Shares of Zumiez (ZUMZ, Financial) surged today after the company reported impressive second-quarter results. The stock was up 9.78%.
The company reported comparable sales growth of 3.6%, driving revenue up 8.1% to $210.2 million, which exceeded estimates of $202 million. A shift in the retail calendar contributed 530 basis points to the sales increase. Gross margin expanded 250 basis points to 34.2%, narrowing the loss from $0.44 per share last year to $0.04 per share, significantly better than the expected loss of $0.33 per share.
CEO Rick Brooks noted an acceleration in sales trends during the second quarter, with July North America comparable sales increasing in the high single digits. He attributed the growth to fresh apparel and footwear assortments and improved customer engagement.
For the third quarter, Zumiez expects revenue of $221 million to $225 million, up 2%-4%, or 7%-9% when adjusted for the calendar shift. The company forecasts a per-share result between a loss of $0.04 and a profit of $0.06, which was below analyst expectations of $0.23 per share but better than revenue estimates of $218.8 million.
From a valuation perspective, Zumiez Inc (ZUMZ, Financial) has a GF Value of $20.79, which suggests the stock is "Significantly Overvalued" compared to its intrinsic value. For more details, check GF Value.
The stock currently trades at $28.18 with a market cap of $539.41 million and a price-to-book ratio of 1.7. Despite some financial strength concerns highlighted by a Piotroski F-Score of 3 and an Altman Z-Score of 2.58, the company's Beneish M-Score of -3.52 indicates it is unlikely to be a manipulator.
Zumiez has shown strong recent performance with a 52-week price change of 52.15% and a year-to-date price change of 40.12%. While the company's total debt growth over the past year dropped by 13%, its cash-to-debt ratio stands at 0.68, suggesting moderate financial health.
Competition remains robust within the apparel retail sector with peers such as Lands' End (LE) and Stitch Fix (SFIX). Despite competitive pressures and a rather low predictability score, Zumiez continues to demonstrate resilience in its operational execution and customer engagement strategies.
For investors, the mixed signals of a low forward earnings estimate and strong recent price performance make Zumiez a stock to watch closely, particularly given its current valuation metrics and sector dynamics.
