Zumiez Out of Zoom?

Zumiez, Inc. (ZUMZ - Analyst Report) is a specialty retailer of action sports related apparel, footwear, equipment, and accessories. The company's target market is young men and women between the ages of 12 and 24 who seek popular brands that represent a lifestyle centered on activities that include skateboarding, surfing, snowboarding, BMX and motocross.

Zumiez reported 3rd quarter results that were in line with the company's recently lowered guidance. Management reiterated its full-year EPS guidance of $0.52-$0.57. We continue to expect a weak consumer into 2009 because macro headwinds (housing, weak economy, and higher unemployment) will persist for some time. We also expect the company's sales trends and profit margins will remain under pressure.

The stock is trading at about 13x our 2008 EPS estimate. We think this valuation is reasonable, and we remain neutral on the stock. Our six-month target price is $8, or about 16x our 2009 EPS estimate.

Read the full analyst report on ZUMZ