Earnings Preview: Zumiez - Analyst Blog
August 29 2011 - 11:15AM
Zacks
Zumiez, Inc. (ZUMZ) is scheduled to report
second-quarter 2011 financial results on August 31, 2011. The
current Zacks Consensus Estimate for the quarter is earnings of 5
cents a share.
First-Quarter 2011, Summary
Zumiez reported first-quarter earnings of 6 cents a share,
beating the Zacks Consensus Estimate of 2 cents a share. The
company also turned around from a loss of 3 cents a share posted in
the first quarter of fiscal 2010. Net income from operations was
$1.9 million compared with a loss of $0.7 million in the prior-year
quarter.
Net sales in the reported quarter increased 18.8% year over year
to $105.9 million from $89.1 million a year ago. Comparable store
sales rose 12.6% in the quarter compared with an increase of 9.1%
in first-quarter 2010. Total revenue beat the Zacks Consensus
Estimate of $101 million.
Agreement of Estimate
For the second quarter of fiscal 2011, out of 19 analysts
covering the stock, 2 have revised their estimates upward, while 2
moved in the opposite direction in the last 30 days. For fiscal
2011, out of 19 analysts, 1 analyst has positively revised the
estimate while six moved downward in the last 30 days.
The last 7 days saw no estimate revisions from the 19 analysts
covering the stock. Estimates for fiscal 2011 likewise witnessed no
movement in either direction in the past one week.
Magnitude of Estimate Revisions
With positive and negative estimate revisions cancelling each
other out, for the second quarter 2011, over the last 30 days, the
Zacks Consensus Estimate has hit a plateau at 5 cents a share. The
consensus estimate for 2011 has also remained constant at $1.12 per
share.
Surprise History
With respect to earnings surprises, Zumiez showed a favourable
trend in the last four quarters. The company has recorded positive
surprises in the trailing four quarters with a low of 4.3% and a
high of 200%. On an average, the earnings surprise was a positive
78.1%. Based on the current flow, we expect the company to come up
with healthy results in the upcoming quarter.
Our View
Currently, Zumiez maintains a Zacks #3 Rank, which translates
into a short-term Hold rating. Moreover, our long-term
recommendation on the stock remains Neutral.
Zumiez is a mall-based specialty retailer of action-sports
related apparel, footwear, equipment, and accessories. Zumiez’s
strategy is based on offering action-sports merchandise focused on
young men and women in the age of group of 12 to 24 years, which
has enabled the company to carve a distinct niche for itself.
Furthermore, the company’s stores are strategically located in
busy areas of the mall, such as food courts, movie theatres and
music/game stores, which are generally frequented by the company’s
target customers.
Moreover, the company is currently in the early phase of its
store expansion program and plans to enlarge its network by opening
44 new stores during fiscal 2011, including its first store in
Canada.
Moreover, Zumiez has near to debt-free balance sheet with total
long-term debt of $31.3 million and shareholders’ equity of $231.3
million, reflecting a debt-to-capitalization ratio of just 11.9% at
the end of first-quarter 2011. The company ended the quarter with
$130.7 million of cash and marketable securities offering financial
flexibility to drive future expansion.
On the flip side, the company operates in a highly fragmented
specialty retail sector and faces intense competition from larger
teenage-focused retailers, such as Abercrombie & Fitch
Co. (ANF) and Aeropostale Inc. (ARO).
Furthermore, Zumiez also competes with large-format sporting goods
stores, such as Big 5 Sporting Goods Corp. (BGFV)
and Dick's Sporting Goods Inc. (DKS) as well as
local snowboard and skate shops. Being in such a competitive
industry, Zumiez may find it difficult to execute new business
strategies, which in turn may impact its operations adversely.
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis Report
BIG 5 SPORTING (BGFV): Free Stock Analysis Report
DICKS SPRTG GDS (DKS): Free Stock Analysis Report
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
Zacks Investment Research
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Jul 2023 to Jul 2024