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4 Reasons Why Zumiez is Likely to Keep Up the Superb Show

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Zumiez Inc. (ZUMZ - Free Report) is one of those few companies which has maintained its upbeat performance even amid a tough retail scenario. The company’s impressive growth strategies have been backing its stellar past performance, which also includes a solid comparable store sales (comps) record. In fact, the company’s last quarterly outcome and encouraging outlook seem to have raised investors’ spirits in particular.

Evidently, the company has surged a whopping 37.7% in the past three months, as against the industry’s decline of 3.4%. So let’s take a detailed look at the factors that are likely to keep driving this Zacks Rank #1 (Strong Buy) stock’s momentum.



Zumiez’s Customer-Focused Initiatives Bode Well

Zumiez is gaining from its focus on providing differentiated assortments and a great shopping experience, which are strengthening its position in the industry. Further, the company is boosting competitive advantage by investments in logistics, planning and allocation along with omni-channel capabilities, which positions it for growth. Incidentally, the company is on track with the roll out of new customer engagement strategies across stores in the United States. Moreover, it remains focused on finding new and unique brands across all departments. In connection with this, the company plans to launch more than 100 new brands in its stores. This will help bring freshness in its merchandise that customers are looking for. We believe these strategies place the company well for growth.

Focus on Store Expansion: Global Opportunities Look Promising

The company maintains the strategy of optimizing store base through expansion in the underpenetrated markets by either repositioning or closing underperforming stores through constant evaluation, aimed at maximizing long-term productivity. Though the company has slowed down the rate of domestic store growth, it continues to see opportunities for international expansion. In fiscal 2017, the company intends to introduce 18 stores, including three in Canada, four in Europe and two in Australia.

E-Commerce Development to Boost Top Line

Given the evolving retail trends, Zumiez is striving to expand its e-commerce and omni-channel platforms to provide consumers with the facility of quick and easy access to its products and brands. In this regard, Zumiez has considerably improved customers’ experience, by integrating its physical and digital networks. This allows customers to access inventories through all channels, alongside availing facilities like buy online, pick up in store, reserve online and pay in store. We believe that the company’s well-balanced store expansion and e-commerce strategies will help Zumiez keep track of the evolving patterns, and drive top-line growth.

Zumiez Inc. Price and Consensus
 

Zumiez Inc. Price and Consensus | Zumiez Inc. Quote

 

Robust Earnings Surprise Trend, Outlook Boosts Estimates

Zumiez’s second-quarter fiscal 2017 marked its eighth straight quarter of positive earnings surprise, while its top-line beat the Zacks Consensus Estimate in six of the last eight quarters. Additionally, the company saw its fourth straight quarter of comps growth. Results were fueled by solid comps growth, investments in omni-channel capabilities and stringent cost controls. These factors encouraged management to issue an encouraging outlook for the third quarter and fiscal 2017, despite a difficult retail landscape. Ever since, the Zacks Consensus Estimate for the third quarter and fiscal 2017 has risen to 47 cents and $1.04, from 43 cents and 93 cents respectively.

Well, Zumiez also maintained its splendid comps trend in September, which represented the company’s seventh straight month of comps growth. Further, based on solid quarter-to-date performance, the company also raised its previously issued third-quarter view. (Read: Zumiez Stock Up on Solid September Comps, Ups View)

All these factors suggest that Zumiez is most likely to keep its solid show going.

Looking for Similar Bets? Check These 3 Stocks From Zumiez’s Space

Abercrombie & Fitch Co. (ANF - Free Report) , with a long-term earnings per share growth rate of 14%, sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank  stocks here.

Boot Barn Holdings, Inc. (BOOT - Free Report) , which also flaunts the same Zacks Rank as Zumiez, has a long-term growth rate of 15%.

DSW Inc. with a long-term growth rate of 6.3% also flaunts a Zacks Rank #1.

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