Zumiez's May Comps Jump 3.6% - Analyst Blog

The Washington-based retailer of sports-related teen apparel, Zumiez Inc. ZUMZ, reported a 3.6% rise in comparable-store sales (comps) for the four-week period ended May 31, 2014, compared with a comps increase of 1.1% for the four weeks ended June 1, 2013.

Moreover, net sales for May rose 13.3% to $49.5 million from $43.6 million reported in the year-ago period. We believe the company's sales for the month mainly picked up with the arrival of warmer weather that induced demand for the spring and early summer collections.

Last month, Zumiez recorded massive sales gains benefiting from the strong Easter sales due to the festival's shift into April this year. The company reported an 8.2% growth in comps for the four-week period ended May 3, 2014, compared with a comps increase of 4.6% for the four weeks ended May 4, 2013. Sales for the month rose 17.6% to $50.6 million from $43.0 million reported in the year-ago period.

In March, Zumiez announced its sales and earnings guidance for the first quarter of fiscal 2014. Management anticipates first-quarter revenues to land in the range of $156–$160 million, while comps are likely to decrease in the low single-digit range.

Based on sales projections for the quarter, the company formulated a bottom-line guidance of net loss per share of 2 cents to earnings per share of 3 cents. The earnings expectation also includes estimated charges of 2 cents per share related to the Blue Tomato acquisition.

We believe that the company's well-balanced store expansion and e-Commerce strategies will help drive its top line, going forward. Moreover, Zumiez aims to increase its store count to 600–700 in the long run. As of Apr 5, 2014, the company operated 555 stores, of which 513 are in the United States, 29 in Canada and 13 in Europe.

Zumiez currently has a Zacks Rank #2 (Buy). A better-performing stock among apparel/shoe retailers is Citi Trends Inc. CTRN, which carries a Zacks Rank #1 (Strong Buy). Other stocks doing well in the same industry include American Apparel Inc. APP and Foot Locker Inc. FL, both sporting a Zacks Rank #2 (Buy).

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