Back to top

Image: Bigstock

Zumiez (ZUMZ) Banks on Its Robust Omni-Channel Strategies

Read MoreHide Full Article

Zumiez Inc. (ZUMZ - Free Report) looks promising on the back of its solid omni-channel strategies. The company has been gaining from its one-channel approach to retail and advanced in-store fulfillment capabilities for a while now. Moreover, this reputed apparel, footwear and accessories retailer’s focus on building a customer-centric business model apart from offering differentiated assortments seems encouraging. We note that the company is prudently managing costs to boost its margins.

Impressively, shares of this Lynnwood, WA-based company have surged 30.5% so far this year, rallying ahead of the industry’s 25.2% growth. Well, this outperformance is also attributable to the company’s stellar first-quarter fiscal 2021 results wherein both the top and the bottom line surpassed the Zacks Consensus Estimate and grew year over year as well. Markedly, quarterly results exceeded the pre-COVID levels even though part of the company’s global store fleet was closed in the March quarter. Also, sales trends accelerated as the quarter progressed on the company’s ability to grab a share of the discretionary spending in the United States.

Logically, a sturdy quarterly performance attracted an upbeat outlook. Hence, Zumiez remains optimistic about fiscal 2021 and projects net sales to increase in the low-to-mid-teen range from the fiscal 2019 reading. Also, earnings per share are predicted to grow meaningfully in fiscal 2021. For the fiscal second quarter, sales are likely to grow in double digits from the fiscal 2019 actuals.

Delving Deeper

Zumiez is steadily investing in resources to boost its localized merchandising assortments. The implementation of advanced technology helped augmenting customers’ shopping experience across diverse channels. Management is encouraged about fiscal 2021, given its advanced in-store fulfillment capabilities including Zumiez Delivery. Further, the company is driving its competitive edge by investing heavily in logistics, planning and allocating resources as well as bolstering its omni-channel capabilities, which position it well for growth.

These apart, Zumiez’s strategy to optimize store base including expansion in the underpenetrated markets looks appealing. In fact, bulk of the company’s capital spending is deployed to store remodeling and openings. In fiscal 2021, management intends to open 22 stores comprising about five stores in North America, 12 in Europe and five in Australia. Simultaneously, it plans to close five to six stores during the ongoing fiscal year. For the current fiscal year, management expects to incur capital expenditures worth $20-$22 million, indicating a rise from $9.1 million spent in fiscal 2020. Most of the capital spending will be on store openings and planned remodels.

Buoyed by the aforesaid strategies, management issued bullish sales numbers for May 2021. Net sales in the four-week period having ended May 29, 2021, grew 42.4% year over year. From a regional perspective, net sales at North America during the same period jumped 45.9% from the year-earlier comparable period’s figure while the metric at other International business rose 19.9% year over year. From a category perspective, the company’s all categories except hard goods were up in total sales year over year. Men's was the company’s largest positive category followed by accessories, footwear and women's. For the four weeks ended May 29, 2021, comparable sales surged 32.9% from the number posted for the four weeks ended Jun 1, 2019. Hence, these solid monthly numbers indicate a sturdy second-quarter fiscal 2021 performance ahead.

Markedly, the confidence in the stock is further backed by higher revisions of the company’s earnings estimates as analysts look quite cheerful. The Zacks Consensus Estimate for earnings in the fiscal second quarter moved 29.3% north to 75 cents in the past 30 days. Also, the consensus estimate of $4.02 for fiscal 2021 and $4.11 for fiscal 2022 has increased 26% and 12.3%, respectively, in the same time frame.

Having said that, the currently Zacks Rank #1 (Strong Buy) company’s robust strategies coupled with a healthy balance sheet, sturdy business model and a strong brand presence position it well for long-term success.

More Hot Stocks in Retail

Abercrombie & Fitch (ANF - Free Report) has a long-term earnings growth rate of 18% and a Zacks Rank #1 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn (BOOT - Free Report) , presently a Zacks #1 Ranked stock, has a trailing four-quarter earnings surprise of 51.7%, on average.

Urban Outfitters (URBN - Free Report) presently has a long-term earnings growth rate of 11.5% and a Zacks Rank of 1.

Time to Invest in Legal Marijuana

If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.

You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.

Today, Download Marijuana Moneymakers FREE >>