Zumiez Inc. last week hiked its third-quarter earnings outlook to a range of 25 cents to 27 cents a share from 21 cents to 24 cents a share previously forecast due to better than expected sales and product margins. Comps are expected to rise in a high single digit range in the three months.
September month-to-date comparable store sales jumped 15.3% and quarter-to-date comps increased 10.8% for the two and six week periods ended Sept. 11.
Speaking at the Goldman Sach's conference, CFO Trevor Lang said that the top performers during the BTS period were men’s apparel, which accounted for about a third of sales; and accessories, which accounted for about 20% of sales.
The shoe business and skate businesses were each “up a bit” during BTS while nearly all other product segments improved with the exception of young girls’ apparel. When asked about the struggling Junior’s business, CEO Rick Brooks stated “We all have our self-inflicted mistakes.”
He also pointed to the retailer’s branded partners, which he said have been slow to introduce new products with the arrival of new seasons. “We have some work to do on that front,” he added.
Lang said the company is concerned regarding significant “pressures” from Asia sourcing. “The pendulum of power has swung back to the East and lead times are getting longer,” said Lang. “The cost increases are getting higher for two main reasons the labor costs are going up and cotton price are going up.” As a result, Zumiez has transferred some of its sourcing back to Mexico, where Lang said there are “huge lead time improvements.” He added that costs will definitely increase in the near future and that Zumiez’s goal is to “keep them flat or minimize any losses.”
