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Zumiez's April Comps Soared

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The Washington-based retailer of sports-related teen apparel, Zumiez Inc. , reported an 8.2% rise in comparable-store sales (comps) for the four-week period ended May 3, 2014, compared with a comps increase of 4.6% for the four weeks ended May 4, 2013.

Moreover, net sales for April rose 17.6% to $50.6 million from $43.0 million reported in the year-ago period. We believe sales for the month have mainly benefited from strong Easter-related sales during the month due to the Easter shift to April this year.

The shift in Easter timings had earlier negatively impacted the company’s March 2014 sales. Last month, the company reported a 2.9% decline in comps for the five weeks ended Apr 5, 2014, compared with a comps increase of 2.1% for the five weeks ended Apr 6, 2013. Sales for the month suffered mainly due to reduced purchases and lower spending on each purchase.

Along with its fourth-quarter results, on Mar 14, Zumiez announced its sales and earnings guidance for the first quarter of fiscal 2014. Management anticipates first-quarter revenues in the range of $156–$160 million, while comps are likely to decrease in the low single-digit range.

Based on sales projections for the quarter, the company formulated a bottom-line guidance of net loss per share of 2 cents to earnings per share of 3 cents. The earnings expectation also includes estimated charges of 2 cents per share related to the Blue Tomato acquisition.

However, we believe that the company’s well-balanced store expansion and e-Commerce strategies will help drive its top line, going forward. Moreover, Zumiez aims to increase its store network to 600–700 stores in the long run. As of Apr 5, 2014, the company operated 555 stores, of which 513 are in the United States, 29 in Canada and 13 in Europe.

Zumiez currently has a Zacks Rank #3 (Hold). Better-performing stocks among apparel/shoe retailers are American Apparel Inc. , Iconix Brand Group, Inc. (ICON - Free Report) and The Buckle, Inc. (BKE - Free Report) , all of which carry a Zacks Rank #2 (Buy).

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