Zumiez's (ZUMZ) Growth Strategies On Track: Time to Hold?
Zumiez Inc. ZUMZ is well-poised to tap the positive trends in the fashion world, thanks to its digital endeavors and other robust strategies. The company is boosting its competitive advantage through investments in logistics, planning and allocation along with omnichannel capabilities, which positions it for growth ahead.
In a nutshell, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, expanding international markets and efficiently controlling expenses. Buoyed by such strengths, shares of this key lifestyle retailer have gained 17.6% compared with the industry’s 12% rise over the past six months.
Delving Deeper
Zumiez has been gaining from its focus on providing differentiated assortments. Moreover, the company has invested resources to boost localized merchandising assortments. The implementation of advanced technology has helped augment customers’ shopping experience across diverse channels. Also, the company’s one-channel approach to retail looks impressive.
Management is encouraged by its advanced in-store fulfillment capabilities, including Zumiez Delivery. We note that Zumiez is adjusting its merchandise assortments and controlling expenses to boost results in the near term. Its customer-centric strategy also bodes well.
Zumiez Inc. Price and Consensus
Zumiez Inc. price-consensus-chart | Zumiez Inc. Quote
Zumiez keeps up with the strategy of optimizing its store base through expansion in the underpenetrated markets as well as through either repositioning or closing underperforming stores. Such a strategy ensures that it has the right number of stores across each location. A major proportion of the company’s capital spending is allocated toward store remodeling and openings. Management intends to open roughly 19 stores in fiscal 2023, including about five stores in North America, 10 in Europe and four in Australia. Capital expenditures are anticipated between $20 million and $21 million for fiscal 2023.
During third-quarter fiscal 2023, Zumiez reported a narrower-than-expected loss per share. Further, sales beat the Zacks Consensus Estimate. The company posted a quarterly loss of 12 cents per share, narrower than the consensus estimate of a loss of 17 cents per share. Total net sales of $216.3 million came above the consensus estimate of $213 million. Sales results were buoyed by the company’s impressive performance across the international region.
Other international sales, comprising Europe and Australia, were $34.8 million, up 11.1% from the year-ago quarter’s level. Excluding the impacts of foreign currency translations, the other international net sales rose 5.2% from the fiscal 2022 readings. On its last earnings call, the company informed that its fourth quarter-to-date results have shown incremental progress through the trends seen in the first three quarters of the fiscal year.
A proven business model, robust brands and various growth opportunities position the company well to drive overall growth and boost stakeholders’ value in the long run. Considering its strengths, Zumiez seems to be a decent investment bet now. A Value Score of B further speaks volumes for this current Zacks Rank #3 (Hold) company. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $912.2 million and 64 cents, respectively. These estimates show corresponding growth of 4.9% and 151.7% year over year.
Eye These Solid Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch ANF, Gap GPS and American Eagle Outfitters AEO.
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 13.3% from the year-ago reported figure. ANF delivered an earnings surprise of 713% in the last reported quarter.
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year EPS suggests growth of 387.5%, from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered an earnings surprise of 23% in each of the trailing four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 4% and 39.2%, respectively, from the year-ago reported figures.
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Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
