This hot looking specialty retailer stock has a lot going for it as it is currently firing on all cylinders while testing lower, up-channel support.
On November 26, 2019, Jefferies analyst Janine Stichter said she finds that many of the larger retro and streetwear brands are seeing search interest track flat to down with weakened social media engagement, which she views as a signal that the the cycle is now past peak, although the category is still broadly healthy. Even with a fairly heavy reliance on Vans, Zumiez (ZUMZ) is sufficiently diverse to weather a deceleration in the retro cycle and data also suggests a major resurgence in skateboards, which is positive for Zumiez, said Stichter, who raised her price target on the stock to $38 from $34 and keeps a Buy rating on the shares. Despite the broader downtrend in the retro brand cycle, he checks also indicate that the Guess (GES) brand is “in the earlier stages of capitalizing on its status as a retro 90s brand,” added Stichter.
On December 4, Zumiez approved the repurchase of up to an aggregate of $100 million of its Common Stock. The repurchases will be made from time to time on the open market at prevailing market prices. The Repurchase Program is expected to continue through the fiscal year 2020 that will end on January 30, 2021, unless the time period is extended or shortened by the Board of Directors. The Repurchase Program supersedes all previously approved and authorized stock repurchase programs.
On December 5, 2019, Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended November 2, 2019. Zumiez reports Q3 EPS of 75c versus the consensus 60c. The company reports Q3 revenue of $264M versus the consensus of $260.87M. Zumiez reports Q3 comparable sales increased 5.5%. Zumiez sees Q4 EPS of $1.26-$1.32 versus the consensus $1.17.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We are very pleased with the third quarter performance and our teams continued ability to provide high-quality service to the customer. The third quarter represented our fourth consecutive strong back-to-school season, our 13th quarter of positive comparable sales gains and continued solid full price selling in each of our geographies that we operate. At the same time, the initiatives we’ve implemented aimed at creating efficiencies and generating savings throughout our organization contributed to our better than expected bottom line and allowed us to convert mid-single digit comparable sales into a 37.1% improvement in earnings per share. The holiday season is off to a good start and we are confident that our distinct approach to retailing combined with an operating model built around a singular cost structure has Zumiez well positioned to deliver record results in 2019 and generate increased shareholder value for years to come.”
With the Thanksgiving holiday shifting a week later in 2019, the fiscal month of November has significant comparability issues with the prior year. Therefore, the Company is providing a comparable sales update for the period beginning November 3, 2019 through December 3, 2019, quarter-to-date, compared with the same period in the prior year. Both years then include the full Black Friday weekend as well as Cyber Monday shipments. The Company’s comparable sales increased 3.3% for the 2019 fourth quarter-to-date period through December 3, 2019 compared with the same period in the prior year ending December 4, 2018.
Based upon better than anticipated trends and performance year-to-date, the Company is raising its annual guidance. Fiscal 2019 comparable sales are now expected to increase approximately 4.0% and 4.5% compared to prior guidance of 2.0% to 4.0%. Diluted earnings per share are now projected to range from $2.38 to $2.46, up from previous guidance of $2.10 to $2.20.
The Revenue has been growing by 4.15% on average over the past 5 years.
We are not adding ZUMZ stock to the GST Portfolio at this time because it’s so tied to the consumer that if the economy continues to slow, this stock will get hit hard. Nevertheless, it looks like a compelling swing long trade off the lower uptrend channel support.