Differentiation isn't achieved easily in the apparel and accessories industry, yet Zumiez (ZUMZ 15.05, +2.05) stood out from the crowd based on its second quarter earnings report. Accordingly, its stock, which is up 14% in pre-market action, also looks poised to stand out from the crowd in today's session.
Zumiez caters to young men and women with fashion, footwear, and accessories that tie in to the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles, and Zumiez had the ties that bind in the second quarter. Its net sales increased 7.8% to $192.2 million while its comparable sales increased 4.7% versus a 4.9% decrease in the same period a year ago.
Granted the comparable sales comparison was on the easier side, but nothing comes easy these days for mall-based retailers. Zumiez knows as much, having acknowledged in its press release that its business outperformed its expectations.
The retailer was able to leverage its sales strength and achieved a 30 basis points expansion in its gross margin rate of 31.1%. SG&A expenses consumed its gross profit, but nonetheless, Zumiez cut its net loss by 27% versus the same period a year ago to $608 million or ($0.02) per diluted share. The latter exceeded analysts' average expectation.
Zumiez also exceeded analysts' expectations with its third quarter guidance, which calls for net sales in the range of $236 million to $241 million and net income per diluted share of approximately $0.43 to $0.48. That guidance is predicated on comparable sales growth between 4% and 6%.
It sounds as if Zumiez is off to a good start, too, in the third quarter. Comparable sales increased 7.4% for the four-week period ended August 26, 2017.
Shares of ZUMZ are going to get off to a good start today, driven by some short-covering activity and perhaps some new money being put to work in the wake of the retailer's encouraging outlook. That's a welcome change of pace to be sure considering ZUMZ was down 40% for the year as of Thursday's close.