Brean Still Thinks Zumiez Is Best-In-Class

Brean Capital’s Liz Pierce maintained a Buy rating on Zumiez Inc. ZUMZ, with a price target of $24, saying that the company is better positioned than it was a year ago, despite no change in sector challenges.

The company reported better-than-expected 4Q GAAP earnings of $0.50 on total sales of $242 million. Zumiez’s sales in North America declined 7.9 percent to $212.5 million, while its European sales were up 7.2 percent to $29.9 million during the quarter.

Zumiez’s 4Q comparable store sales declined 9.5 percent in 4Q and fell short of the company’s historical standards. The decline in comps was consistent with industry standards, analyst Liz Pierce noted.

Emerging Fashion Trends Plus Omni Channel Investments To Prove Beneficial

Although Zumiez issued lower-than-expected 1Q comp guidance, the same was better than February’s comp, indicating a pickup in the business. Pierce believes that easier comps in April will enable some of the trending products to have a positive impact on the company’s results.

Pierce expects the omni-channel investments made by Zumeiz over the past few years to have a positive impact on both the top and bottom line of the company in the second half of FY16.

Investments made by the company include enhanced assortment planning software for inventory optimization, enhancement of the in-store telecommunications infrastructure to facilitate overall customer experience, upgraded web platforms to enhance speed and omni-channel functionality.