Zumiez Inc. (ZUMZ) Q2 2023 Earnings: A Tough First Half, But Optimism for the Future
Zumiez Inc. (NASDAQ:ZUMZ) recently held its second quarter fiscal 2023 earnings conference call, discussing the company's business outlook and financial results. Despite facing challenges due to inflationary impacts, competition, and higher levels of discounting, the company's Q2 sales improved from the previous quarter and exceeded their guidance. The company is optimistic about the future, expecting further improvement in the second half of 2023.
Financial Performance in Q2
Zumiez reported Q2 net sales of $194.4 million, down 11.6% from $220 million in Q2 2022. The decrease was primarily driven by the North America business, offset by more favorable results from other international businesses. Gross profit for the quarter was $61.7 million, compared to $75.1 million in Q2 of last year. The operating loss in Q2 2023 was $10.5 million, compared to an operating profit of $5 million in Q2 2022. The net loss for the quarter was $8.5 million or $0.44 per share, compared to a net income of $3.1 million or $0.16 per diluted share for Q2 2022.
Regional and Category Performance
From a regional perspective, North America net sales were $159.7 million, a decrease of 15.9% from 2022. Other international net sales, which consist of Europe and Australia, were $34.8 million, up 15.5% from last year. From a category perspective, all categories were down in comparable sales from the prior year during the quarter, with hard goods being the most negative, followed by footwear, accessories, women's, and men's.
Third Quarter Outlook
For the third quarter, Zumiez is planning total sales to be between $211 million and $216 million. They expect third quarter 2023 product margins to be down slightly from the third quarter of fiscal 2022 due primarily to the mix of sales year over year. Consolidated operating margins for the third quarter are expected to be between negative 1.5% and negative 2.5%, and they anticipate a loss of $0.15 to $0.25 per share.
Future Plans and Investments
Zumiez is focusing on strategic investments that will create significant long-term benefits for their customers and shareholders. These include investing in their people through training and mentoring, optimizing trade area performance, working with brands to increase speed and flexibility, investing in innovative approaches to enhance the shopping experience, and continuing their international expansion with a focus on Europe and Australia.
The company is planning to open 19 new stores during the year, including approximately five stores in North America, 10 stores in Europe, and four stores in Australia. They expect capital expenditures for the full 2023 fiscal year to be between $19 million and $21 million.
Despite the challenges faced in the first half of 2023, Zumiez remains optimistic about the future. They believe that by staying the course, they will emerge from this turbulent period even stronger.
This article first appeared on GuruFocus.
