Zumiez (ZUMZ) Looks Well Poised to Tap Rising Online Demand
In spite of lingering apprehensions associated with the ongoing coronavirus crisis, the Retail - Apparel And Shoes industry has been steadily making its way out of the woods. Players in the industry have been focusing on deepening engagements with consumers, creating innovative and compelling products, and enhancing digital and data analytics capabilities. No wonder, Zumiez Inc. ZUMZ has been aggressively adopting strategies and making planned investments to cater to consumer demand and behavior.
Online Sales Gaining Traction
This specialty retailer of apparel, footwear, accessories is striving to expand e-commerce and omni-channel platforms to provide consumers with the facility of quick and easy access to its products and brands. In this regard, the company has considerably enhanced customers’ experience by integrating its physical and digital networks. This enables customers to access inventories through all channels, alongside availing facilities like buy online, pick up in store and reserve online and pay in store.
During third-quarter fiscal 2020, Zumiez registered net sales growth of 2.6% driven by continued strength of e-commerce demand. Comparable sales for retail stores locations opened in the third quarter, and e-commerce business, increased 8.1%. By channel, comparable stores sales were up 2.2% and comparable e-commerce sales surged 39.6%. Zumiez highlighted that fourth-quarter e-commerce sales for the 31 days ending Dec 1, 2020 were up about 16.7% year over year.
Focus on Measures Undertaken
Apart from these, Zumiez has been taking measures to address challenges tied to the COVID-19 pandemic. Management has been minimizing operating costs, which comprise travel, marketing and other non-essential items. We note that SG&A expenses declined 3.3% to $67.9 million during the third quarter of fiscal 2020. As a percentage of sales, SG&A expenses declined 160 basis points to 25%.
Management is currently anticipating SG&A expenses across the business to be down 9% compared with 2019 due to reductions in store operating hours, travel and training, planned capital spending, incentive and several other benefits.
Wrapping Up
We believe that Zumiez’s well-balanced store expansion and e-commerce strategies will help it in keeping pace with evolving patterns. The company is sharpening competitive edge by investing in logistics, planning and allocation, and omni-channel capabilities, which position it for growth in the near and the long term.
Markedly, shares of this Zacks Rank #2 (Buy) company have gained 27.7% over the past six-month time frame, courtesy of its robust business strategies. In the said period, the industry rallied 49.1%. Meanwhile, the Zacks Consensus Estimate for fiscal 2020 and 2021 has surged 14.3% and 11.2% in the past 30 days to $2.88 and $3.27, respectively.
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