Zumiez's (ZUMZ) Growth Strategies on Track: Apt 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 by investments in logistics, planning and allocation along with omnichannel capabilities, which position it well for growth.
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 12.9% compared with the industry’s 2.7% rise over the past three 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 in augmenting the customers’ shopping experience across diverse channels. Also, the company’s one channel approach to retail looks impressive.
Image Source: Zacks Investment Research
Management is encouraged about its advanced in-store fulfillment capabilities, including Zumiez Delivery. Further, the company is boosting its competitive advantage by investments in logistics, planning and allocation, along with omnichannel capabilities, which position it well for growth. 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 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. In fact, 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 to be between $19 million and $21 million for fiscal 2023.
During second-quarter fiscal 2023, Zumiez reported narrower-than-expected loss per share. Further, sales beat the Zacks Consensus Estimate. The company posted a quarterly loss of 44 cents per share, narrower than the consensus estimate of a loss of 67 cents per share. Total net sales of $194.4 million came above the consensus estimate of $190 million. Sales results were somewhat offset by the company’s impressive performance across the international region.
Other international sales, comprising Europe and Australia, were $34.8 million, up 15.5% from the year-ago quarter’s level. Excluding the impacts of foreign currency translations, North America’s net sales jumped 15.7%, while other international net sales rose 11.8% from the fiscal 2022 readings. On its last earnings call, the company’s third-quarter-to-date results have showed incremental progress to the trends seen in the first and second quarter.
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 $892.7 million and 59 cents, respectively. These estimates show corresponding growth of 4.1% and 161.3% year over year.
Eye These Solid Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch ANF, American Eagle Outfitters AEO and Boot Barn BOOT.
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 and EPS suggests growth of 0.5% and 526.3%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 107.7% in the last reported quarter.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 82.6% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 3.3% and 24.2%, respectively, from the year-ago reported figures.
Boot Barn, a fashion retailer of apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 8.2% and 9.1%, respectively, from the year-ago reported figures.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report
