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Zumiez (ZUMZ) Adapts to New Normal as Shoppers Go Online

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Amid fears of the ongoing pandemic and resultant social distancing, retailers have been directing resources toward digital platforms, accelerating fleet optimization and augmenting supply chain. In fact, companies have been expanding delivery options and contactless payment solutions to provide a seamless shopping experience. No wonder, Zumiez Inc. (ZUMZ - Free Report) has been aggressively adopting strategies and making planned investments to cater to consumer demand and behavior in the new normal.

This specialty retailer of apparel, footwear, accessories has been making every effort to expand its e-commerce and omni-channel platforms to provide consumers with the facility of quick and easy access to products and brands. In this regard, Zumiez has considerably enhanced customers’ experience by integrating its physical and digital networks. This enables customers to access inventories through all channels alongside availing facilities like buy online, pick up in store and reserve online and pay in store.

We believe that well-balanced store expansion and e-commerce strategies will help this Zacks Rank #1 (Strong Buy) company to keep track of the evolving patterns and drive the top line. You can see the complete list of today’s Zacks #1 Rank stocks here.

During second-quarter fiscal 2020, Zumiez registered online sales growth of 122%. The company highlighted that third quarter-to-date e-commerce sales for the 37 days ending Sep 7, 2020 were up about 27.4% year over year. It informed that stores were opened for 73.4% of potential operating days during the quarter.

The company has definitely been sharpening competitive edge by investing in logistics, planning and allocation, and omni-channel capabilities, which position it for growth in the near and the long term.

Apart from these, Zumiez has been taking measures to address challenges tied to the COVID-19 pandemic. Management has been minimizing operating costs, which comprise travel, marketing and other non-essential items. We note that SG&A expenses declined 11.9% during second-quarter fiscal 2020. As a percentage of sales, SG&A expenses shrunk 560 bps to 23.1%. The company is anticipating SG&A expenses across the business to be down 12.5% compared with 2019 owing to the reductions in-store operating hours, travel and training, planned capital, incentive compensation and several other benefits.

Markedly, shares of Zumiez have gained 58.1% over the past six-month time frame, courtesy of its robust business strategies. In the said period, the industry rallied 73.2%. Meanwhile, the Zacks Consensus Estimate for fiscal 2020 and 2021 has surged 59.9% and 17.4% in the past 60 days to $2.51 and $2.90, respectively.

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