Zumiez Inc. saw the cost of new stores, including the acquired Fast Forward business, cut into the bottom line a bit in the third quarter, but nothing to prevent the action sports retailer from posting a double-digit gain there. ZUMZ reported a 43% jump in net sales to $82.3 million from $57.4 million in the year-ago quarter. Comparable store sales were up 10.7% for the quarter on top of a 9.8% gain last year. On a conference call with analysts, Rick Brooks, president and CEO, said that “mens was the leader in terms of comp performance in the third quarter, but all the other departments, including juniors, comped positive.”
Gross margin for the third quarter decreased 50 basis points to 36.8% of net sales from 37.3% last year, due mostly to increased occupancy costs. Merchandising margins were said to be ahead of the same period last year with a “solid improvement.” SG&A expenses increased 50 basis points to 23.5% of net sales from 23% in Q3 last year as a result of the expensing of stock-based compensation. The strong gains on the top-line more than offset the decreased margins and increased expenses, prompting a 2.3% increase in net income to $6.8 million, or 24 cents per diluted share, from $5.3 million, or 18 cents per diluted share, last year. For fiscal 2006, the company maintained its guidance for net income of 66 cents to 67 cents per share, which represents an increase of more than 40% compared to fiscal 2005.
