Zumiez Inc. reported comparable store sales increased 1.5 percent in the third quarter ended Nov. 2, on top of 3.7 percent comparable store growth in the third quarter of 2012 with help from an ascendant juniors business, stronger skate hardgoods sales in North America and strong snow hardgoods sales in Europe.
Web sales comped up 7.9 percent, while bricks-and-mortar sales comps were up 0.7 percent.
Total net sales reached $191.1 million during the quarter, up 6.2 percent from $180.0 million in the year earlier quarter, when ZUMZ operated 55 fewer stores. ZUMZ is on track to open 59 additional stores in fiscal 2013, including 9 in Canada and 6 in Europe, which it owns action sports retailer Blue Tomato.
Gross margin dipped 30 basis points to 37 percent while SG&A rose 80 bps to 26.2 percent. Merchandise margins essentially held steady with a year ago.
Net income in the third quarter of fiscal 2013 was $11.9 million, or 39 cents per diluted share, compared to net income of $12.7 million, or 40 cents per diluted share, in the third quarter of the prior fiscal year.
One-time costs shaved 7 cents per diluted share from earnings, compared to 11 cents a year earlier. In the most recent quarter, those costs included $1.7 million for charges associated with the acquisition of Blue Tomato and $1.3 million for the conditional settlement of a previously disclosed California class action wage and hour lawsuit.
New store openings, more than offset the shift of $7 million in back-to-school sales into the second quarter.
“The quarter began with a solid Back-to-School season, and while softer traffic trends returned, we were able to maintain a positive comparable store sales result for the quarter,” said CEO Rick Brooks.”
Junior's, hardgoods and accessories posted positive comps during the quarter, while boy's and men's comped negative against very strong growth in the third quarter of 2012. Footwear also comped down.
“We're benefiting broadly from the perspective that there is some desire to move back towards a little bit, perhaps a little bit
better quality women's merchandise than has been driven by the fast fashion cycle for the last few years,” Brooks said of the junior’s business, which accounts for about 15 percent of ZUMZ sales.
Zumiez also disclosed that its comparable store sales increased 1.7 percent for the four-week period ended Nov. 30, 2013 compared to a comps decline of 4.2 percent for the four-week period ended Nov. 24, 2012. Total net sales for month were up 16.3 percent to $62.4 million.
Comps for the four-day Black Friday weekend were up 11.2 percent, but CFO Christopher Codington Work noted it’s difficult to know how much of that is due to the compression of the holiday shopping season versus incremental business.
Hardgoods comped positively in November, with skate gear growing in North America and strong snow sports sales in Europe. Brooks said the company’s markdown activity was essentially flat with a year ago.
ZUMZ ended the quarter with cash and current marketable securities of $94.2 million, 4.1 percent below their level Oct. 27, 2012.
ZUMZ expects net sales in the fiscal fourth quarter to be between $230 million and $237 million and result in net income per diluted share of approximately 60 to 66 cents, including charges related to the Blue Tomato acquisition. The guidance anticipates comparable store sales in the range of 1 to 2 percent.