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Zumiez Records Positive Comps and Sales Growth for July

Zacks Equity Research

With the back-to-school shopping season round the corner, various American apparel retailers have been posting positive July sales and comparable store sales (comps) growth.

Following suit, WA-based retailer of sports-related teen apparel, Zumiez Inc. (ZUMZ) reported a 3.5% rise in comps for the four-weeks ended Aug 2, 2014. This compares to a comps rise of 0.8% reported for the four weeks ended Aug 3, 2013. The company’s net sales for July soared 11.9% to $62.8 million from $56.1 million posted last year.

Looking at the trailing six months performance, we note that this Zacks Rank #1 (Strong Buy) company has been delivering positive comps every month, with the exception of March in which its comps slipped 2.9% year over year. Per analysts, this could be attributable to Zumiez’s constant focus on its brands instead of focusing on promotional activities.

Further, in first-quarter fiscal 2014, the company’s comps grew 1.8% against a decline of 0.7% registered in the year-ago quarter on the back of a rise in comparable store transactions, partially offset by a decline in dollars per transaction. Moreover, comps exceeded the company’s initial forecast of a mid single-digit decline driven by full price selling in the latter half of the quarter as well as clearance of the excess inventory in the initial part.

Net sales for the quarter surged 9.7% year over year to $162.9 million and was above the Zacks Consensus Estimate of $160 million, driven by better-than-expected growth in comps).

Looking into the second quarter of fiscal 2014, the company anticipates revenues in the range of $174–$176 million, while comps are likely to witness a single-digit rise.

Coming to the company’s earnings, Zumiez reported adjusted earnings of 10 cents per share, down 23.1% year over year but rising twofold from the Zacks Consensus Estimate of 5 cents per share.  Based on sales projections for the second quarter, the company expects earnings per share in the band of 19–21 cents. The current Zacks Consensus Estimate for the same is pegged at 23 cents a share.

Other stocks in the same industry looking attractive at current levels include Citi Trends, Inc. (CTRN) and The Men's Wearhouse, Inc. (MW), with the same Zacks Rank as Zumiez, and Foot Locker, Inc. (FL), with a Zacks Rank #2 (Buy).

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