Zumiez Inc.'s comps decreased 13.1% for the four-week period ended Nov. 1, and also slashed its forecast for full-year income to a range of 52 cents to 57 cents per share. That compares with a previous estimate of 80 cents to 82 cents per share. The retailer cited weaker sales and more promotions
The action sports retailer is lowering fiscal 2008 fourth quarter comparable store sales guidance from a negative low single digit decrease to a negative mid-teen decrease over the fiscal 2007 fourth quarter.
For the fiscal third quarter ended Nov. 1, 2008, the company expects to report diluted earnings per share in the range of 22 cents to 23 cents per share, versus diluted earnings per share of 28 cents in the third quarter last year. Analysts polled by Thomson Reuters were expecting income of 24 cents per share.
The comp drop in October compares with a comparable store sales increase of 5.1% in the year ago period ended Nov. 3, 2007. Total net sales increased 1.2% to $25.0 million, compared to $24.7 million for the same period last year.
“Given the increasingly difficult consumer environment and the associated highly promotional retail atmosphere we experienced weakening sales and product margins that were below our August and year-to-date trend of negative 1% and the expectations we shared with you at our second quarter earnings release,” commented CEO Rick Brooks. “As we look to the future, it is difficult to predict how the consumer will respond this holiday season due to extraordinary recent macroeconomic events and record low consumer confidence, therefore we have lowered our fourth quarter sales and earnings expectations. We are scrutinizing business trends closely and believe we are making appropriate modifications to our capital expenditures, inventory and expense structure to weather this very difficult operating environment. Our current expectation is we will have at least $75 million in cash and marketable securities and no debt at the end of fiscal 2008.”
He continued, “Looking beyond fiscal 2008, we believe fiscal 2009 will be challenging as well so we are lowering our inventory commitments, reducing our historical new store growth of 20% to no more than 15% and plan to reduce our capital expenditures in 2009 to approximately $28 million. We believe these actions will allow us to make the appropriate investments in our business, while protecting our financial position. We believe long-term growth is achievable because our business model is sufficiently differentiated, our team is strong and we remain well capitalized.”
“Given the increasingly difficult consumer environment and the associated highly promotional retail atmosphere we experienced weakening sales and product margins that were below our August and year-to-date trend of negative 1% and the expectations we shared with you at our second quarter earnings release,” commented CEO Rick Brooks. “As we look to the future, it is difficult to predict how the consumer will respond this holiday season due to extraordinary recent macroeconomic events and record low consumer confidence, therefore we have lowered our fourth quarter sales and earnings expectations. We are scrutinizing business trends closely and believe we are making appropriate modifications to our capital expenditures, inventory and expense structure to weather this very difficult operating environment. Our current expectation is we will have at least $75 million in cash and marketable securities and no debt at the end of fiscal 2008.”
He continued, “Looking beyond fiscal 2008, we believe fiscal 2009 will be challenging as well so we are lowering our inventory commitments, reducing our historical new store growth of 20% to no more than 15% and plan to reduce our capital expenditures in 2009 to approximately $28 million. We believe these actions will allow us to make the appropriate investments in our business, while protecting our financial position. We believe long-term growth is achievable because our business model is sufficiently differentiated, our team is strong and we remain well capitalized.”
