Zumiez Inc.’s ZUMZ first-quarter fiscal 2015 adjusted earnings of 12 cents a share were in line with the Zacks Consensus Estimate and within the company’s guided range of 11–13 cents per share. Also, adjusted earnings jumped 20% from 10 cents posted in the year-ago quarter.
Zumiez Inc. – Earnings Surprise | FindTheCompany
Including charges related to the Blue Tomato acquisition, the company reported earnings of 9 cents a share, flat year over year.
Quarter in Detail
Net sales advanced 9% year over year to $177.6 million, marginally surpassing the Zacks Consensus Estimate of $177 million. The top line growth was driven by positive comparable-store sales (comps). However, foreign currency headwinds adversely impacted quarterly sales by about $5 million.
Quarterly comps grew 3%, up from a 1.8% increase registered in the year-ago quarter. Comps, which included eCommerce business results, benefited from higher dollars per transaction, partly offset by reduced comparable transactions.
Category wise, the company witnessed comps growth in the hardgoods, juniors, men's and accessories categories, partly offset by negative comps in the footwear section.
Concurrent with the first-quarter results, Zumiez posted its sales data for May 2015. The company’s comps for the month declined 2.2%, against a 3.6% improvement recorded in the same period a year ago. The year-over-year decline was a result of a fall in comparable transactions, somewhat offset by enhanced dollars per transaction. Shares of the company plunged 8.9% in the after-market trading session following the announcement. However, net sales for the month ended May 30, 2015 climbed 4.1% year over year to $51.5 million.
Costs & Margins
In the reported quarter, gross profit rose 11.9% to $56.5 million, with the gross margin expanding 80 basis points (bps) to 31.8%.
Zumiez’s selling, general and administrative expenses escalated 11.9% to $52.4 million, while as a percentage of sales, the same increased 80 bps to 29.5%.
Stemming from an improved gross profit, operating profit for the quarter ascended 11.1% to $4.1 million, with the operating profit margin remaining flat year over year at 2.3%.
All aforementioned costs and margins results were adversely impacted by charges related to the Blue Tomato acquisition.
Financial Update
As of May 2, 2015, cash and marketable securities were $150.9 million, up 40% year over year. Total shareholders’ equity at quarter end stood at $364.4 million.
Store Update
Zumiez continues with the strategy of optimizing its store base through expansion in under-penetrated markets and by either repositioning or closing underperforming stores through their constant evaluation, aimed at maximizing long-term productivity.
During the first quarter, Zumiez opened 13 new stores, including 4 in Europe. With this, the company ended the quarter with a total store count of 616. Going forward, in fiscal 2015, Zumiez plans to introduce roughly 57 stores, with up to 7 stores in Canada and 6 in Europe.
Guidance
Management stated that the first-quarter results were in line with expectations. Though the company’s business witnessed a major slowdown in April, it was somewhat compensated by solid improvement in European sales. Going forward, the company remains pleased with its investments made toward global expansion, enhancement of omni-channel capacities and customer-centric approach. The company believes that with constant focus on these strategies, it can generate greater profits and boost shareholder value in the future.
Zumiez initiated its outlook for the second quarter of fiscal 2015. Management envisions net sales for the quarter to range from $179–$183 million, while comps are anticipated to decline in the range of 3%–5% over the same time period.
Consequently, the company expects earnings per share for the second quarter in the band of 12–15 cents. This projection includes an expected 1 cent per share impact from charges related to the Blue Tomato acquisition.
Hence, adjusted earnings per share for the second quarter are anticipated to be in the range of 13–16 cents.
Zacks Rank
Zumiez currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the apparel-shoe space include American Eagle Outfitters Inc. AEO, with a Zacks Rank #1 (Strong Buy), Citi Trends Inc. CTRN and Bebe Stores Inc. BEBE, each carrying a Zacks Rank #2 (Buy).
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