Shares of Zumiez Inc. (ZUMZ) gained 10% during yesterday’s afterhours trading session following the company’s announcement of strong sales results for Jun 2014 and an upbeat second-quarter fiscal 2014 outlook.
The Washington-based retailer of sports-related teen apparel, footwear, equipment and accessories reported a 3.1% rise in comparable-store sales (comps) for the five-week period ended Jul 5, 2014, compared with a comps increase of 1.0% for the five weeks ended Jul 6, 2013. Moreover, net sales for June rose 11.1% to $65.3 million from $58.8 million reported in the year-ago period.
We believe the company’s sales for the month have mainly picked up due to a possible rise in traffic. Our anticipation is based on certain positive economic factors including the recently reported unemployment data which dropped 0.2% in June and a rise of 7.4% in consumer credit.
Bolstered by better-than-expected net sales results, the company has raised its sales and earnings forecast for the second quarter of fiscal 2014. Zumiez now expects sales for the quarter to come in the range of $174 to $176 million compared with the previous forecast of $167 to $171 million.
Similarly, earnings are anticipated to come in between 19 cents and 21 cents per share, up from the earlier guidance range of 12 cents to 16 cents. Currently, the Zacks Consensus Estimate for the quarter is pegged at 18 cents per share.
We believe that the company’s well-balanced store expansion and e-Commerce strategies will help drive its top and bottom line performances, going forward. Moreover, Zumiez aims to increase its store count to 600–700 in the long run. As of Jul 5, 2014, the company operated 572 stores, of which 527 are in the United States, 31 in Canada and 14 in Europe.
Zumiez currently has a Zacks Rank #2 (Buy). Some better-performing stocks among apparel/shoe retailers are Citi Trends Inc. (CTRN), Christopher & Banks Corporation (CBK) and The Men's Wearhouse, Inc. (MW), all carrying Zacks Rank #1 (Strong Buy).
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