Action-sports lifestyle retailer Zumiez, Inc. reported that surging sales and comps during the second quarter ended July 31 propelled the company to a slight profit for the period which was much improved over initial guidance and the one cent per share loss than most analysts expected. In a conference call with analysts, ZUMZ said that along with nearly double-digit comp growth, Q2 benefitted from an improved selling environment, accelerated transactions, e-commerce growth and significant strength from its accessories and men’s departments.
Among other solid performers during the quarter, management said the biggest contribution to 9.3% comp growth came from the aforementioned accessories and men’s departments, which accounted for about 50% of sales.
Zumiez also reported strong comps from its boys departments. Hard goods, juniors and footwear all comped negative for the quarter. CFO Trevor Lang added that comp growth was driven by increased transactions, which was partially offset by a reduction in dollars per transaction. The decrease in dollars per transaction was driven by a high-single digit decrease in average unit retail, slightly offset by an increase in units per transaction.
A 250 basis point improvement in gross margin to 31.4% of sales was driven by a reduction in occupancy costs as a percent of sales, partially offset by costs associated with the relocation of the company’s distribution center, which was around $1 million.
Regarding outlook, management said the month-to-date performance for August “is a bit better” than previous guidance, adding that the company has seen good results in the places it has stocked with back-to-school gear and remains “well-positioned” for the crucial BTS season.
The company expects net income of between 21 cents per share and 24 cents per share for the quarter ending Oct. 30. Guidance is based on an anticipated comp improvement in the mid-single digit range.
