Zumiez Inc. experienced an increase in average unit retail and the overall number of sales transactions in the second quarter, both of which helped to fuel a 41.5% growth in sales to $55.8 million from $39.4 million in Q2 last year. Gross margins improved 130 basis points to 33.7% of sales, which helped boost net income 93.6% to $1.6 million, or six cents per diluted share, compared to $0.8 million, or three cents per diluted share, in the year-ago period. Comparable store sales were up 12.6% for Q2 on top of an 11.3% comp sales gain in Q2 last year.

On the product mix side of things, the company’s private label Empire brand is being “incredibly well received” by the employee base, which management sees as the first step toward generating excitement behind the brand. Currently, private label accounts for approximately 13% of sales. Direct-to-consumer sales accounted for approximately 1% of sales, but management feels that there is a real opportunity grow the business over the next three to five years.

Management attributed the margin improvement to “better vendor pricing, improved leverage on fixed overhead, improved initial markups, and lower markdowns.” Speaking of better vendor pricing, the company sees its easiest work at making Fast Forward more profitable in this arena. Zumiez feels that with its size, it will be able to leverage its “better vendor pricing” to help increase product margins in the Texas-based chain. However, increases on the expense line offset much of the margins improvement, which management attributed to SOX work as well as payroll increases due to the new stores and preparation for BTS.

The company had a busy Q2 as it completed its acquisition of Fast Forward as well as opening an additional 22 stores. Zumiez expects to open a total of 42 shops for the year, with the remaining 14 all opening before Thanksgiving.

The company stated that it is raising guidance for fiscal 2006 to 66 cents to 67 cents in diluted earnings per share. Previously, the company had forecast diluted earnings per share in the 65 cents to 66 cents range.