Zumiez (ZUMZ), an apparel retailer, is trading higher today (+4.5%) after reporting strong Q2 (Jul) results and providing guidance for Q3 (Oct). In case you're not familiar, Zumiez is an apparel retailer with a core target market of young men and women between the ages of 12 and 24 and a focus on customers who enjoy the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles.
In addition to selling men's, women's, and children's clothing, the company also sells footwear, cold weather gear, and accessories. ZUMZ currently operates approximately 700 stores, including 610 in the U.S., 50 in Canada, 36 in Europe and 7 in Australia. It also operates websites at zumiez.com, blue-tomato.com and fasttimes.com.au
Zumiez targets a large population of young men and women, many of whom are attracted to the aforementioned unique styles and lifestyles, including action sports and streetwear. They tend to express their personal independence and style through the apparel, footwear, and accessories they wear. ZUMZ feels that it has created a highly differentiated retailing concept by offering an extensive selection of relevant and current lifestyle brands, including some brands and products that are available only at ZUMZ stores.
Turning to the JulQ results, ZUMZ reported EPS of $0.17, up nicely from a $(0.02) loss in the prior year period. This was better than prior guidance of $0.13-0.14. Revenue rose 13.9% year/year to $219 mln. In terms of guidance for Q3 (Oct), ZUMZ expects EPS of $0.45-0.51 and revenue of $247-252 mln, both are in-line with market expectations.
Same store comps are always important for retailers, and ZUMZ performed strongly on that metric, as JulQ comps came in at +6.3%. ZUMZ is one of the few retailers who still reports monthly comps, so this number was pretty much known prior to the earnings release. What was new information was that August comps came in at a robust +9.5%, so it's clear that the momentum from JulQ is continuing into OctQ.
ZUMZ says that it's encouraged by its back-to-school results and its current expectations for the back-half of 2018. ZUMZ is pleased with the current trend lines of the business. With the increasingly blurred lines between retail channels, the company has moved toward a channel-less world in which the empowered consumer isn't focused on going into a store or buying online, but rather transacting with a trusted retailer.
In sum, this stock struggled during the first half of 2017, but it has been steadily climbing higher since early September 2017 as its earnings results have been improving nicely. It seems that ZUMZ has been doing a good job at fending off online competitors. ZUMZ says it's committed to a strong brick and mortar presence, but the company has noted in the past that it has the right to exit over 85% of its North American locations within the next three years if needed. ZUMZ has also been doing a good job with its online sales.