Zumiez (ZUMZ), an apparel retailer, is trading sharply higher today (+13%) after raising Q4 (Jan) EPS guidance and reporting impressive December same store comps.
In case you're not familiar, Zumiez is an apparel retailer with a core target market of young men and women between ages of 12 and 24 with a focus on customers who enjoy 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 nearly 700 stores, including 608 in the US, 51 in Canada, 33 in Europe and 7 in Australia. It also operates websites at zumiez.com, blue-tomato.com and fasttimes.com.au
Turning to today's news, ZUMZ reported that December sales increased 11.4% YoY to $160 mln. Same store comps increased +7.9% for December despite lapping a pretty healthy +3.4% comp last year. Due primarily to this stronger-than-expected quarter-to-date sales and product margin performance, the company is increasing guidance and now expects Q4 (Jan) EPS of $0.88-0.90, up from prior guidance of $0.78-0.84. Its same store comps guidance for JanQ has been raised to approximately +7%, up from prior guidance of +3-5%.
This stock struggled during the first half of 2017, but it has been steadily climbing higher since early September following its strong JulQ report. That was followed up with a strong OctQ report in late November. The company reported in-line Q3 (Oct) results, but same store comps increased at a faster than expected rate (+7.9% vs guidance for +4-6% growth), transaction volume grew, and guidance for Q4 (Jan) was strong. Now it seems that Q4 (Jan) will indeed wind up being another strong quarter for ZUMZ.
In sum, it seems that ZUMZ has been performing quite well over the past 6-9 months, 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. Right now though, it seems ZUMZ is doing quite well. In fact, its stock price has about doubled since its August lows.