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Zumiez October Comps Impress

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Wash.-based retailer of sports-related teen apparel, Zumiez Inc. reported a 1.2% rise in comparable-store sales for the four weeks ended Nov 2, 2013. This compares with a comps rise of 0.6% for the four weeks ended Oct 27, 2012.

Net sales for October climbed 10.4% to $46.3 million from $41.9 million reported in the year-ago period.

Last month, the company reported a decline in sales, while comps dipped marginally. Net sales for September dipped 6.0% to $58.9 million from $62.7 million reported in the year-ago period. Comparable-store sales for the five weeks ended Oct 5, 2013, declined 0.6% compared with a comps rise of 5.6% for the five weeks ended Sep 26, 2012.

Further, the company posted a comps increase of 0.9% for second-quarter 2013 compared with an increase of 9.5% reported in the year-ago quarter.  Net sales increased 16.9% year over year to $157.9 million. Quarterly sales were almost in line with the Zacks Consensus Estimate of $158.0 million.

Going forward, the company anticipates third-quarter revenues in the range of $187–$191 million, while comps are likely to range from flat to a 2% increase.

Based on sales projections for the quarter, the company expects earnings per share to be 39–43 cents. The earnings expectation also includes estimated charges of 4 cents related to the Blue Tomato acquisition. Operating margin is anticipated to be in the range of 10–11%.

We believe that the company’s well-balanced store expansion and e-Commerce strategies will drive its top line further. Moreover, Zumiez aims to increase its store network to 600–700 stores in the long run.

The company plans to expand its store base by opening 58 new stores in fiscal 2013, which includes 9 stores in Canada and 5 in Europe. As of Nov 2, 2013, the company operated 548 stores, including 511 in the United States, 28 in Canada and 9 in Europe.

Zumiez currently carries a Zacks Rank #3 (Hold). Stocks worth considering among apparel/shoe retailers are Finish Line Inc. (FINL - Free Report) , DSW Inc. (DSW - Free Report) and Fifth & Pacific Companies Inc. . All of these have a Zacks Rank #2 (Buy).

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