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Specialty retailer Zumiez Inc. (ZUMZ - Analyst Report) reported a same-store sales growth of 9.2% for the five-week period ending January 1, 2011. This is a substantial jump from an increase of 0.3% in the year-ago period.

Total net sales for December were $88.5 million, up by a sharp 14.1% from $77.6 million in the year-ago period. The December results marked the thirteenth consecutive month of same-store sales growth.

However, December same-store sales growth lagged November when Zumiez had posted a double-digit same store sales growth of 20.7%. December net sales also fell behind November net sales climb of 26.2%.

Hot Topic, Inc. , which competes with Zumiez, reported a decline of 1.7% in same store sales for the five weeks ended January 1, 2011. Total sales dropped 0.1% year over year.

For the fourth quarter of 2010, management expects comparable store sales to increase in the low double-digit to mid-teen range and net income to come in a band of 43–47 cents per share.

The Zacks Consensus Estimate for fourth-quarter 2010 is of 47 cents per share. For fiscal years 2010 and 2011, the Zacks Consensus Estimates are, respectively, 85 cents per share and $1.03 per share.

We expect Zumiez’s focus on teenage action-sports based merchandise and expanding store network, leveraged by a healthy debt-free balance sheet, to deliver solid performance in the upcoming quarters. However, intense competition from other specialty retailers, seasonal nature of the business and risks associated with sourcing merchandise from foreign countries might weigh on the company’s results.

The company operates in a highly fragmented specialty retail sector and faces intense competition from larger teenage-focused retailers such as Abercrombie & Fitch Co. (ANF - Analyst Report) , Aeropostale Inc. (ARO - Snapshot Report) and American Eagle Outfitters Inc. (AEO - Analyst Report).

The quantitative Zacks #1 Rank (short-term Strong Buy rating) for the company indicates upward pressure on the stock over the near term.

Based in Everett, Washington, Zumiez Inc. is a mall-based specialty retailer of action-sports related apparel, footwear, equipment, and accessories in the United States.

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