Zumeiz Beats by a Penny - Analyst Blog
March 09 2012 - 3:00AM
Zacks
Backed by strong merchandise, new
store opening and e-commerce strategies along with improved
margins, specialty retailer Zumiez Inc. (ZUMZ)
reported robust fourth-quarter 2011 result. The quarterly earnings
of 60 cents per share beat the Zacks Consensus Estimate of 59 cents
and surged 22.4% from the prior-period level of 49 cents.
Fiscal 2011 earnings was $1.20 per
share, rising a penny above the Zacks Consensus Estimate of $1.19
per share and the year-ago earnings of 88 cents per share.
Net sales in the reported quarter
climbed 17.7% to $183.9 million from $156.2 million a year ago.
Comparable store sales rose 9.7% in the quarter compared with an
increase of 13.0% in fourth-quarter 2010. Moreover, total revenue
also surpassed the Zacks Consensus Estimate of $182 million.
The company’s yearly sales were up
16.1% to $555.9 million, outpacing the Zacks Consensus Estimate of
$553 million.
Cost of goods sold in the fourth
quarter increased 16.7% year over year to $112.4 million. Gross
margin contracted 60 basis points to 61.1% in the quarter driven by
increased costs. Selling, general and administrative expenses were
$40.2 million, down 100 basis points to 21.9% as a percentage of
net sales.
Nevertheless, the company reported
an operating income of $31.3 million, up 30.4% from the year-ago
operating income of $24.3 million in the prior-year quarter,
resulting in an expansion of 160 basis points in operating margin
to 17.0%.
Financial
Update
At year-end 2011, cash and
marketable securities were $172.8 million, a sharp increase of
34.2% from $128.8 million at the end of fiscal 2010. Total
long-term liabilities increased to $34.3 million compared with
$29.4 million at the end of last year.
Guidance
For the first quarter of fiscal
2012, management anticipates to generate revenue in the range of
$123 to $125 million on the back of a high-single-digit growth in
comparable store sales. On the verge of promising sales, the
company expects earnings per share to come in the band of 6 cents
to 8 cents. The current Zacks Consensus Estimate for the upcoming
quarter stood at 8 cents per share, which is at the higher end of
the guidance range.
We expect Zumiez’s focus on teenage
action-sports based merchandise and expanding store network to
deliver solid performance in the upcoming quarters. However,
intense competition from other specialty retailers, seasonal nature
of the business and risks associated with sourcing merchandise from
foreign countries might weigh upon the company’s results.
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), Aeropostale Inc.
(ARO) and American Eagle Outfitters Inc.
(AEO).
We maintain our long-term “Neutral”
recommendation on Zumiez. The quantitative Zacks #2 Rank
(short-term Buy rating) for the company indicates no clear
directional pressure on the stock over the near term.
AMER EAGLE OUTF (AEO): Free Stock Analysis Report
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis Report
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From May 2024 to Jun 2024
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Jun 2023 to Jun 2024