Zumiez Records Positive July Comps
Wash.-based retailer of sports-related teen apparel, Zumiez Inc. (ZUMZ) reported 0.8% increase in comparable-store sales for the four weeks ended Aug 3, 2013. This compares unfavorably with a comps rise of 7.5% for the four weeks ended Jul 28, 2012. The marginal comps growth was due to rise in dollars per transaction, partially offset by lower comparable store transactions.
Net sales for July increased 19.3% to $56.1 million from $47.0 million reported in the year-ago period.
Of late, the company’s comps have been witnessing a declining trend due to the persistent fall in comparable store transactions. Looking at the trailing seven months’ performance, we observe that the company’s comps growth rate has plunged lower every month, with the exception of April when it rose 4.6% and February, when the company posted negative 8.9% comps.
Further, the company posted a comps rise of 0.9% in the second quarter of fiscal 2013 and 0.2% hike in year-to-date comparable store sales. The reported performance was well within the company’s earlier guided range of flat to 2% increase. Zumiez is slated to announce second-quarter 2013 earnings result on Aug 26, 2013.
The company had earlier projected revenues in the range of $155–$158 million for the second quarter. Based on sales projections, the company had anticipated earnings per share to be 12–14 cents.
We believe that the company’s well-balanced store expansion and e-Commerce strategies will drive its top line further. Moreover, Zumiez aims to increase its store network to 600–700 stores in the long run.
The company plans to expand its store base by opening 58 new stores in fiscal 2013, comprising 9 stores in Canada and 6 in Europe. As of Aug 3, 2013, the company operated 529 stores, including 495 in the United States, 27 in Canada and 7 in Europe.
Zumiez currently carries a Zacks Rank #3 (Hold). Other stocks worth considering among apparel/shoe retailers are The Children (PLCE), The Gap, Inc. (GPS) and Citi Trends, Inc. (CTRN). All of them have a Zacks Rank #2 (Buy).
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