Zumiez Inc. saw ZUMZ shares jump overnight after reporting that comparable sales for the 13-week period ended November 2 increased 7.5 percent and that net sales for the fiscal third quarter increased 2.9 percent to $222.5 million, compared to $216.3 million in the prior-year third quarter.
The shift in the retail calendar had a negative impact on the third quarter results, decreasing net sales growth by approximately 510 basis points. However, this shift positively affected net sales growth in the second quarter. Comparable sales growth, as reported, is not impacted by the calendar shift and provides a more accurate measure of operating performance.
Net income in the third quarter was $1.2 million, or 6 cents per share, compared to a net loss of $2.2 million, or a loss of 12 cents per share, in the prior-year third quarter.
Rick Brooks, CEO, Zumiez Inc., stated, “The strategic initiatives we have been executing this year have contributed to a noticeable increase in sales trends. Fueled by growing strength in our North American business, consolidated comparable sales sequentially accelerated 390 basis points to high-single digits in the third quarter. We experienced strong gains in our apparel and footwear categories as consumers have responded favorably to our refined product assortments and enhanced customer engagement tactics. We still have much work to do improving profitability and capitalizing on the opportunities we have created for the company. Our results during back-to-school and the start of the holiday season represent solid progress toward these goals and we are committed to building on our momentum to deliver greater value for our shareholders next year and over the long term.”
Balance Sheet Summary
As of November 2, 2024, the company had cash and current marketable securities of $99.3 million compared to cash and current marketable securities of $135.8 million as of October 28, 2023. The decrease was primarily driven by share repurchases and capital expenditures partially offset by cash flow from operations.
Fourth Quarter To-Date
Total fourth quarter-to-date total sales for the 31 days ended December 3 increased 10.0 percent, compared with the same 31-day time period in the prior-year period ended November 28, 2023. Total comparable sales for the 31-day period ending December 3, 2024 increased 2.9 percent from the comparable period in the prior year.
Fiscal 2024 Fourth Quarter Outlook
The company is introducing guidance for the three months ending February 1, 2025.
Net sales are projected to be in the range of $284 million to $288 million. Consolidated operating margins are expected to be between 6.0 percent and 7.5 percent, resulting in earnings per diluted share of approximately 83 cents to 93 cents per diluted share.
When challenged by an analyst on the aggressive top-line guide for the fourth quarter, CFO Chris Work confirmed the company is indeed anticipating comps of 6.0 percent to 7.5 percent and are currently trending at 2.9 percent in Q4-to-date.
“We expect a higher concentration of sales around Christmas due to the calendar shift,” Work noted. “Historically, when Christmas falls on a Wednesday, sales tend to peak around that time. We are confident in this trend based on past data and our current trajectory, especially with strong apparel and footwear performance in Q3.”
The company has opened six new stores in fiscal 2024, with one additional store opening planned in the fourth quarter. These seven new stores opened during the year include three stores in North America, two stores in Europe and two stores in Australia.
Zumiez expects to close approximately 33 stores throughout fiscal 2024 by the end of the year.
Image courtesy Zumiez, Inc.
