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Zumiez Sticks Q1 Print: Analyst Says Skate Segment 'Somewhat Inexplicably Turned Positive'

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Zumiez Sticks Q1 Print: Analyst Says Skate Segment 'Somewhat Inexplicably Turned Positive'

Zumiez Inc. (NASDAQ: ZUMZ) shares were soaring Friday after the apparel retailer posted a first-quarter earnings and sales beat the day prior.

The apparel and footwear retailer reported 3.3-percent comp growth in the quarter.

The Analyst 

Baird analyst Jonathan Komp maintained a Neutral rating with a $24 price target.

The Thesis

The analyst said the results were much better than he feared, adding that Zumiez's valuation should normalize from recent lows. (See his track record here.) 

Shares look fairly valued in the low $20 range, as industry sales and margin concerns remain present, Komp said in a Thursday note. 

“The fiscal 2019 comps/EPS were left intact, embedding appropriate conservatism following the company’s seasonally lowest quarter and with tough multi-year overlaps ahead." 

Zumiez ended the quarter with $168 million in cash, up 42 percent, but Komp said the company did not repurchase any shares during the period. Surprisingly, skateboarding may also be on the upswing, giving the company a boost, he said. 

“While we anticipated apparel softness with men’s/women’s apparel the largest comp detractors in Q1 and May, we are encouraged by the strength in footwear and also surprised by a rebound in Skate hard goods which somewhat inexplicably turned positive following over 3 year years of negative quarterly performance." 

The analyst says he is encouraged to see Zumiez deliver upside in a tough environment, but added that the sustainability of the skate hard goods recovery remains uncertain, and a threat exists in the form of a more promotional apparel environment ahead.

Price Action

Zumiez shares were trading higher by 14.49 percent at $21.38 at the time of publication Friday. 

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Photo by John Phelan via Wikimedia

Latest Ratings for ZUMZ

DateFirmActionFromTo
Sep 2019MaintainsBuy
Aug 2019MaintainsNeutral
May 2019DowngradesNeutralUnderperform

View More Analyst Ratings for ZUMZ
View the Latest Analyst Ratings

Posted-In: Apparel Baird Jonathan KompAnalyst Color News Price Target Reiteration Analyst Ratings Best of Benzinga

 

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