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Zumiez (ZUMZ) Stock Up 32% Year to Date, Outpaces Industry

Zacks Equity Research

Zumiez Inc. ZUMZ looks quite disciplined in its approach of tackling prevailing headwinds in the retail landscape — stiff competition from online retailers and aggressive pricing strategy. Despite the ultra-competitive retail scenario, shares of this Lynnwood, WA-based company have surged approximately 32% so far in the year, outpacing the industry’s decline of 15.8%. The company’s shares have also outperformed the Retail-Wholesale sector that advanced 16.1% during the aforementioned period.

In the changing environment, Zumiez has been able to create a niche for itself on the back of e-commerce strategies, omni-channel presence, store expansion, integration of sales channels and other initiatives. In fact, these factors have aided the company in sustaining decent comparable store sales (comps) trend.


 

Notably, comps grew 3.3% in the first quarter of fiscal 2019, marking the company’s 11th straight quarter of positive comps. The metric benefited from higher transaction volume and growth in dollars per transaction. Strength in the footwear, accessories and hard goods categories also aided comps.

Prior to this, comps increased 3.9%, 4.8%, 6.3% and 8.3% in the fourth, third, second and first quarter of fiscal 2018, respectively. For fiscal 2019, the company expects comps growth in low single digit range.

Apart from robust comps, the company’s focus on providing differentiated assortments is impressive. Zumiez has invested much resources to boost localized merchandising assortments. Additionally, it is making investments in logistics, managing costs and taking technology strides.

In a bid to provide consumers with quick and easy access to its products and brands, the company is striving to expand its e-commerce and omni-channel platforms. In this regard, Zumiez has considerably improved customers’ experience, by integrating its physical and digital networks. This allows customers to access inventories through all channels, alongside availing facilities like buy online, pick up in store, reserve online and pay in store. We believe that the company’s well-balanced store expansion and e-commerce strategies will help it keep track of the evolving patterns and drive top-line growth.

Currently, the company has a long-term earnings growth rate of 13.5% and carries a Zacks Rank #2 (Buy). Also, the company delivered average positive earnings surprise of 46.3% in the trailing four quarters and flaunts a VGM score of B. These show that the stock has more room to run.

Other Key Picks

The Children's Place, Inc. PLCE has a long-term earnings growth rate of 8% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Deckers Outdoor Corp. DECK has a long-term earnings growth rate of 11.6% and a Zacks Rank #2.

L Brands, Inc. LB has a long-term earnings growth rate of 11% and a Zacks Rank #2.

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