U.S. Specialty retailer in action sports related apparel, footwear, equipment and accessories, Zumiez Inc. ( ZUMZ - Analyst Report ) , is scheduled to release its second-quarter 2012 results on Thursday, August 30, 2012.

The current Zacks Consensus earnings per share (EPS) estimate for the second quarter stands at 13 cents, reflecting a year-over-year growth of 57.0%. Estimate revision trend in the past couple of months remained stable.

Further, Zumiez outperformed the Zacks Consensus Estimate in the trailing four quarters, exhibiting continued strength and consistent with its history of delivering positive earnings surprises. Zumiez’s first quarter witnessed a positive surprise of 36.4%. The company’s average surprise for the trailing four quarters comes to nearly 27.0%.

Summarizing First-Quarter 2012

On May 17, Zumiez reported better-than-expected results for first-quarter 2012 on account of improved margins as well as strong merchandise, store expansion and e-commerce strategies. Quarterly earnings of 15 cents per share beat the Zacks Consensus Estimate of 11 cents and surged 150.0% from the prior-period level of 11 cents.

Net sales in the reported quarter climbed 22.7% to $129.9 million from $105.9 million a year ago. Total revenue was almost in line with the Zacks Consensus Estimate of $129 million. First-quarter 2012 comparable store sales at Zumiez were up 12.9% compared with an increase of 12.6% reported in first-quarter 2011.

Guidance

Following solid first-quarter results, Zumiez initiated its sales and earnings guidance for the second quarter of fiscal 2012. Management anticipates second-quarter revenue in the range of $128 - $130 million, on the back of a mid-single-digit growth in comparable store sales. Based on sales projections for the quarter, the company expects earnings per share to come in the band of 4 cents - 6 cents.

Agreement

Estimate revision trend in the second-quarter have been largely stable, with estimates remaining intact over the last 7, 30 and 60 days. The last estimate revision was seen 90 days back, reflecting the effect of solid first quarter results.

In the last 30 days, second quarter estimates remained unchanged, with only one out of 16 estimates moving down. For fiscal 2012, 2 out of 16 estimates were revised upwards, while one estimate slipped in the last 30 days. In effect, estimate for fiscal 2012 was steady at $1.60. Estimates for fiscal 2013 witnessed two upward revisions with no movement in the opposite direction, in the same time period. However, estimates for fiscal 2unchanged at $1.84.

Magnitude

There was no change in estimates in the last 30 days. However, the estimates were revised upwards 90 days ago. Second quarter estimates reflected an upside of 3 cents per share 90 days back. Over the same time frame, estimates for fiscal 2012 and 2013 moved up by 7 cents and 12 cents per share, respectively.

Our Take

Zumiez is currently in the early phase of its store expansion program and plans to enlarge its network by opening 50 new stores during fiscal 2012, including 10 new stores in Canada. Additionally, in the recent years, Zumiez has launched stores averaging 3,000 square feet, which enables it to offer extended merchandise without compromising on the store ambience. These initiatives provide the company with a strong platform to effectively capitalize on the emerging opportunities.

Further, the Everett, Washington-based sporting goods retailer targets young men and women in the age group of 12 to 24 years, who seek popular brands that represent a lifestyle centered around extreme sports activities. This provides the company a distinct market niche, which in combination with its store expansion strategy should help deliver solid performance in the upcoming quarters.

However, intense competition from other specialty retailers like Hot Topic Inc. ( HOTT - Analyst Report ) and Pacific Sunwear of California Inc. ( PSUN - Snapshot Report ) , seasonal nature of the business and risks associated with sourcing merchandise from foreign countries may weigh upon the company’s results.

Currently, Zumiez holds a Zacks #3 Rank, implying a short-term ‘Hold’ rating on the stock. However, we retain our long-term ‘Outperform’ recommendation on the stock.