-essential items. Moreover, the company has deferred store openings for the time being.

Notably, Zumiez’s e-commerce websites continue to function in the interim. No wonder, the company has been boosting competitiveness by making investments in logistics, planning and allocation. Also, it has been expanding e-commerce and omnichannel capabilities to provide consumers with the facility of quick and easy access to its products and brands. Surely, this was not enough to make up for the loss of revenues from brick-and-mortar stores.

Any investments in pay and benefits for team members, shift in channel mix toward digital fulfillment, and a decline in higher-margin discretionary items’ sales are expected to have hurt margins in the to-be-reported quarter.

Zumiez Inc. Price, Consensus and EPS Surprise
 

Zumiez Inc. Price, Consensus and EPS Surprise
Zumiez Inc. Price, Consensus and EPS Surprise

Zumiez Inc. price-consensus-eps-surprise-chart | Zumiez Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Zumiez this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zumiez has a Zacks Rank #4 (Sell) and an Earnings ESP of -4.26%.

3 Stocks With a Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Guess GES currently has an Earnings ESP of +12.75% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dave Busters Entertainment PLAY has an Earnings ESP of +14.46% and a Zacks Rank #3 at present.

Caseys General Stores CASY presently has an Earnings ESP of +40.82% and a Zacks Rank #3.

5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>


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Guess, Inc. (GES) : Free Stock Analysis Report
 
Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
 
Caseys General Stores, Inc. (CASY) : Free Stock Analysis Report
 
Dave Busters Entertainment, Inc. (PLAY) : Free Stock Analysis Report
 
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Zacks Investment Research