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Things You Need to Know Before Zumiez's (ZUMZ) Q3 Earnings

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Zumiez Inc. (ZUMZ - Free Report) is likely to register a decline in the top line when it reports third-quarter fiscal 2020 numbers on Dec 3, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $243.7 million, indicating a decline of 7.7% from the prior-year reported figure.

However, the bottom line of this specialty retailer of apparel, footwear and accessories is expected to improve year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has increased by a couple of cents to 76 cents over the past seven days. The figure also suggests a penny improvement from the prior-quarter’s reported figure.

Notably, this Lynnwood, WA-based company has a trailing four-quarter earnings surprise of 41.2%, on average. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by a significant margin.

Key Factors to Note

Zumiez’s third-quarter performance is likely to reflect the impact of a challenging back-to-school season, thanks to the ongoing coronavirus crisis. On its last earnings call, management informed that third-quarter-to-date performance (as of Sep 10) has been significantly impacted by the timing of back-to-school as many states and districts delayed the start of the new school year or have been opting for digital learning due to the disruptions caused by the pandemic. Nonetheless, management anticipated an extended back-to-school season with some demand shifting to later part of the third quarter.

The company had earlier highlighted that third quarter-to-date sales for the 37 days ending Sep 7, 2020 were down about 14% year over year. Comparable sales for the 37-day period ending Sep 7 fell 5.1%. By channel, comparable sales for the stores opened were down 10.7%, however, e-commerce sales were up 27.4%.

Markedly, Zumiez has been striving to expand e-commerce and omni-channel platforms to provide consumers with the facility of quick and easy access to its products and brands. No wonder, the company has been bolstering competitiveness by making investments in logistics, planning and allocation. Evidently, management has been taking every measure to mitigate the impact of the pandemic. These include curbing of capital expenditures and minimizing operating costs among others.

However, the impact of costs associated with digital fulfilment and supply chain, and COVID-19 related expenses on margins cannot be ruled out.

Zumiez Inc. Price, Consensus and EPS Surprise

Zumiez Inc. Price, Consensus and EPS Surprise

Zumiez Inc. price-consensus-eps-surprise-chart | Zumiez Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Zumiez this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zumiez has a Zacks Rank #3 but an Earnings ESP of -2.12%.

3 Stocks With a Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

RH (RH - Free Report) presently has an Earnings ESP of +0.94% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger (KR - Free Report) presently has an Earnings ESP of +0.38% and a Zacks Rank #3.

Casey's General Stores (CASY - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #3 at present.

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